The thought of comparing auto insurance quotes can be daunting, but it will definitely pay off in the end. Between insurance companies' different approaches to risk assessment and life's unpredictability, the need to shop around for car insurance rates is evident. Here are two reasons you should compare auto insurance quotes:
Customers who have stuck by their insurance companies' sides for years might argue they already have the best price for auto insurance. Perhaps they went through the quote comparison process years ago and were satisfied with their initial picks. Unfortunately, recent inquiries into auto insurance rates have shown that companies might be taking advantage of their most loyal patrons.
Benjamin Lawsky, the New York Department of Financial Services Superintendent, recently sent out a letter to insurance companies asking about their mathematical formula regarding a customer's reaction to insurance price levels, according to The Wall Street Journal. The action sprung from concern that companies were using price optimization, a process where they raise customers' rates based on an analysis of which patrons are least likely to switch coverage or shop around. According to Lawsky, this practice uses unfairly discriminatory rates and would violate state law.
While price optimization is being banned in a growing number of states, loyal customers should still practice safe judgment and at least look into different insurance quotes. By shopping around and comparing prices, loyal drivers will finally know if they have indeed been paying the lowest possible price.
A major part of the risk calculation formula used by insurance companies has to do with customers' major life events. The amount required for insurance premiums fluctuates depending on where drivers are at in their lives. For example, a driver might qualify for lower insurance rates if he or she is retired, according to NerdWallet. The end of a career means not having to drive back and forth to work five days a week. The less miles drivers put on their cars, the less they will typically have to pay for insurance. While most companies will offer reduced rates with retirement, it's still important to shop around to find the most cost-efficient coverage.
On the other side of the spectrum, insurance rates can skyrocket for teen drivers. However, some companies offer discounts for good grades and taking extra driving courses. To get the lowest rates, it's important that drivers find insurance providers that actually allow for these price reductions.
Are you convinced of quote comparison benefits? Use CoverHound's website to compare auto insurance rates today.