Changing Your Auto Insurance May Save You Money

Texas law requires that you carry liability auto insurance to drive a car, and your policy must provide up to $30,000 in coverage for each injured person, up to $60,000 total for all injuries per incident, and up to $25,000 for property damage.

Texas is unique in that it does not require additional collision coverage like many other states. Even though the cost of auto insurance is typically lower thanks to the lower coverage requirements, people still want to save as much as possible and are always looking for discounts:

Many people stay with an insurance carrier for many years thinking that they will get a loyalty discount for their tenure. However, according to a recent study by the Texas Office of Public Insurance Counsel, drivers who were with the same auto insurance provider for eight years were able to reduce their premiums by an average of 19 percent by changing insurance carriers. Some people can save several hundred dollars per year by switching auto insurance providers.

Despite the huge potential savings, other studies have shown that few people actually shop around for new auto insurance or change their providers. J.D. Power and Associates recently completed a customer satisfaction survey that found that few people changed insurance carriers even though rates increased by 2.1 percent in 2012 and 2.5 percent in 2013. Only 39 percent of survey respondents said that they shopped for new auto insurance, and of those, only a little more than 25 percent actually changed carriers.

There are a few reasons why this may be the case.

Some customers keep the same cheap car insurance Texas carrier because it is a hassle to shop for a new policy, and others stick with their providers because they like the customer service they receive.

In addition, even though many insurance providers do offer discounts for loyal customers, they also employ other pricing strategies to optimize the amount they can get for the policy. Study authors said that many insurance companies use a formula to determine how much of a price increase customers will tolerate before looking for a new policy.

Still, auto insurance experts say that it is important for consumers to shop around every few years for new rates — at least to find out what’s out there if nothing else. When comparing prices, make sure you have a copy of your current policy with you to ensure that you are evaluating the same level of coverage.

When shopping for a new policy, it is also important that you look beyond simple price. Double check the reputation of the provider and its history with the Texas Department of Insurance. You will want to make sure that the insurance company is compliant with state laws and has a history of providing excellent customer service and paying out claims.

Even if you ultimately decide not to change carriers, you can always use the price quote you received to haggle for lower prices with your current insurance company.

Also talk to your auto insurance provider about other discounts besides the loyalty discount. You may be able to save money by purchasing multiple policies (such as for other cars or for your home), by maintaining a safe driving record, by paying for the premium in one lump sum, or by investing in certain safety features for your vehicle.

Texas law also provides auto insurance discounts for taking a drug and alcohol awareness course. If you are a student, you could also get a discount for good grades. If you are working, your employer or a professional organization to which you belong might entitle you to a discount.