Insurance Shopping

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Part
01

Insurance Shopping

Four common reasons why people shop for auto and home insurance products include marriage, better credit history, better price, and better coverage.

MARRIAGE

  • It is common knowledge that insurance companies provide discounts on car insurance to married couples since they are less likely to file an accident claim compared to young people or male drivers.
  • A study by the Consumer Federation of America also revealed that most large auto insurance companies offer lower rates to married drivers compared to the single, separated, divorced, or widowed.
  • According to another study from InsuranceQuotes.com, a married person at age 20 years pays 21% less than a single person of the same age.
  • As such, an individual getting married would encourage him/her to shop for auto insurance products because of the cheaper rate.

IMPROVED CREDIT HISTORY

  • Just like other institutions, auto insurance companies in many states in the US use credit scores to gauge a customer's financial trustworthiness. These companies use a proprietary score to determine customer rates.
  • According to data from these providers, customers with better credit have fewer accidents.
  • A NerdWallet analysis showed that a 40-year-old driver with a bad credit history pays almost double the amount of a driver of the same age with better credit.
  • While some states have banned the use of credit history when pricing auto insurance rates, the Insurance Information Institute revealed that drivers with poor credit tend to file more expensive insurance claims. Credit history also influences home insurance rates in the same manner.
  • As such, an improved credit history would motivate a consumer to shop for auto and home insurance products without the fear of receiving higher rates.

BETTER PRICE

  • Although most Americans do not view home insurance rates as a financial burden, about 31% of them feel that it is a burden, which is a drop from 49% in 2009.
  • Price is one of the top reasons for which consumers shop for auto insurance products. At the time of renewal, 69% of insurance consumers comparison-shop for auto insurance compared to 44% of home insurance consumers, looking for a better price.
  • According to a survey of Consumer Reports members, more than 50% admitted to shopping for new home insurance providers to get a better price.

BETTER COVERAGE

  • The Journal of Financial Planning published a survey indicating that many homeowners are vastly misguided when it comes to the coverage of their home insurance.
  • The survey, which the National Association of Insurance Commissioners conducted, revealed that one-third of them believe their insurance covers flood damage, earthquakes (35%). A smaller percentage feel that their home insurance covers mold.
  • As such, education and awareness regarding the coverage of their home insurance would motivate them to shop for better options.
  • Next to better price premiums (14.5%), about 12.1% of consumers would shop for home insurance products with better coverage.
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