Insurance companies promise that switching over to their product can save you a bundle of money. But just how accurate are their claims? (mlinksva, Flickr)

    by: Terry Shea | AOL Autos

    If you get the feeling you’re seeing more ads for car insurance in recent years, there’s a good reason. You are. Spending on auto insurance advertising ballooned from $600 million in 2003 to over $1.7 billion in 2007. In 2008, Geico alone spent more than $600 million, with State Farm and Allstate not far behind.

    From talking lizards to modern cavemen to that guy who used to be the fake President on 24, it’s almost impossible to escape the constant barrage of advertisements offering huge discounts on car insurance. But how much can you really save? Take a look at the claims in the advertising and it defies logic. If you can switch to Allstate and save 20%, then over to State Farm, where you can pocket $489, jump to GEICO next to get back over $500, and by the time you make the switch to Progressive to save $550, the insurance company should be paying you. And that $451 from Esurance? That’s bonus time, right?

    Read The Fine Print -- In The Ads

    Well, not exactly. You need to read the fine print because there is always an asterisk associated with those claims. Typically, the insurance companies offer those numbers as the average savings for customers who switched and reported that they saved money. Customers who switched and didn’t save money don’t count when factoring that average. Neither do customers who shopped that company and decided the rates were too high to switch.

    Logic says that nobody switches auto insurance companies to pay more. And if you get a few quotes, one will obviously be the cheapest. With few exceptions, like having a particularly poor customer service or claims experience, a cheaper rate is about the only reason to switch.

    Most insurance companies maintain proprietary databases and statistical models they use to calculate the risks they take when insuring an individual. Since all of the companies use a wide variety of rating variables and weigh them differently, the odds are pretty good that one company out there will have a better rate for you than all the others. The flip side to that rationale is that no one company can save everyone money.

    What’s certainly true is that insurance companies are relying less on fuzzy, neighborly, feel-good advertising and instead are appealing to consumer’s wallets to earn their business. According to Dick Luedke, spokesman for State Farm, the largest auto insurer in the country with around 41,000,000 auto policies in force, “There is no question that the market is very competitive right now.”

    But you need to look at more than just the price tag when deciding which company to go with. “Price is not the only thing a customer should look at,” said Luedke. “You really don’t know what your insurance policy is worth -- truly worth -- until you file a claim. The best value is not always the best price.”

    Ask For The Discounts

    But with price being where the rubber meets the road today, we asked around to find out what those discount claims are really about. Luedke, whose State Farm alternately advertises whole dollar savings as well as savings “up to 40%,” told us that the discounts usually amount to multi-car or multi-line bundles (meaning a car and home or renter’s policy togeter) as well as good driver bonuses. To State Farm, a good driver is one with no at-fault accidents or moving violations in three years.

    Other insurance companies offer most of these discounts as well. Some, such as Esurance, an online-only upstart that now has a presence in 30 states, offer a discount simply for switching and another for generating your quote online, whether you purchase online or phone in your order to their call center.

    Could it be that your current agent is simply not sharing all of the available discounts or you are not asking the right questions during your annual policy review? (You do have an annual policy review, don’t you?) According to Raleigh Floyd, spokesperson for Allstate, “If you are not taking advantage of all the discounts available to you, then yes, you’re paying too much.”

    While it may seem that your current agent is fleecing you when you can get such a better deal elsewhere, the truth is that perhaps your insurance company’s rating variables might not favor you right now.

    In explaining why the extremely competitive marketplace encourages such advertising on price, Esurance Chief Marketing Office John Swigart said, “As [the market’s] gotten more competitive and since many consumers make their final decision based on price, it is important to state and demonstrate that you’re competitive on price.”

    More Tips

    Here are some ways you can save money on car insurance:

    • Drive safely. Sort of obvious, no? Maintaining a clean driving record with as few accidents and tickets as possible is one of the best things you can do to qualify for the best rates. Insurance is based in math and it’s pretty clear that if you keep forcing the insurance company to pay up, sooner or later your rates are going to increase or they may drop you altogether, forcing you to pay even more with another carrier.

    • Insure more than one car. Like donuts and that warehouse club package of paper towels, buying in bulk is a good way to save.

    • Buy a homeowner’s or renter’s policy from the same company -- more bulk buying.

    • Maintain good credit. Yes, that ugly credit score albatross rears its ugly head again. Data indicate that people with poor finances tend to use their insurance more. So, pay your bills on time.

    • Speaking of paying your bills on time, while most insurance companies offer you the option these days of paying monthly with an automatic payment plan, some will offer a discount if you pay the whole premium up front. If you have the cash, go for it.

    • Let your insurance company know if your regular commute doesn’t involve your family car. It’s kind of hard to get into accidents when the car is parked.

    • Raise your deductible if you can afford to, as minor fender benders and bumper bruises become out-of-pocket expenses and your insurance company won’t need to pay up when they happen. Similarly drop comprehensive theft and damage coverage on an older clunker that might not be worth much more than your deductible.

    • Shop around! If there’s one thing this barrage of ads is honestly telling us it’s that there are people out there saving money and it’s free to ask around and get a quote. Maybe you will end up being one of those “average” drivers who switches and becomes the right kind of statistic, with an asterisk, of course.

    Quick Shopping Tools:

    Research New Cars

    Cars for Sale in Your Area

    Get Repair Estimates

    1 - 20 of 192 Comments
    adamshleton Jul 01, 2010 9:45 AM
    Ive more or less tried all the big companies over the last 20 years! The only place where I could finally save was with The Hartford. After 2 claims which were handled very nicely, where each time I was kept informed by their customer reps about what the status of my claim was, Im not switching anywhere else in a hurry. Low rates dont attract me any more! Source: http://hartfordauto.thehartford.com/Auto-Insurance/
    Report This
    haveagoodday615 Jun 23, 2010 11:56 PM
    I have been insured with Geico for years. I have had 3 claims with them within he last 4 years. My rates did not increase. I have called other insurance companies and no one can beat my rate. They are so nice and friendly and are always there when I need them. My entire family is insured with them.
    Report This
    latinafunny Jun 23, 2010 10:30 AM
    I had MetLife Auto for many years and myrates just kept going up and up, despite the fact that I NEVER had a claim, accident, ticket, nothing and I WORKED for MetLife HQ in NYC and only used my car weekends---sooo I switched to AAA, yes the auto club (www.aaa.com) has insurance and it was less than the insurance quotes I received! I had no idea the auto club was still around!!!
    Report This
    seattleniceguy Jun 22, 2010 9:55 PM
    Great comments folks! I've been an insurance agent for over 35 years. I think it's safe to suggest most have never read their insurance policy's cover to cover. As a result few understand; what coverage to purchase, when to turn in a claim and when not to? Just as it's important to have a good mechanic, lawyer, plumber, it's important to have a good relationship with your insurance agent. Your insurance agents earns generally a 10% commission (+/-). In order to "earn" that commission you should hear from your agent on a regular basis. In my 35 years experience if asked which insurance company's to avoid? With out a doubt avoid; Farmers , Allsnake and GEICO. Also, we know what happen to the mortgage industry when Countrywide and Washington Mutual Mortgage went into default. With the nations largest insurance company going into default AIG has had a similar impact on the insurance industry. WE MUST purchase insurance differently then in the past. Your insurance was met to pay for catastrophic losses, not a $50 towing bill or a $70 window repair. Buyer ... beware and be knowledgeable or be prepared to pay higher insurance rates! T. Vance Webster VanceWebster.net
    Report This
    rrbsr Jun 22, 2010 9:46 PM
    The lizard is an illegal alien!
    Report This
    ishrppa Jun 22, 2010 6:29 PM
    DON'T GO WITH AIG!! THEY WILL GET YOU COMING AND GOING!! They have changed their name to 21st Century - so be very aware! Don't have an accident cause you'll be fighting them for months to get a decent value for your auto!
    Report This
    svanaken Jun 22, 2010 5:14 PM
    We all have insurance stories. I was with GEICO when it was for government employees and not everyone. Rates were low and though I never made a claim, I was satisfied. They go 'public' and my rates steadily climb each year even though I remove all but liability. Switched to State Farm and my rates fell by half for the exact same coverage. Rates still go up a bit every year despite not having made a claim, but at least I'm not getting screwed over by GEICO. Plus the State Farm agent is right here in my town, not 20 miles away.
    Report This
    yourinsuranceman Jun 22, 2010 5:14 PM
    There is no insurance company that has the lowest rates. There are many factors involved in rating. Many companies have certain risks they prefer and ones they don't and their rate will reflect that. And companies that say they don't have the "middle man (agent/broker)" to pay, have to pay an employee to do the work the "middle man" does. An employee is far more costly than paying a small commission.
    Report This
    ilappraiser Jun 22, 2010 3:56 PM
    I had State Farm for years and never had to pay out of pocket besides my deductible for any claims. I switched to Geico a couple of years ago because it was cheaper and now I have my first claim and they want me to pay $2000 plus my $500 deductible for some kind of betterment charge. So in the long run I am not saving any money!! I am going back to State Farm!!
    Report This
    kackymarie Jun 22, 2010 3:49 PM
    AARP(Hartford) was always sending letters about switching. I finally called them, spent an hour on the phone only to find out it would have cost me over $500 a year MORE than my PEMCO. Of course, Pemco is one of the best but they are only in the pacific NW. My house insurance is with them also. Anyone who knows anything will tell you that Safco, State Farm and Pemco are the best. Allstate is not! They are listed as one of the worst to have. Any will be better if you never use them! I still get pissed tho at credit score and insurance. My credit is good but they tell me I could save even more if my credit were even better! That's a load of crap. Look at my driving record, not my credit score. Obviously one had nothing to do with the other.
    Report This
    abi2win Jun 22, 2010 3:48 PM
    I am an insurance agent and agree that you may be able to save money with different carriers. The one thing I noticed is that most people never compare like coverage. Most people usually do not understand what every part of an insurance policy means and when they call an 800 number or get a quote on line many times certain coverages are lowered without the client knowing. A change in your uninsured coverage, deductible or liability limits can save you $100's, but may also cost you your home in a lawsuit. My advice is, if you compare, make sure you are comparing the same limits , coverage and vehicle usage that you currently have.
    Report This
    rbabykat Jun 22, 2010 3:36 PM
    I've had Allstate for at least 50 to 60 years. I have always carried the package, i.e., auto, homeowners, life, recreational vehicles, motor club and Individual Retirement Accounts. Fortunately, we have had few claims, but were always extremely pleased with the promptness and professionalism in settling any claim, be it auto, homeowners or even motor club. The nice part, our agent(s) regardless of what town we might reside in, was always there for us and took good care of our insurance needs. Have we checked prices? Of course! But a few dollars difference was not ever enough to have us change companies. We visited Florida after Hurricane Andrew and saw the devastation. We also became aware of what company took care of their insureds promptly and fairly. It was Allstate!!!
    Report This
    henjiuyiqian Jun 22, 2010 3:33 PM
    nike-alliance(com),Inc. We are the best online dealer,about all kinds of nike.run retailing and wholesale trade wordwidely for years. Free Shipping And Customs,Super Sale Off Retailing,With 1Week Delivery to your door.
    Report This
    tfa1611 Jun 22, 2010 3:10 PM
    I have to laugh Geico claimed to cut out the middleman? They now have offices and they have a middleman... They quoted me 1 price then 45 days later they sent me an adjusted bill for an extra $237 dollars I was baited and switched. I admit I went back to my Independent Agent and realized I had made a mistake. Lesson Learned
    Report This
    gregbrooksme Jun 22, 2010 2:50 PM
    Ya, you are a loyal customer and what does the insurance co. do, stick it to you, atleast in OH. toot a lool
    Report This
    henryptnm Jun 22, 2010 2:48 PM
    I have Allstate and I don't have any problems with them. Geico did send me a questionnaire and I gave them the same information Allstate has concerning miles I drive and I have no violations. Geico gave me the rate. Their rate was over $ 200 over Allstate for a year. That was it for Geico. I told Geico their rates were higher. They couldn't believe it.
    Report This
    maverickh1l Jun 22, 2010 2:40 PM
    Well, I don't currently have car insurance. It's pointless, seeing as how my car is in my driveway waiting serious rust repair that I need the money I was spending on car insurance to pay for. Here's my deal. When I bought my car and first insured it, I was 18, and the premiums on a sports coupe were $141 a month through State Farm with a whole boatload of discounts (multi-line, good student, etc). I had to take the car back off the road for a mechanical issue (not going anywhere without a running engine, right?) and put it back on the following year. Still cost me $141 a month. It took me 3 years to get the premium to drop to $63 a month, after turning 21 and having a good payment rating. I ended up dropping insurance coverage while I was in school, and went with Geico because SF wanted like $700 to bring the coverage back. Geico charged me $120 a month, roughly, after not having had insurance on the car for over 6 months. After a while, the payments dropped to $105 a month (still 166% of what I had been paying with State Farm). I turned 25, and Geico, instead of lowering my payments (you know, cutoff is 25 and then premiums drop SHARPLY), wanted to charge me $120 a month again (close to 200% of State Farm). I called them, and they said that the state had changed something with the insurance premiums and that my rate was actually going to be higher than what I had been paying even though I had a birthday. A couple of months before, I had researched other premiums and found the same BARE MINIMUM (for the state) coverage at eSurance for $77! $77! That's about 40% less than Geico, who "could save me 15% or more on my car insurance"! I called eSurance back after calling Geico, and my rate NEVER changed through them, so guess who I switched to (no penalty and no loss in coverage because I was at renewal date). And it was only 25% less than what I was paying at State Farm for slightly better insurance (had additional PIP and some accidental injury coverage crud). However, this was a premium of $600 for 6 months. I got a call from Allstate after enrolling at AAA, and I got a quote for 6 months at $200! That's a third of what eSurance wanted! Guess who I'll be going to when I'm ready to put the car back on the road? State Farm, Geico, and eSurance can kiss my *** !
    Report This
    kenpastor Jun 22, 2010 2:35 PM
    I would love to "bundle" my insurance to take advantage of car and home rates together. However, I live in Florida and that is not possible with all the major companies. They will not consider it because of the hurricane threat.
    Report This
    cheaperbird5 Jun 22, 2010 2:29 PM
    well these stories are all the same...mine was going up each year,but not much,then it seemed odd because i spoke to a friend and theirs was quite lower..so i called and a few others...and i did end up saving 250 per year...the part i cannot figure out is;ihave a clean record,but they just kept raisning me....well i always new insurance companies-banks-government-and big companies-mark up profits from..."we the people"..so much that everytime i hear about some low-life suing them for somekind of bogus sounding settlement.....well....i just love it...especially when they pay off...at then..."we the people"...get some of our money back...screw them...insurance used to be voluntary,now everybody is forced to have it...this is garbage too..!
    Report This
    rtheshadow Jun 22, 2010 2:22 PM
    why would you switch companys to one that promotes stealing,,watch the commercial where the little green guy steals the old guys dollar,,that stealing from co-worker's and he should be FIRED!!!
    Report This
    1 - 20 of 192 Comments
    Leave A Comment?
    Please keep your comments relevant to the Are Insurance Savings for Real? article.

    Latest Auto News

    Mapquest Gas Sweepstakes

    Featured AOL Autos Editors

    Fetching latest post ...
    Fetching latest post ...
    Fetching latest post ...

    Great Auto Loan Rates

    Low Rates on New and Used Autos

    Presented By Apply In One Easy Step »

    AOL Autos Facebook Activity


    Order Carfax Report
    Powered by
    Get a free CARFAX record check for a used car
    Go >>
    Follow AOL Autos on Twitter
    It’s almost impossible to escape the constant barrage of advertisements offering huge discounts on car insurance. But how much can you really save?


    Your Comment:
    Send Report Cancel