Imagine you were looking to purchase a new mobile phone. Would you buy the first device you saw on offer from one retailer at any price without knowing all its features or comparing it and its cost to other devices available through other retailers? Chances are you would not. You would likely shop around to see what your options are.
Yet, that same level of consumer diligence is not as common when purchasing auto insurance. Why? Shopping around enables consumers to ensure they are getting the best auto insurance price as well as discovering discounts for which they may qualify. The cost of auto insurance policies can vary by hundreds of dollars, depending on which insurer you choose.
According to the results of one survey of American drivers, 36% of adults who own a car do not compare rates or shop around for car insurance at all. Interestingly, when asked what is top-of-mind when considering which auto policy to buy, 54% of the survey’s respondents say it is the price (their No. 1 priority).
Choosing a policy that fits your budget is sensible. But it should not be your only consideration. The types of coverage within an auto policy and the insurer’s customer service and claims-handling record are also important factors to weigh.
A report published by Deloitte Canada suggests evolving consumer behaviours, intensifying competition, and disruptive technologies are prompting changes in the private auto insurance industry. It finds Canadians who compare insurance quotes online jumped from 23% to 40% between 2008 and 2013. Furthermore, the Deloitte study finds:
Perhaps it has to do with loyalty discounts. On the topic of brand loyalty, KPMG Canada finds 57% of Canadian consumers expect personalized treatment from a company they are loyal to, 65% highlight customer service as a factor, and 66% say product consistency is essential.
No one wants to lose a valuable discount that helps keep their rates low. But are you saving more with a loyalty discount than you could with another different insurance company whose pricing structure is different? Not necessarily.
The Insurance Bureau of Canada (IBC) outlines the risk characteristics auto insurers use to determine an individual’s premium. Those factors include:
Other factors that affect your rate include:
Car insurance rates often change. In Ontario, for example, the Financial Services Regulatory Authority (FSRA) typically publishes the rate changes for private auto insurers it approves every three months. Similarly, Alberta’s provincial regulator, the Automobile Insurance Rate Board (AIRB), publishes details on the filing decisions it approves for the auto insurers that provide private passenger vehicle insurance in that province every quarter.
Sometimes just a few insurers change their rates, and other times dozens do, which is why you should compare auto rates regularly. Shop your rate when:
Compare your auto insurance rates in less time than you may spend researching which new mobile phone to buy. You may be pleasantly surprised to learn you can save funds while still getting the tailored protection you and your family need.