Fewer Americans Shop for Auto Insurance though More Switch Providers

auto insuranceA new J.D. Power and Associates study revealed some interesting statistics about the habits of auto insurance consumers. While a smaller number of insurance customers are shopping around for new coverage, a growing number are actually switching to new providers.

The primary reason for the extreme behavior is overall customer satisfaction and car insurance prices. Many current customers are happy with their coverage and don’t search for more, but those who do shop around find that cost encourages them to walk away.

Car Insurance Prices Push Shoppers to Drop Coverage

The number of people shopping for auto insurance has reached a six-year low, according to the J.D. Power and Associates 2013 U.S. Insurance Shopping Study, released this week.

According to the study, only 23 percent of auto insurance customers shopped for a new insurer in the past 12 months. This represented a significant drop from 2011 when 33 percent shopped for coverage.

An interesting find in the study was that, of the 23 percent who shopped for coverage, 45 percent actually switched insurers. This is the highest rate since the study first began measuring insurance customer retention in 2008.

The study found that individuals who opted to not shop around did so due to customer satisfaction. J.D. Power found that overall customer satisfaction with auto insurance companies has improved to an all-time high of 804 (on a 1,000-point scale).

But shoppers are also cost-sensitive, so those who do shop around are placing a high importance on price. For many, this is reason enough to walk away, the study reveals.

Shopping Around for Auto Insurance is Important

As proven in the J.D. Power study, shopping around for coverage can showcase different and sometimes better coverage options, which is why it’s important to explore other companies. Even if car insurance prices are not an issue, the following can make a difference in the auto insurance experience:

  • Improved policy offerings: Shopping around can help you access different coverage options, including unique riders not offered from your current provider.
  • Lower deductibles: Some companies offer deductibles starting at $500. If you would prefer to pay a lower deductible, you may benefit from shopping for a different insurer.
  • Better customer service: Poor customer service is one of the more common gripes of auto insurance customers. If you’re not happy with yours, explore other auto insurance companies with better customer service reputations.
  • Better settlement claims experience: Some companies may be great at everything, except settling auto insurance claims. If your company doesn’t have the best reputation in this area or if you’ve had problems with them in the past, shopping around can present more reputable options.

Many consumers are turned off by the idea of shopping around because they feel doing so equates to making a commitment. Nothing could be further from the truth. By shopping around and requesting free quotes, you simply educate yourself on the options available. But as you can see from the study, there’s a good chance shopping around will encourage you to switch providers anyway.

(Image courtesy of Stuart Miles / FreeDigitalPhotos.net)