Many people will be surprised by how much money they could save by taking the time to compare car insurance quotes before purchase. Rather than just renewing their car insurance every year, they should compare the quote from their insurance renewal letter with other car insurance providers’ quotes. It’s not uncommon for some companies to be remarkably cheaper, by even as much as a few hundred dollars per year.
There are two main reasons for this. The first one is that car insurance companies use different methods for determining how much they should charge people according to their ‘risk factors’; risk factors being information about a person that makes them more of a risk to insure than another. For example, a 21 year old driver in a high performance sports car is much more of a ‘risk’ to insure than an experienced 40 year old, driving a family car. The higher the perceived risk a driver poses to a car insurance provider, the higher the quoted premium will be. Different companies place different importance on certain risk factors, which means, given the same information, one company could be cheaper than another.
Another reason car insurance quotes from another company could be cheaper than a person’s present insurance provider is due to a pricing technique used by many car insurers. Companies know, from research, that most people automatically renew their policies with the same company each year, rather than search for the cheapest. Based on this research, some companies increase the premium from what it should have been, had the person been a new customer. For example, a driver didn’t make a claim the previous year, so their premium should drop by a small amount according to one of their ‘risk factors’; yet the insurer wants to renew the policy with the premium as the same amount as the previous year. Basically, the insurance providers are banking on people not comparing their car insurance quotes, so they can sneakily increase the premiums.
It is for those reasons that car insurance is cheaper between different insurance providers. For people who need to save as much as they can, it is certainly worth their time to compare car insurance quotes from a few different companies before renewing, in order to find the cheapest insurance for their particular situation.