How to Save Hundreds on Car Insurance by Changing or Updating Your Policy

Can you really save money by switching car insurance? I did the research so you can do the math.

Allstate claims "drivers who switched to Allstate saved an average of $396 a year." 21st Century says their customers saved an average of $474 a year by switching from their insurance/s. Progressive boasts drivers who switched to Progressive saved an average of $550! While Geico promises to save you 15% on car insurance in 15 minutes. So, any truth to these claims? And, most importantly, can you really save $400 or more a year on car insurance by switching carriers? Well, yes and no. Let me explain.

But first, a little about just how these insurance companies even come up with such figures. When they say their customers saved a certain amount of money by switching from their old insurance to the new one, what the really mean is, what their customers actually said they saved by switching. They did not tally all their new customers' figures, only the ones who reported back to them about their (new-found) savings. Obviously, each customer who said he saved, did in fact save, but they all saved different amounts, and out of 100% of the customers who reported a savings, they reach what they call an "average" amount. That's why it's so easy for auto insurance companies to boast of customer savings, because they only report those customers who actually saved! Even if there were only two or three of them! But, the real truth lies behind what the figures don't tell you, as opposed to what they do disclose.

First off, each of the insurers seeks out certain types of customers in certain neighborhoods and then offers them competitive rates based on the area and the type of driver. The thing of it is, is insurers don't actually admit (at least not publicly) what types of drivers those are and more importantly, that their prime targets differ for each insurer. So, it goes without saying not every driver falls into each insurers "best deal" price range.

Secondly, those numbers don't generally reveal precisely how their new customers saved money by switching carriers. Some altered their coverage, by perhaps lowering their limits; some decided to save by trading in their sports car for a family sedan or minivan; while others stopped insuring a teenager who reached that golden age of 25 whereby the rates drop significantly, or their teen driver simply moved away to college, altogether. Then again, some of these new customers might simply have changed locations, and moved to a safer (read: cheaper) area to insure.

Every single one of these cases did, in fact, save the driver hoards of money, but it's not the actual switching of companies that did the trick, as much as the changes they made that reduced the cost of their coverage, itself. So, basically, much as I hate to say it, you can probably save the same amount of money by staying with your original carrier and making the same type of coverage changes, provided the changes you made are being offered at the same rates by your original insurer, as the new one.

Since all insurance companies measure risk differently, there's no simple way to tell which company can offer you the most savings without first doing some comparison shopping, and plugging in the data. Get several quotes before settling down with any one company, and then the real test comes: What changes have you neglected making over the years, and what changes can you now make to lower your coverage? It's important to keep all your insurances up to date, not just your auto insurance. And if you're really struggling with money as I am, you might want to consider only paying for liability, and keeping your limits low, if you're a good (safe) driver with a squeaky clean record, and if your car is old (give it a good 5-7 years before you go this route), or if the model you drive is inexpensive to begin with, and you're not worried it'll get stolen. Personally, I have the least amount of coverage on my car ($15,000 / liability) and I even dropped that extra $12 for uninsured motorists, convinsing myself most drivers these days have car insurance, as it is required by law. You might want to hold onto uninsured motorists, however, as it's not wise to assume all drivers are law-abiding citizens, especially if you live in Los Angeles, as I do! I'll take my chances *sigh*.