Comparing prices…………   Leave a comment

Dog Blog

We may look the same, but our insurance rates won’t!

Good morning one and all!

This is a quick thought for those who compare pricing with your neighbors/friends/relatives etc to see whether or not your policy premium is competitive.  Can we please stop doing this?  It’s like comparing apples to galoshes.  Apples and oranges are probably much more similar than you and your neighbor’s insurance rating basis. 

“But we live in the same neighborhood, we drive similar cars!”  you may protest. 

“That’s all very true,” Sammy counters, “but insurance premium is based on several hundred different factors.  Even though you may seem very similar on the surface, looking deeper into the matter reveals quite a few important differences.”

Just one example that happened recently – we had a client call in, frustrated by the increase in their rates due to purchasing a new vehicle.  One thing that they kept coming back to was the fact that their granddaughter had also just purchased a new vehicle, and was paying substantially less.  As I pointed out, this is an impossible comparison to make, because you are talking about over 50 years difference in age, totally different types of vehicles owned, different credit ratings, different driving records and claims history, different lengths of time with the insurance company (remember our discussion on loss ratio?), and on and on and on.  Let’s not forget that different companies offer different discounts.  And we don’t even know if the granddaughter has the same insurance company! 

Crazy as it may seem, you could take twin siblings, driving the same vehicles, with similar driving histories, living next door to each other, and they will still be paying different amounts of money for their insurance.  If you want to know whether your rates are competitive, contact your agent and request quotes from multiple carriers.  Rather than comparing with friends/neighbors/relatives, who are dramatically different (from an insurance rating point of view), you are comparing YOUR information with multiple companies!

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