Save That Money - How I’m Saving $500 this Year on Car Insurance
Photo by Aaron Burden on Unsplash
In celebration of Valentine's Day, this article shares the story of a recent breakup, which ultimately left more money in my pocket.
It was a typical Thursday evening. I just finished cooking dinner for my family and was deep in the night-time blitz - what we lovingly call the time it takes to get our toddler down for the night.
My phone pings with a message from Geico. My bill for the next six months of premium is available and will cost $604. I immediately shake my head and put my phone away until later that evening.
Why you should track your expenses
Something didn't feel right with that bill - is it possible that Geico jacked up their rates again? My wife and I drive smaller economy cars and are roughly ten years old. Paid off with no accidents. Plus, we both work from home and put only a few thousand miles per year on our cars.
I pull out my trusty spreadsheet which confirms my suspicions. Geico has increased our rates. Here's the breakdown.
2023 to 2024: rates jumped 20%
2022 to 2024: rates jumped 35%
2021 to 2024: rates jumped 64%
I understand costs across many companies' supply chains have increased, insurance companies included. More natural events (ex. hurricanes) and car accidents, along with labor and material price increases mean it's much more expensive for Geico to operate.
But at some point, it's a bit much right? My income hasn't increased 64% since 2021. At this moment, I was so happy I'd been tracking our expenses for the past several years. Armed with my calculations, it was time to make a call...
Asking Geico for help
Well, to be honest, I didn't call Geico but jumped on a quick online chat. I'm a stereotypical millennial and suffer from a phobia of phone calls. In my defense as a toddler parent, online chat allows me to triple-task.
The long and short of the conversation with Geico was they couldn't lower my rate due to operating costs. The agent was nice enough and took the time to review my policy and go on a very detailed explanation about the cost increase and how their hands were tied.
Considering I was a customer for over six years with minimal issues, I didn't love their response.
5 minutes later…
A short online search led me to a fascinating article from Nerdwallet, which advised that the cheapest full-coverage car insurance provider in North Carolina is Progressive.
Call me intrigued. I pulled up Progressive's website and started the auto-quote process. A few minutes later, I had a quote in hand for almost half what I was paying at Geico. Progressive even provided an online form which was sent to Geico to notify them that they stole my business.
The breakup
I loved how seamless the experience with Progressive was going, but I like to cover my bases so after a few days, I called Geico to make sure they had the breakup paperwork.
The customer service rep got very uncomfortable and immediately transferred me to one of the underwriters. Here's where it gets interesting, the underwriter was very upset that I was taking my business elsewhere (not surprised), but their approach was odd.
After hearing why I ditched our six-year relationship for someone new, she spent several minutes asking me questions and trying to pick apart the price I received from Progressive.
The simple and most effective response would have been to simply offer me a better rate to stick around after I was advised I was leaving solely due to the more affordable policy for the same coverage.
Several minutes later I'm being asked the same questions and so I kindly told the underwriter if Geico lowers their rates at a later date I'll reconsider. The call ended shortly after.
Whew, breakups are hard.
A step-by-step recap for switching car insurance companies
This can vary slightly based on your current car insurance company, but all of the major carriers should be fairly similar. It’s extremely easy and should take between 15 minutes to an hour.
Step 1: Research & Compare
I’d seriously consider taking a look at this article from Nerdwallet. It saved me a ton of time and is a great starting point.
Once you have an insurance carrier or two in mind, contact them directly for a quote. Major carriers such as Geico and Progressive make it super easy, simply go to their websites and answer a few questions.
Another option is to go to an insurance comparison website. An example is LendingTree, you simply put your information in once and you should receive quotes from all different types of carriers.
Once you have a quote(s) in hand, compare the quotes to your current policy. Insurance policies can be a bit confusing - make sure the policies have the same coverage before making a decision.
Step 2: Cancel Your Current Policy & Inform Your Lender
After you’ve signed with a new car insurance carrier, you need to make sure your current car insurance carrier is aware of the change. Some carriers make this extremely simple, others such as Geico may put up a fight.
A simple Google search should confirm how to break it off with your current car insurance carrier. For example, I searched for “cancel Geico car insurance.” The first result led me straight to the answer.
If you are currently carrying an auto loan for your vehicle, make sure to contact your lender. Every insurance carrier and lender is different, sometimes they’re updated automatically. But better safe than sorry.
Step 3: Refunds & Follow-ups
I timed my breakup with Geico at the end of the current coverage period and wasn’t eligible for a refund.
Depending on your situation and timing, you may get some money back! Congrats - getting a refund on something expensive is always a great feeling. The insurance carrier will likely send a physical check, keep an eye out for the mailbox.
After chatting with Geico on the phone, I was all set from a follow-up standpoint, but every carrier is different. Make sure to follow any requirements they have to ensure a seamless transition to the new carrier.
What to do with the savings
This whole process took maybe an hour. 45 minutes which could have been avoided if I wasn't so chatty and didn't reach out to Geico twice.
The outcome? I'm saving over $500 this year - not bad for an hour of work.
If you switch car insurance carriers this year and end up with some extra cash - save that money and put it to good use. Use a few dollars for a celebratory taco or two, but then put the rest of it to work. Pay down high-interest debt, round out your emergency fund, start a business, or invest.
My plan for this money is to invest in the future - both for myself and my daughter. A portion will go into her 529 and the rest will be dropped into a brokerage account and invested in an index fund.
If you had an extra $500 this year, what would you do with it?
