Now that managed competition has come to Massachusetts, drivers are seeing advertisements on TV, radio and print that may promise you that you can save money by changing insurance companies. The Division of Insurance always recommends that you shop around for the automobile insurance that best suits your needs, but you should examine these ads closely to determine what they are really claiming before making any decisions.
|Be Cautious About Advertisements that Promise Savings|
Massachusetts law includes strict requirements that insurance advertisements may not include untrue, false or deceptive claims. Since premium calculation is so complex and varies from company to company, no insurer can legitimately claim that every driver will save money by switching to them.
Calculating Premium is a Complex Process
Many factors go into the calculation of an automobile insurance premium. The type of car, amount of coverage, place of principal garaging, selection of deductibles, application of discounts and your driving history and experience are combined with many other factors to produce a premium. Each company also calculates rates in a different way. While one person might save money switching to Company X, you might have completely different results.
|Understand How "Average Savings" are Calculated|
Most of these advertisements talk about "average savings" drivers may experience if they switch companies. Any claim that a driver can save money based on a comparison of the premiums of other companies must support that claim with specific data. The method the company uses to calculate this savings must be described in the same advertisement. In most cases, this description is contained in the fine print at the bottom of the screen or at the end of a radio or print advertisement. In order to know whether you might actually save money by switching companies, you need to understand how the company calculated the savings comparison.
Average Customer v. Average Savings
Many advertisements say that "customers who switch save an average of…" You should keep in mind that this is not the same as saying that the average customer saves a certain amount by switching to that company. Many companies will ask drivers applying for a premium quote the amount of premium they pay their current insurer. In calculating the savings in the advertisement, the company is only looking at those drivers who actually purchased a new policy - not ones who obtained a quote but declined to purchase insurance. The calculation also does not take into account drivers who do not actively seek a price quote. The group of drivers in this sample cannot be considered an average driver and they may or may not resemble your driving profile.
Shop and Save
No matter how the savings comparison is made, results will vary. The only way for you to find out how much money you can save on automobile insurance is to actually shop premium quotes for the coverage you need. Be sure that each quote you obtain is for the same exact coverage, so that your comparison is "apples to apples." People who actually shop around have the best chance of saving money.
|Companies Compete on More than Just Price|
The price you pay for automobile insurance might be the most important factor in helping you choose a company; however, it should not be the only factor. Insurance companies sometimes offer unique features in their policies - some at no charge - to distinguish themselves from their competitors. While it is good to make companies compete on price, your first step should be to make sure you have the coverage levels and policy features you need.
Remember that one of the most important reasons to purchase automobile insurance is so that it will cover expenses in the event you have an accident or loss. Adequate coverage, good claims service and customer handling are all important. Asking your friends and family about their experiences dealing with particular insurance companies can be a useful source of information on how well companies treat their customers.
|Contact the Division of Insurance|
If you have any questions regarding travel insurance, contact the Division of Insurance by calling (877) 563-4467 or visiting www.mass.gov/doi for more information on this or any other insurance topic.
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