Is it worth higher premiums for State Farm auto insurance if they cannot drop me for any reason?
Question: Recently married, we’re looking to combine our policies and my insurer, State Farm, always makes a point to mention that they cannot drop my insurance for any reason other than failure to pay or a discontinued drivers license. My wife’s insurer would be cheaper, but I’m wondering if there is any real value in not being able to be dropped. We don’t have children, don’t get a lot of speeding tickets and live in Central Texas. Is being dropped from insurance is a real concern, a scare tactic or just pointless since they can always raise my premiums?
Answer: State Farm’s value really is in its brand recognition which is good for agents in gaining new business but doesn’t really do much for you as an insurance customer. Insurance agents that can write with only one carrier, also known as captive agents, have to give you a reason to stay with them if they want to keep you as a customer, so this is most likely what they see as the strongest reason they can offer. Be sure to check into any insurance carrier that you choose to move forward with. AM Best ratings will give you an insight into how financially secure they are. JD Power ratings can be helpful as well but the service aspects can be misleading as they tend to focus specifically on the carrier’s call center rather than the total customer service experience. Internet reviews can be helpful but keep in mind that someone with something negative to say is more likely to post something than someone with a positive experience.
Even if they can’t drop you, carriers find ways to make you leave if they no longer want you as a customer, such as raising premiums to amounts that become unaffordable which you mentioned. It would also be in your best interest to find an agent that can help you go over your coverage and figure out what best fits your situation. One of the biggest mistakes I see is that consumers keep the same insurance coverage they had at 16 even though they have life changes that may require a change in coverage. Also, don’t be afraid to go with an insurance carrier you haven’t heard of, but make sure to do your homework. As a Scottsdale Independent Auto Insurance Agent, most of my carriers do not advertise in traditional methods but are A+ rated and great choices.