Often we reassure ourselves that there is little difference, that full coverage is full coverage, and we've been with our agent for, well, forever, and doesn't that count for something?
Ask yourself if it counts this much: $1,102.
A new CarInsurance.com study shows that if you're a driver under age 25, that's the difference in annual premiums you can expect to find between the lowest auto insurance quote you're offered and the next-lowest. The differences shrink a little as you get older but remain shocking: Even among those over 65, the spread is $478.
How much money are you leaving on the table by not shopping around?
Differences among car insurance quotes
CarInsurance.com delivers more than 1 million comparison quotes a year, most of them online. Our online quote tool delivers up to four quotes instantly.
Our customers come with all kinds of insurance needs, but for comparison's sake, we looked only at single drivers insuring a single car with full coverage and no violations on their records. Then we calculated how much they could save simply by choosing between the two best rates.
Across all age ranges, the savings were a consistent 30% or more.
Why would car insurance rates vary so much?
|Comparing average annual insurance premiums|
|Age||Lowest quote||Next-lowest quote||Difference||Savings|
|16 to 24||$3,152||$4,254||$1,102||35%|
|25 to 34||$1,938||$2,566||$628||32%|
|35 to 44||$1,818||$2,362||$544||30%|
|45 to 54||$1,614||$2,089||$475||29%|
|55 to 64||$1,446||$1,902||$456||32%|
|65 and over||$1,461||$1,939||$478||33%|
Every insurer decides on its own how much risk to take, and how much to charge for it. Each insurer must file rate plans in states where it does business, outlining how it intends to price those risks.
In Washington state, for example, one insurer gives a discount to drivers who shop more than seven days before their policies expire. It penalizes new customers who carried less than a hefty amount of liability coverage with their previous insurers. And it has 87 separate ZIP code buckets in Washington state alone; the cheapest ZIP code is priced hundreds of dollars less for an otherwise identical policy.
Younger drivers get dinged for not having attributes considered "less risky." Most don't own homes, or have a profession, or a credit record. And insurers penalize them greatly for their age and driving record, gambling that the huge premiums they take in make up for the much greater number of claims.
It's hardly an exact science, though. Some insurers charge too much; others, not enough. And the difference between them, at least for those under 25, comes to $1,102 a year - or $92 a month.
The differences only grow as your policy becomes more complicated by additional drivers, claims and speeding tickets.
Overlooked auto insurance savings
$92 a month is a lot of money to most of us. It's a cable or cell-phone bill, maybe enough to pay the gas and lights.
But if you're someone under 25, an age range that earned a gross monthly median income in 2009 of $898, according to the Census Bureau, it's a fortune.
When the wolf is at the door, we tend to concentrate on small savings, such as bypassing one gas station for another down the block that's 2 cents cheaper, or buying cereal that comes in a bag rather than a box.
But it's the big moves that pay off: Get a second job. Or a roommate or move back home.
And double-check your insurance.