U.S. drivers could save an average of $481
every six months on auto insurance if they took the time to compare
rates, but most drivers don't shop around for auto insurance on
a regular basis, according to information from Progressive Auto
The findings, which focus on Car Insurance Rates variance - or the average spread between the highest and lowest six-month rates available
for new policies - are based on rate information provided to nearly 700,000 consumers, living in 46 states and the District of Columbia, who
called Progressive between March 1, 1998 and March 31, 1999. Each consumer received comparison rates for Progressive and up to three other leading auto insurers in their market. Rate information was obtained from public filings with each state's department of insurance.
Specifically, six-month rates varied an average of $481 across the country. That means the same driver could receive a quote of $1,256 for a six-month auto insurance policy from one company, and a quote of $775 for the identical policy from another company. On a state-by-state basis, average six-month rates varied more than $500 in 13 states -- Arizona, California, Delaware, Illinois, Kentucky, Louisiana, Maryland, Minnesota, Nevada, Oklahoma, Oregon, Tennessee and Texas -- and in the District of Columbia.The most dramatic variances were in Kentucky and Texas. The average six-month variance in Kentucky, based on calculations for more than 13,000 consumers in that state, was $711. In Texas, the average six-month variance was $705, based on calculations for 64,000 Texans. The study also found that rates varied least in New York and Vermont, where average six-month variances were $192 and $210 respectively. The chart below shows savings available in major U.S. markets, based on
the average rate variances in each:
||Average Six-Month Rate Variance
|New York City
Many drivers unaware of variances
because they don't shop around
In a separate study, Progressive commissioned Millward Brown, a national research firm, to conduct interviews with 1,800 drivers during November
1998. The results revealed that the majority of drivers are unaware of how extensively rates vary. In fact, 65 percent of those polled thought that
comparable auto insurance policies would vary by no more than $250 in a six-month period. Furthermore, almost 60 percent of consumers surveyed had not contacted an insurance company or agent to obtain rate information in more than two years.
Ralph Nader, well-known consumer advocate, commented on the findings, "It's surprising that so few people take the time to shop around when the premium varies so greatly between companies. Clearly, consumers need to be aware of these differences and they need to shop around to make sure they are getting the best value for their auto insurance dollar."
"Nationally, the auto insurance market is very competitive with more than 300 companies offering coverage in any given market," said Moira Lardakis, Progressive division president. "Because no single insurance company will always offer the lowest rates for everyone, the best way to manage auto insurance costs is to shop around for the best combination of rates and service. Consumers can't benefit from the competitive market unless they shop around."
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