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Looking for the best automobile insurance rates can save thousands

Shopping around:

Could you use an extra $1,000 in your pocket? An insurance company survey estimates that some Mississippi drivers could save as much as $1,000 per year by shopping around for auto insurance.

Consumer advocate Ralph Nader says it is surprising that so few people take the time to shop around when premiums vary so greatly between companies.

“Clearly, consumers need to be aware of these differences and make sure they are getting the best value for the auto insurance dollar,” Nader said.

Progressive Company, the fourth largest insurer of personal automobiles in Mississippi, recently conducted a study that rated the average spread between the highest and lowest six-month premium rates quoted to consumers for new auto insurance policies. Mississippi ranked 15th among 46 states with six-month rates statewide varying an average of $497. That means someone requesting insurance could receive a quote as high as $1,232, or as low as $735, for an identical six-month policy in Mississippi.

The comparison rates were for four of the largest and best-known auto insurers in Mississippi calculated for 4,112 drivers. Rate information was obtained from filings with the Mississippi Insurance Department.

Tolman Howard, who is the new general manager in Mississippi for the Progressive Company, said consumers shopping for the best deal on insurance should consider both price and service. Progressive offers a free comparison shopping service by calling 1-800-AUTO-PRO or by visiting the Web site, www.progressive.com. The company gives quotes from Progressive and three or four other companies.

“We only use A-rated companies, so it will be a financially stable company,” Howard said. “Also, you can go to your local independent insurance agent and get a quote on Progressive and other companies.”

Howard said most people take their insurance for granted, and automatically pay the bill when they receive renewal statements rather than shopping around.

“Companies are constantly changing their rates based on loss experience and future forecasts,” Howard said. “The savvy consumer should consider checking their policy when it comes up for renewal to see if they can get better rates or service.”

Mississippi Insurance Commissioner George Dale said it is a mistake to shop for insurance based solely on cost.

One factor to check is the underwriting guidelines.

“A company that may have a lower rate is very particular about whom they will insure almost to the point that you have to prove that you don’t need insurance to qualify for the underwriting guidelines,” Dale said. “Another company that may brag about having the lowest rates will be quick to non-renew you if you have one or, at the most, two claims. Many companies offer a ‘preferred customer policy.’ You have to meet very strict guidelines. If you ever have a claim or a ticket, you are eliminated from that coverage, or have to go to more expensive coverage.”

Underwriting is the responsibility of the insurance company, and is not regulated by the Mississippi Insurance Department.

Dale also warns to be wary of auto insurance offers over the telephone, television or the Internet. Call the Mississippi Insurance Department at 1-800-562-2957 to find out if the company is licensed to do business in Mississippi. If the company is not licensed, the Mississippi Insurance Department has no jurisdiction and can’t help policy holders who have trouble collecting on a claim. Dale said he gets the largest number of complains from seniors who are members of organizations like AARP, and who buy insurance solicited by telephone.

“We believe a person is better served dealing with the insurance agent of their choice who can help them when they have a problem,” Dale said.

Dale had several other suggestions for consumers:

• Sometimes auto insurance is less expensive if purchased from the same company that also insures the consumer’s home.

• Check on the price of insurance before you purchase a car. Purchasing insurance for sports cars, for example, can be extremely expensive.

• If you are concerned about the cost of insuring teen drivers, make certain the teenagers know that if they get a ticket or have an accident, the cost of insurance will go through the roof.

“Threaten children with absolute murder if they get a ticket or have an accident,” Dale chuckled. “If you are a parent, outside of an absolute mortality, the worst thing that can happen is if your child gets a DUI ticket. You will have to mortgage the house then to get insurance. The Supreme Court has ruled if you live under the same roof, you are responsible for the child even if you don’t have them on the policy.”

• Business people should be aware of insurance “stacking.” The courts have ruled that under certain circumstances when coverages run out on the vehicles involved in an accident, the costs of a claim can be changed to other vehicles owned by the business. Rather than a $100,000 limit on one policy, a claim for $500,000 could collect $100,000 from each of five policies covering company vehicles.

Dale said business people have tried to change the law that allows stacking, but it has been defeated in the Legislature after being opposed by plaintiff lawyers.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com.


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