Do Different Car Insurance Companies Really Have Different Rates?

I keep seeing ads on TV which claim this or that car insurance company is cheapest. Are they really that different, or is this just marketing?

Make sure you understand why the rates are different. For instance if your current policy has towing and car rental included, make sure that is included in the policy you are comparing it too. Make sure the deductible is the same...and so on....

That said, I did have an experience where I just bought a newer car and my old insurance company raised my rates quite a bit! When I called in to pay a bill, they asked me if I'd like to compare rates, and I did get a much lower quote on exactly the same (apples for apples) policy!

They were both national company, so I guess the new company is using price to bring in new business. Good for me. I switched!

Compare rates. It is pretty easy these days.

No, they are different. I say this from two perspectives, one as a former insurance agent and also as an economist.

In my state, the legislature requires insurance companies to file the rates for "representative" customers for auto and home owners insurance under a variety of comparable scenarios with the county clerk. You can go and directly compare them.

What you will find is that there is a least expensive company for you, but that company is not the least expensive company for everyone.

There are two reasons for this. One, a company may be "buying a book of business." When companies try and expand their property and casualty position they offer large, but temporary discounts, they never tell the customer it is temporary but it is. The second has to do with the risks a particular company is good at underwriting. Some companies subsidize their auto insurance to get life insurance customers. The reverse is also true. Likewise, some companies are good at underwriting people with prior dui convictions, others are not. Some are good in particular regions because of the large information and historical base they have their, but not so good in other areas because the lack of penetration in the area means they cannot be as certain as to the risks and hence must carry higher rates.

The rate differernces can be huge. In my stint in commercial banking I was responsible for the bank's collateral risks. I saw every commercial and private policy that came through the door at least once. I had a nice database of claim paying history on our fires and accidents and a nice database on the costs of insurance via escrow information and new auto purchase info. I ended up buying Safeco because of it. In my geographic area, it not only was very good at paying, it was among the three least expensive too. However, Erie was hard to get money out of. Great premiums, terrible payments on claims, at least from my humble perspective. The other was State Farm, but you had to be a customer there for several years before the savings kicked in. Once they kicked in, no one beat them. Geico was great for cars, but they don't have a homeowners policy and so with the discounts available on combined policies, they are not so attractive.

It isn't just marketing, but you do have to shop and the agents are trained to make it expensive in terms of time for you to look beyond the one you are using. They want it to be emotionally costly for you to compare companies.

Some is real, some is marketing. But the ones with the cheapest rates are generally the ones that will lowball you on any claims. Cheapest isn't always best.
Also make sure you're comparing the same coverage when you get quotes.

To answer your question Yes they do have different rates. Why, I do not know. I am able to recommend my clients to get home & auto insurance but I dont know their rating system. I know its based on you driving record and credit rating. AIG wanted $872/ 6 months, Progressive $720/ 6months, and Esurance $612/ 6 months for me. Is it marketing yes it is, more clients the higher the premium, less clients lower the premium.

Yes.

Insurance companies use different rating criteria. So shop around to get the best rate.

you better believe the rates are different, very different. shop around.

Except for Massachusetts, yes, every company CAN file their own rate. IN MA, the state sets the rates.

That's why what's cheapest for ME, is likely not cheapest for YOU.

Yeah some are quite different actually, go on a price comparison website.

rates really are different and it is marketing

shop hard.

The best thing to do is call a LOCAL independent agent. Just look in the phone book for the PIA or Big I (Trusted Choice) logos and you will find a professional licensed agent that will be able to help you solve your insurance problems, and give you rate comparisons of several different companies.

An independent insurance agent will normally have a dozen different companies and if he cannot help you, he should be networked with other local agents that can.

Most of the replies on this site say "go to this on-line carrier or that on-line carrier or that 1-800 number" but I'm sure that when you do, you'll find that you don't know the questions to ask or don't know the answers to answer.

Good luck, drive RESPONSIBLY and I hope this helps

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