Car insurers spend truckloads of money on advertising to lure
customers away from the competition, and the promises of lower
rates might be tempting.
But take stock of what you've got before you split. You might
find that the perks for staying with your current insurer outweigh
the ones offered by another company.
"Years ago, the coverage was apples-to-apples," says Jeff
Camara, an independent insurance agent and office manager of Vargas
& Vargas Insurance in Dorchester, Mass.
But now carriers are differentiating themselves with a variety
of offerings, so you have to take extra care when comparing.
"There are some upsides to staying loyal," says analyst Penny
Gusner, CarInsurance.com consumer analyst.
Here are some of them:
The most obvious is the loyalty reward, also called a
persistency, longevity or tenure discount, which gives you a small
rate cut for staying with the company for a certain amount of time.
Not all insurers offer them.
Camara says of the nine companies with which his agency works,
three have loyalty discounts. They range from about 2 to 10
percent, he says.
The length of time you have to remain with a company for a
discount varies by insurer and location. State Farm in California,
for instance, gives a loyalty discount for customers who stay for
at least a year. With Ameriprise Auto & Home Insurance, you
have to stick with the company for three years to earn its tenure
Some insurers also offer discounts for switching to them, which
might cancel out any benefit of a loyalty discount with your
"A loyalty discount probably isn't a big deciding factor,"
Some insurance companies now offer accident forgiveness
programs, which promise not to raise your rate the first time you
have an accident after a period of remaining claim-free. Rules for
the programs vary, but some insurers require you to be a customer
for a certain number of years before you qualify.
For its major accident forgiveness program, for instance,
Progressive requires customers to be with the company for at least
five years and for everyone on your policy to remain claim- and
violation-free for the last three. If you meet those criteria, then
your car insurance rate won't go up if you have a large claim.
can be hefty and last for years.
Programs like Nationwide Insurance's "Vanishing Deductible"
promise to reduce your deductible each year you drive safely and
are signed up with the program. Under the Nationwide program, your
deductible decreases by $100 a year up to $500. Some companies,
though, such as The Hartford, will knock money off the deductible
if you haven't had any accidents or violations, even if you had
coverage with another company.
Losing deductible dollars and accident forgiveness might be a
bigger deal than losing a loyalty discount when changing companies,
Some companies might be more lenient about minor accidents or
violations with longtime customers, even without a formal accident
forgiveness program, Gusner says. Another perk for loyalty is that
once you've been with a company for a number of years, the insurer
generally won't pull your driving record every year, which could
save you from an immediate premium increase if you get a
If you're a longtime customer with a good track record, an
insurer is also more likely to reinstate your policy without any
penalty if you're a little late on a premium payment, Camara says
-- as long as you don't make it a habit.
For some folks, having a personal relationship with an insurance
agent is important. You'll lose that professional if you're with a
company that has its own agents, such as State Farm or Allstate,
and you change insurers. You can keep your independent insurance
agent as long as you switch to one of the insurers represented by
At Progressive Insurance, customers who have been with the
company for at least 10 years earn "Emerald Access," and 20-year
customers earn "Lifetime Crown Benefits." The company says its
customer service representatives give first priority to Emerald and
Crown customer calls. Crown customers also get a lifetime insurance
Deciding whether to switch insurance companies comes down to
weighing what you have to gain and what you have to lose.
"As a consumer it's smart to shop, but you want to make sure
you're getting the same policy as you were before," Camara
Or at least you want to make sure you take into account anything
you might lose to calculate the true savings.