Yep, its that time of year again. Time to renew my car insurance quote. Ah well, I’ll just roll it over at the same insurer, right? Wrong! Don’t just roll over your car insurance when renewal time comes. It is important that every year you get a new car insurance quote otherwise you are likely going to miss out on any new deals that are available. And with resources out there these days that make getting and comparing car insurance quotes as easy as checking your email then there is really no excuse.
Insurance companies rely heavily on a customer staying with them over a long period of time. Each company puts a monetary value on a customer. When a an insurance provider purchases another, they often value the company by putting a value on each customer. This is called the customer acquisition price. The total ‘book’ of customers is worth a value. The acquisition cost, the price a company pays on average for taking over that customer, is usually more than 1 years profit off that company. In fact, it is often several times the value.
This means that insurance companies try hard to get you to use their product. They actually pay more money in trying to get you than they make off you in the first years. This means that companies are always offering better products, more innovative features, and often more competitive prices. So every year you should re quote your car insurance and not just let it roll over.
In addition to the insurance companies trying to get your business, they also price the insurance based on the risk of their ‘pool’ of customers. For instance, if an insurance company had 50 customers in postcode 3121 and 25 of them were broken into that year, then the following year your premium will likely rise because the insurance company is saying ‘a car in postcode 3121’ is more likely to be broken into and so they charge a higher price. If another insurance company had no claims for theft during the year then they probably won’t increase the premium because the risk of the customer for theft didn’t change (or went down).
Above are just two of the reasons you should not just renew your car insurance each year. It only takes 15 minutes to get a car insurance quote or two and you can potentially save 100’s. Research has shown that prices for the same person can be vary more than $1000 due to the risk each insurance company puts on the pool you policy lies in. Re-quote every year – it’s as simple as that.