Car insurance comparisons
October 11, 2012 9:22 PM Subscribe
Why do car insurance prices vary so much?
I would think that various companies would have similar mathematical models that, when put in the same data (address, history, etc - my own) give similar prices for insurance.
I'm in California. 24 y/o male with driving history < 3 years.
However, I'm seeing huge variety in quotes. (In fact, it seems a pretty straight correlation between the more established/widespread/highly advertised/prominent company, the higher the quote.)
For example, for (almost) the past year I had been on AAA and was paying ~$150/month (all these quotes the basically the minimum coverage -- no collision or comprehensive).
Geico gave me a quote today of $136. Progressive: $108. Esurance: $89. AIS: $64. Freewayinsurance.com: $31 (!!)
I'm not sure how much I should trust this last company. When they gave me the quote, the website said they would call me on my phone within 10 minutes, and they didn't -- so maybe they never actually would give me that quote. (Then again, it was outside of most people's business hours.) When I see a quote like that, I almost think "too good to be true." Would I get asked by a cop for insurance one day and find out that Freeway is a scam, not real insurance, and then get cited for being uninsured?
And then I also slightly feel antsy even about AIS, because my exposure to them came from them blanketing a radio station with ads.
The bodily injury liability I'm using for these is $15K/30K. The property damage is generally looking at $10K. No comprehensive or collision.
How could there be such a variation in price if they presumably use similar models? Is Freeway literally too good to be true? Any thoughts?
I would think that various companies would have similar mathematical models that, when put in the same data (address, history, etc - my own) give similar prices for insurance.
I'm in California. 24 y/o male with driving history < 3 years.
However, I'm seeing huge variety in quotes. (In fact, it seems a pretty straight correlation between the more established/widespread/highly advertised/prominent company, the higher the quote.)
For example, for (almost) the past year I had been on AAA and was paying ~$150/month (all these quotes the basically the minimum coverage -- no collision or comprehensive).
Geico gave me a quote today of $136. Progressive: $108. Esurance: $89. AIS: $64. Freewayinsurance.com: $31 (!!)
I'm not sure how much I should trust this last company. When they gave me the quote, the website said they would call me on my phone within 10 minutes, and they didn't -- so maybe they never actually would give me that quote. (Then again, it was outside of most people's business hours.) When I see a quote like that, I almost think "too good to be true." Would I get asked by a cop for insurance one day and find out that Freeway is a scam, not real insurance, and then get cited for being uninsured?
And then I also slightly feel antsy even about AIS, because my exposure to them came from them blanketing a radio station with ads.
The bodily injury liability I'm using for these is $15K/30K. The property damage is generally looking at $10K. No comprehensive or collision.
How could there be such a variation in price if they presumably use similar models? Is Freeway literally too good to be true? Any thoughts?
I have geico and their rates are higher than others but I have had good service with them. I would be wary of freeway insurance.
I believe that when you turn 25 your rates should go down because males under 25 have higher rates.
The main thing is to make sure you have the minimum coverage for your state requirements which most legitimate companies will let you know about.
posted by amapolaroja at 12:57 AM on October 12, 2012 [1 favorite]
I believe that when you turn 25 your rates should go down because males under 25 have higher rates.
The main thing is to make sure you have the minimum coverage for your state requirements which most legitimate companies will let you know about.
posted by amapolaroja at 12:57 AM on October 12, 2012 [1 favorite]
Each insurance company uses their own information to set their rates. For instance, Geico seems to be much higher for young males (ie. unmarried men under 25) which is likely due to them a higher rate of accidents, and therefor insurance usage.
You are doing the right thing by comparing insurances, but make sure you go with a reputable company (not the freewayinsurance.com as that quote is way too low.) You want insurance that will actually cover you should you need it.
Also, your amounts are low, try getting quotes with the insurance with higher limits, as really property damage can hit 10k in a second. Very often raising your limits only adds a few dollars. Your insurance will go down once you are 25, if you get married (Or have a child you have custody of,) and dependent upon what you do for a living. If you don't get any tickets, have no accidents, and just wait a bit it gets much better.
My husband and I have Geico insurance with high limits, we're in our late 30s and we pay 140 every six months. Not per month, but every six months.
posted by SuzySmith at 2:13 AM on October 12, 2012
You are doing the right thing by comparing insurances, but make sure you go with a reputable company (not the freewayinsurance.com as that quote is way too low.) You want insurance that will actually cover you should you need it.
Also, your amounts are low, try getting quotes with the insurance with higher limits, as really property damage can hit 10k in a second. Very often raising your limits only adds a few dollars. Your insurance will go down once you are 25, if you get married (Or have a child you have custody of,) and dependent upon what you do for a living. If you don't get any tickets, have no accidents, and just wait a bit it gets much better.
My husband and I have Geico insurance with high limits, we're in our late 30s and we pay 140 every six months. Not per month, but every six months.
posted by SuzySmith at 2:13 AM on October 12, 2012
Another vote for avoid freewayinsurance. The good news is you're coming up to age 25, and no matter WHAT company you're with, it'll go down.
Do you have previous accidents or traffic violations on your record? Something the big dogs, AAA and Geico and such, are adding to their equation, but the smaller guys aren't considering.
And SuzySmith is right: your coverage amounts are WAY too low. Consider raising the property damage coverage to at least $50K, and the bodily injury to $100-$150K --- think about it: how much car repairs can be done for $10K; what if, heaven forbid, the other driver's car needs to be totally replaced? How much serious medical care will $15K cover? Don't forget that anything over your insured amounts is coming out of you, not the insurance company.
posted by easily confused at 3:41 AM on October 12, 2012
Do you have previous accidents or traffic violations on your record? Something the big dogs, AAA and Geico and such, are adding to their equation, but the smaller guys aren't considering.
And SuzySmith is right: your coverage amounts are WAY too low. Consider raising the property damage coverage to at least $50K, and the bodily injury to $100-$150K --- think about it: how much car repairs can be done for $10K; what if, heaven forbid, the other driver's car needs to be totally replaced? How much serious medical care will $15K cover? Don't forget that anything over your insured amounts is coming out of you, not the insurance company.
posted by easily confused at 3:41 AM on October 12, 2012
Also, they vary for lots of reasons. Like how much companies spend on ads. Or salaries. Or paying claims. That last one is why you need to read reviews - some companies fight tooth and nail not to pay. Others, not as much.
Also, look at what else is in the coverage. Uninsured motorist coverage? Collision? What about health insurance - does it assume that if you have health insurance that will pay first? Rental? Towing? Lease gap? Apples to apples and all.
posted by dpx.mfx at 4:10 AM on October 12, 2012
Also, look at what else is in the coverage. Uninsured motorist coverage? Collision? What about health insurance - does it assume that if you have health insurance that will pay first? Rental? Towing? Lease gap? Apples to apples and all.
posted by dpx.mfx at 4:10 AM on October 12, 2012
Underwriting varies, especially on non-driving factors like education, your credit rating or zip code. Insurers' target profit margins will vary, sometimes greatly. Some online quotes reflect only preliminary underwriting and would change by the time a binder is offered. More reliable insurers (strength rating, claims paying reputation) charge higher premiums, all else equal.
posted by MattD at 5:15 AM on October 12, 2012
posted by MattD at 5:15 AM on October 12, 2012
Different companies have different benefits. I think Progressive offers roadside assistance. Rates can depend on the total, overall number of folks the company insures, the distribution across geography, etc.
I too recommend 100/300/100 on liability, and enough to cover a Mercedes on your property damage.
Raise your deductable to $500 (and have it in the bank to cover any loss you may have).
I have State Farm, and it's been good to me. My sister switched to Progressive because she had a good experience with them when she was in an accident with one of their insured. I've had good experiences with Progressive as well, also when I was hit by one of their customers.
Shoes, Matresses and insurance are all things you'll never regreat buying the best.
posted by Ruthless Bunny at 5:43 AM on October 12, 2012 [2 favorites]
I too recommend 100/300/100 on liability, and enough to cover a Mercedes on your property damage.
Raise your deductable to $500 (and have it in the bank to cover any loss you may have).
I have State Farm, and it's been good to me. My sister switched to Progressive because she had a good experience with them when she was in an accident with one of their insured. I've had good experiences with Progressive as well, also when I was hit by one of their customers.
Shoes, Matresses and insurance are all things you'll never regreat buying the best.
posted by Ruthless Bunny at 5:43 AM on October 12, 2012 [2 favorites]
The good news is you're coming up to age 25, and no matter WHAT company you're with, it'll go down
Be wary of people that say this. When I turned 25 I was expecting a huge drop, but my monthly bill only dropped about $4. Like you, when I was 25 I only had about 3 years of driving experience. I'm female and I'm a clean driver. I have never had any tickets, I've never been in any accidents, and, at the time, I drove a 3 year old entry level car that had less than 50,000 miles on it.
YMMV.
By the way, the online quotes are only vaguely related to the real quotes that they will give you over the phone. I've was quoted $90 a month with State Farm's online tool, but when I actually signed up with them, I was being charged $140 a month. They also charged strange fees, like a fee for having my monthly premium automatically deducted from my bank account each month. I don't know if they still do this, but these fees definitely added up over time.
posted by nikkorizz at 6:14 AM on October 12, 2012 [2 favorites]
Be wary of people that say this. When I turned 25 I was expecting a huge drop, but my monthly bill only dropped about $4. Like you, when I was 25 I only had about 3 years of driving experience. I'm female and I'm a clean driver. I have never had any tickets, I've never been in any accidents, and, at the time, I drove a 3 year old entry level car that had less than 50,000 miles on it.
YMMV.
By the way, the online quotes are only vaguely related to the real quotes that they will give you over the phone. I've was quoted $90 a month with State Farm's online tool, but when I actually signed up with them, I was being charged $140 a month. They also charged strange fees, like a fee for having my monthly premium automatically deducted from my bank account each month. I don't know if they still do this, but these fees definitely added up over time.
posted by nikkorizz at 6:14 AM on October 12, 2012 [2 favorites]
A lot of the variability is in service. Does the company have a 24 hour phone line? Do they pay out? How much hassle is it to deal with them?
My brother had cheap insurance, and when his car was stolen they simply refused to pay. The locks weren't broken, so he must have left it unlocked. End of story. Imagine that attitude when you are getting sued for $40,000.
I too recommend 100/300/100 on liability, and enough to cover a Mercedes on your property damage.
This is a big one. The state minimums may not be nearly enough for almost any significant crash. The cheap rates may be for companies that only do the state minimums, where the higher rated companies are going with higher coverages.
Regarding turning 25- the drop is bigger for males, young females' rates don't go up as high so they don't have as far to fall. And comprehensive rates depend completely on the car and its demographics. The cheapest, safest car in the world will still be expensive to insure if it gets stolen all the time and happens to be crashed into a lot. I also think the short driving history might have something to do with it.
posted by gjc at 6:48 AM on October 12, 2012 [1 favorite]
My brother had cheap insurance, and when his car was stolen they simply refused to pay. The locks weren't broken, so he must have left it unlocked. End of story. Imagine that attitude when you are getting sued for $40,000.
I too recommend 100/300/100 on liability, and enough to cover a Mercedes on your property damage.
This is a big one. The state minimums may not be nearly enough for almost any significant crash. The cheap rates may be for companies that only do the state minimums, where the higher rated companies are going with higher coverages.
Regarding turning 25- the drop is bigger for males, young females' rates don't go up as high so they don't have as far to fall. And comprehensive rates depend completely on the car and its demographics. The cheapest, safest car in the world will still be expensive to insure if it gets stolen all the time and happens to be crashed into a lot. I also think the short driving history might have something to do with it.
posted by gjc at 6:48 AM on October 12, 2012 [1 favorite]
This thread is closed to new comments.
posted by HuronBob at 9:39 PM on October 11, 2012