Flo, the bouffant-wearing, fast-talking pitch girl from the Progressive Insurance ads, is known for offering the best deals on car insurance. But according to Consumer Reports, Flo has been writing a lot of bad checks with that mouth of hers.
In an analysis of insurers across the country, CR found that on average Progressive was the second most expensive with an annual premium almost $600 higher than USAA, the company with the lowest annual premiums.
Overall, CR found Allstate, Geico and Progressive on the higher end, while State Farm and USAA came in with lower rates. The analysis also revealed some dirty little secrets about how your insurance rates are determined, and it has less to do with how you drive than your socioeconomic standing.
Since car insurance is regulated at the state level, pricing tends to have no rhyme or reason, but CR offers some interesting insight. Here are some of the “hidden truths” when it comes to car insurance:
Your credit score can determine your premium: The theory goes that you can predict the odds of a customer filing a claim by looking as his or her credit score. This isn't your FICO score but one they compile from various elements in your credit report. This practice started in the mid-1990s, and now almost every state uses these scores unless prohibited.
You will be charged more if data says you won't notice: Companies may use your sensitivity to prices to set your rates. They use models — including data on whether you have complained about your policy and how much of an increase you have accepted in the past — to gauge how likely you are to shop around for a better price or determine how much of an increase you will put up with.
Promised discounts may never materialize: Many of the advertised savings, such as bundling insurance or installing anti-theft equipment, save very little money.
So how can you make sure you’re getting the best deal on car insurance? Take a few tips from Consumer Reports:
- Find copies of your current policy and records of any at-fault accident claims and moving violations.
- Start shopping at the three insurers that had the lowest rates: Amica, State Farm and USAA (open only to members of the U.S. military, discharged veterans, and families of members).
- Check prices from 12 or so companies in your state, both the big names and smaller carriers.
- Do this every two to three years or whenever you personal circumstances change (marriage, teenagers, etc.).
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