Shop for Insurance the Smart Way
Because insurance prices and policy options fluctuate constantly, it’s a good idea to shop for the best value every few years, the Ohio Credit Union League recommends.
According to an article from ValuePenguin, insurance companies update policies about every year to tighten their profit margins. This can leave consumers who purchased the best policy at the time with a policy no longer providing the same value years later.
The trend is evident in rising average costs of car insurance across the United States. According to the 2019 State of Auto Insurance published by Zebra, the average American is paying an annual car insurance premium of $1,470. That’s an increase of 23 percent since 2011.
Ohioans pay less for auto insurance than the average American, the Credit Union League found, but drivers in the Buckeye State are paying more for auto insurance year-over-year. Ohio has the sixth lowest average auto insurance rate in the country at $1,032. However, the average Ohioan now pays $200 more in car insurance premiums than they did nearly a decade ago. That’s an increase of more than 25 percent for Ohio residents and slightly higher than the national average increase since 2011.
Despite all this, the average American doesn’t appear to be dedicated to shopping for insurance, the Credit Union League said.
The ValuePenguin article cited one-third of Americans have never re-shopped for a new policy for their homeowners or car insurance and nearly 50 percent of policyholders who have searched around for a new policy only did so in the past year.
The number one reason for not re-shopping insurance, according to 1,542 respondents in a recent Policygenius survey, was they thought the process would take too much time. Yet, 42 percent of Americans switched their car or homeowner policy after researching options to get better coverage.
The Credit Union League said shopping around isn’t just about finding the lowest price, it’s about finding the best value and it extends beyond simply auto insurance.
“It’s important consumers understand the nature of their current coverage as well as what kind of coverage would best serve their evolving needs,” Eaton Family Credit Union CEO Mike Losneck said.
An online LendEDU survey of 1,000 Americans found 83 percent said they thought their life insurance policy was worth the cost but 33 percent admitted they didn’t fully understand how their policy works.
Similar patterns emerge for homeowner’s insurance, too. When Insurance.com surveyed 1,000 homeowners, about 48 percent of respondents said they aren’t sure what liability insurance covers and another 24 percent have no idea how much of it they have.
To help consumers save money and get the right coverage, the Ohio Credit Union League recommends shopping for insurance with these tips:
- Use technology to compare. In the digital age, there’s no reason to accept the first insurance quote from the first company to come your way. Take time to compare the value different companies and policies offer by using comparison sites like NetQuote, CoverHound or Compare.com.
- Choose a trusted company. No matter what you’re insuring, chances are you want to leave it in hands you can trust. Be sure you fully understand your insurance company’s history and reputation. For an extra layer of protection, The Balance suggests utilizing insurance rating organizations such as Weiss Ratings, Standard & Poors, Fitch Ratings and Demotech, Inc.
- Ask about discounts. Sometimes discounts on insurance policies are “hidden,” meaning they’re not readily found on a website and an agent won’t tell you about them unprovoked. Ask your insurance agent if you are getting all the available discounts for which you are qualified.
- Ask your agent for the best offer. If the “final price” your agent offers on a policy isn’t quite good enough, speak up. Often, your agent may be able to negotiate with the insurance company to get you a lower rate.
- Re-evaluate your coverage consistently. As a rule, it’s a good idea to shop around for insurance at least once a year. But it’s also beneficial to re-evaluate your different insurance policies any time you experience a significant life event, including a marriage, a divorce, a birth, a major purchase or a move.
Dave Godek, MBA
Business Development Manager
Eaton Family Credit Union