Lower Insurance Premiums By Threatening To Leave?

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A classic tip for those looking to lower their cable television bills or their credit card interest rates may work in the world of auto insurance. I was reading a Consumerist post about USAA’s website technical issues and their response to, for a few hours, “losing” a woman’s IRA when I saw this little gem in the comments:

xspook: I had their auto insurance for many years. I decided to shop around and found a much cheaper (over $600 a year savings) policy elsewhere. When I called to cancel, they offered to lower my policy, but couldn’t match the price I got elsewhere. That actually pissed me off, because, as a 10 year loyal customer I should’ve been getting the best price. Now that I tell them I’m leaving, they reward my loyalty with a lower price. Adios USAA. (emphasis mine)

Insurance is a tricky business that I know only a little about. In reading the Berkshire Hathaway Letters to Shareholders, the traditional payout on insurance premiums always seems to be in the 90’s (they make money by investing the float between when premiums are collected and claims are paid). That confirmed something I’ve always believed, that a large component of my car insurance premiums were dictated by risk. Riskier car? Higher premiums. Some accidents or speeding tickets? Higher premiums. Fair enough, that’s why I get insurance, to protect me.

But this little anecdote showed that threatening to leave your car insurance (or any insurance provider) can lower your premiums. I imagine the game that gets played is that all the organizational discounts, good driver discounts and such are up for grabs if a CSR can get you to stay. Who knows?

Either way, shop around for insurance and try twisting some arms to see if you can get a better rate.

{ 13 comments, please add your thoughts now! }

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13 Responses to “Lower Insurance Premiums By Threatening To Leave?”

  1. Tina says:

    I was wondering when you shop for car insurance, i think Car insurance ask you for your ssn to access your credit. Do you happen to know if its a soft pull or hard pull?

  2. jim says:

    Typically it’s a soft pull (or soft inquiry) because the request isn’t related to an attempt to obtain credit.

  3. Dave says:

    I was a State Farm customer for about 8 years and recently I changed over to NJM (best insurance company ever – think of it as a credit union for car insurance). When I called State Farm to tell them I was leaving because I was getting a much better rate, they asked if they could requote my policy and see if there was any way they could reduce my rate (All this did was make me mad, knowing I had overpaid for my car insurance for years, only because I was loyal to them). I didn’t ask what my new rate would be, but it seems like its possible at State Farm.

    • Megan says:

      Just what is NJM Insurance ? Do you have an address, phone #, website, etc…..?

      I just rec. my new policy and it went up $2.50 , doesn’t sound like much, but to a senior citizen on a fixed income, that is $2.50 I could use elsewhere…. and looks like we won’t be getting a S.S. raise again this year…..second year now…..when I called my Ins. Co.,they said it was a rate increase….I said well I don’t get a rate increase on my SS check…..I don’t feel it’s fair for you to raise your rates…….

  4. Nice post — I haven’t checked for a new rate in several years since I’ve been with the same company, so I think I’ll begin shopping around ASAP.

  5. CK says:

    I just got a copy of my policy(ies?) from my agent and I’m going to take it shopping.

  6. fathersez says:

    This really gets me mad. These companies really screw the loyal customers and offer much better to terms to get new ones to sign on.

    For me it was a bank with whom I had a fixed interest loan. Only after I sold the house did they tell me that I could have gotten a cheaper rate. THis really left a very bad taste in my mouth.

  7. Gates VP says:

    This is just classic comparison shopping work. Companies are in this to make as much money as possible. If you (the customer) don’t threaten to leave, then it is typically assumed that you are happy with the price / service / etc.

    For the 15 minutes it takes to get quotes on-line it’s probably worth checking every time that you renew (say once / year). It feels bad to know that you could have been paying less, but the company’s job (by law for publicly-owned firms) is to charge you as much money as possible while still keeping you on.

    So calling and asking for a lower rate is definitely fair game. Ironically, if “everyone did this”, the rates would likely be lower for everyone else. No one would take the risk of being too expensive for too long. Until then you can save money by pushing them to at least be competitive.

  8. I’m back with results.

    Called up my auto insurance company and got my annual total reduced by $180 bucks.

    I’m assuming since I’ve never had an accident, and never filed a claim, I’m considered a perfect client.

    Thanks for the idea!

  9. steve says:

    Since auto insurance company rates are filed in each state with that state’s Insurance Commissioner, there is no way to call and get a different price except in one of four cases:
    A. The company has incorrect information about the use of the vehicles, or the identity of the drivers, the consumer’s credit history, the consumer’s driving record/claims history or
    B. Coverage is reduced by increasing deductibles, or dropping collision for example, or
    C. The consumer is now married, in the case of men aged 25-29, or
    D. The consumer ads additional policies with the company, such as buying Homeowners Insurance in addition to auto and getting a discount for this.

    There are many companies, and their opinions about what cars/people are desirable as customers is different. It can pay to shop around, but recognize that credit is playing an increasing in determining what you will pay.

    It is therefore a good idea to make sure that the company has correct info about you.

  10. Gates VP says:

    Hey Steve. You and Matt seem to have some conflicting data. Do we have any links or support for either claim?

    Or is Steve simply suggesting that insurance companies are actually “changing” one of A, B, C or D in an attempt to match rates?

    Not being facetious, I’d actually like to know.

  11. Colleen says:

    Typically when clients call me to tell me they got “cheaper” car insurance from another company or their own – they really had their deductibles raised, liability limits lowered or some other means of lowering coverage – but 99% of the time it was not a “mysterious” discount they had not been getting –

    Benn in Financial Services field fo 20 years

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