By Jason DeRusha, WCCO-TV

— Geico will save you 15 percent. 21st Century says, if you leave Geico, you’ll save $460. Progressive customers save hundreds when they switch, too. So, how can all these car insurance companies save you money?

Mallerie Shirley of St. Paul asked WCCO-TV’s Jason DeRusha that very question.

Are the insurance companies lying or is it true?

“Well, it’s both,” said Andy Whitman, PhD., a professor of insurance at University of Minnesota’s Carlson School of Management.

Whitman has written books on the insurance industry and regulation, and he said the advertisments are technically correct, if you read the fine print.

“It’s truth for their average insurer who’s priced the way they’re pricing it, but it’s absolutely not true for specific ‘insureds,'” he said.

The ads are promoting savings from customers who did in fact switch. Presumably, the customers who didn’t switch didn’t realize any savings.

While it’s true that people are saving money, you just might not the person saving money.

“These claims in advertisment are not fraudulent, because they’re not aimed specifically at any one person,” said Whitman.

The other factor is that different insurance companies have different target audiences in the underwriting practices, according to Whitman.

“One company might be targeting teenage drivers,” he said, “somebody else targeting seniors.”

So in fact, all the different companies could be saving different segments of the population money. If one customer compared identical plans with all the companies, that one customer would not achieving savings at all.

Either way, Whitman warns against shopping for insurance solely based on price.

“None of the deals show whether the insurance companies fairly pay claims,” he said, “The test and the quality of the company is if they fairly pay claims.”

To those interested in switching, Whitman suggests researching the insurance company before buying, asking friends if they’ve had good luck with their company paying out claims and checking with independent agents and agents that represent a single company for price quotes.

He also says to get price quotes every couple of years and then take those prices to your insurance company to see if they’ll match.

Comments (21)
  1. riz says:

    state farm is the best…

    1. TF says:

      I switched from State Farm to Progressive and literally cut my rates in half.

    2. K. says:

      State Farm sucks! If you happen to be the unlucky person that was hit by a State Farm insured person, you will have to go through a lot of hoops to get paid.

  2. rick says:

    I can say with first hand knowledge that progressive fairly pays claims and is also one of the cheapest for people with blemishes on their record. And the worst I’ve dealt (as far as paying claims) is state farm.

  3. Ben says:

    I have had an excellent experience w/ progressive. Totled out a ’05 wrangler. No problems at all. they were very helpful.

    1. Citizen says:

      @JM. Agree! My family has changed insurance companies several times in our lifetime seeking better rates and insurance. USAA is the best, by far.

    2. Sarah in Outstate MN says:

      We love USAA too, but most people aren’t eligible for it

  4. Michael Clark says:

    Jason, one thing that isn’t mentioned a LOT is the fact that those of us who drive for a living and have to carry Commercial endorsements on our insurance coverage don’t save a lot. I do not go for the cutesy advertising at all, vbut I look at rates of who carries Commercial insurance; not a lot do.

  5. radovich says:

    In mother russua, insurance pays you.

  6. getridofthemall says:

    I have been with State Farm for over 10 years when my daughter totaled my car within a week I got my check and a rental with no problems. I also know when I first went to State Farm I did have a problem because of the Agent so my brother recommended his agent and this agent and his office have been great. If it was not for this Agent I would not have stayed with them because of the first one.

  7. JKB says:

    Ive been with Progressive Insurance for the past 10 years, have had nothing but the best experience. I had totalled out my car and the insurance I had at the time jacked my premium up to $2700 a year,up from a rate of $264 every 6mo. I contacted Progressive, and was able to get the same coverage for less than half. Every six months when my policy comes up for renewal, I always check around for cheaper prices from competitors. NOT one has been able to beat them. My policy comes due again next week, Ive already checked ten competitors, online and locally for different rates. The highest for the same 100/300 coverage was $957 for 6 months. The lowest was Progressive at $310 for 6 months, beating my present Progressive policy by $4. The last time I renewed my policy, I was able to cut my premium by $ 97 just by getting a quote from a different agency that also quoted Progressive. No one can beat them (Progressive) is always the answer. If youre a homeowner, you also get a huge discount even though you dont have the policy with them. I have one violation left to drop off in August before Ill see another discounted premium. (Its pretty darn bad when a deer decides to cross the road, runs into your car causing $2700 damage, and its your fault.) It definitely pays to check around for the best prices.

    1. K. says:

      I have had American Family for years and have had no issues. Plus, the rates are good. I totaled my 1-year old car almost two years ago, and I got a check from American Family that completely covered the cost of a brand new car. And, they did not increase my premium even though this accident was my fault. They apparently have the policy that if your record has been good and you make one mistake, you are forgiven. I thought that was pretty cool!

  8. Easy with the blanket endorsements of a company says:

    Note the pattern and comments above and see a trend or pattern?
    The facts and mostly truth is on any given claim at any given window in time Company A might be better than Company B on a claim —– but that can vary on each individual claim too.
    When you compare look at the comments and trends for just the last few years – past old history may be meaningless mostly.
    And yes – I do work in the industry as an Independent Adjuster on property claims and have exposure to many many companies and their claim handling.
    Ultimately MN Insurance Law prevails regardless. One hopes it’s not a process or fight one needs to get into though as it’s not a fun experience

  9. tom says:

    If you COULD read all the small print in these TV adds you would be shocked by what you read. The more lines of small print, the greater the reasons you would not want their product!!!!!

  10. Matt says:

    OBAMACARE IS A MISTAKE… Sorry had to get your attention, but wouldn’t it be great if you could buy health insurance across state lines and it was tied to you as an individual instead of your company?

    If you want real health care reform and lower costs, follow the auto insurance model. Competition is the ONLY way to lower costs and if you are getting a raw deal, find a company that treats you better.

  11. Kathy says:

    I recently had an experience with car insurance price quotes. I contacted both Geico and Progressive to get a price quote on my car. I gave both companies our names, dob, address, DL numbers, car make & model, vin number – all the information necessary (and more) to get a price quote. Both companies gave me price quotes considerably less that my current insurance company. So I thought – why not make the switch. To my GREAT surprise when I actually went to purchase the policy (from Geico initially) boy was I surprised when the rate just about tripled!!!! I thought I really must have done something wrong in purchasing this policy so I used their option to give me a call – and to my surprise upon speaking with a sales representative she advised me that the new quote (triple) was correct and the reason I’m not sure how my location changed from the time I got the quote (I gave all this infomation) – but it evidently did. So I thought I’ll try Progressive – needless to say – same experience – price increased about double the quote – only difference they couldn’t really give me a reason why the change when I spoke with them. So needless to say I am still with my current insurance company and am VERY disappointed with both Geico & Progressive as they obviously quote a different price just to get you lured in and then when you go to purchase – the real price comes out.

  12. former insurance guy says:

    I think the last comment in your story about taking quotes to your company and asking them to match is quite correct. Not one insurance company can match a quote. It’s against the law. Each company has to file their rates with the state and each rate is based solely on each indiviual case. Rates can go up and down but each time it takes a filing with the state to do so. I would never buy insurance from a company that is buying business. When you do have a claim and if its the big one look out below … or see you later. Sometimes its not how well they pay the claim but what do they do to your rates after the claim. buyer beware is a good motto.

  13. Sarah in Outstate MN says:

    USAA is the best. State Farm is really high.

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