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When loyalty doesn't pay off

August 27, 2015

In most cases, being a loyal person will lead to benefits. When it comes to car insurance, this isn't the case. In most cases, drivers save money by switching insurance, and not staying. According to a study by JD Power cited by Forbes, drivers saved $388 on average when they switched insurances this year.

Regardless of the hundreds of dollars that could be saved by switching car insurances, it seems that many Americans aren't doing that. Most drivers have been loyal to their insurance providers for 12 years—some even longer. With all this money to be saved, why aren't Americans taking advantage of it? One reason could be that comparing car insurance doesn't appeal to many people. In fact, many people find shopping for car insurance time-consuming, frustrating and complicated.

"Drivers who switch insurance will save money.”

Studies show most Americans haven't shopped for car insurance in 12 years.

Lack of information

Nearly half of drivers believe they have to wait to switch until their current insurance policy is up for renewal. This isn't the case, though. Senior Analyst for insuranceQuote.com Laura Adams told MainStreet.com that insurance providers will reimburse drivers the amount remaining on their insurance when they switch.

Adams also said many people only consider their car insurance after a big move or a new car purchase. These are good times to look at car insurance, but they aren't the only times to do so. Comparing car insurance rates after marriage is also a good idea—it could be less expensive to have one policy for two cars than it would be for two separate policies for two individual cars.

Insurance companies try to educate

Insurance providers are doing their best to educate people on the benefits of switching car insurances. Flo, the impossibly upbeat insurance agent from Progressive, has become one of the most recognizable women in advertisements in the last century. Ad Age put her on the list along with Rosie the Riveter, Betty Crocker and the Morton Salt Umbrella girl. According to Forbes, State Farm set aside $843.9 million for advertising in 2014 and Allstate used $937.3 million on advertising for both the parent insurance company and their Esurance branch. People not knowing the benefits of switching insurances is not for lack of trying on the insurance provider's part.

Insurance companies are also creating apps to make dealing with insurance easier. Through apps, people can access their insurance information and even compare rates. With the ability to shop for insurance on a smartphone, drivers have little excuse not to try.

Most people know that insurance rates are affected by facts about each individual's life—whether they're married or not, age, where they live. It's easy to believe that all insurance companies have the same priorities when it comes to who they want to insure. But this isn't necessarily true. Yes, some insurance companies will crank up costs after an accident, but others are more forgiving. Some insurance companies prefer suburban families but others like to insure city drivers. The car insurance business isn't a one-size-fits-all affair; drivers are better off learning whether their insurance fits them.