{"id":367,"date":"2019-09-09T08:23:00","date_gmt":"2019-09-09T15:23:00","guid":{"rendered":"https:\/\/www.insureone.com\/knowledge-center\/?p=367"},"modified":"2025-10-21T19:59:23","modified_gmt":"2025-10-22T02:59:23","slug":"auto-insurance-companies-loyalty-may-be-one-way-street","status":"publish","type":"post","link":"https:\/\/www.insureone.com\/knowledge-center\/auto-insurance\/auto-insurance-basics\/auto-insurance-companies-loyalty-may-be-one-way-street\/","title":{"rendered":"With Auto Insurance Companies Loyalty May Be a One-Way Street"},"content":{"rendered":"\n

While many of us have the best intentions of showing our loyalty when it comes to our auto insurance company, it may be a one-way street. In other words, loyalty may mean a great deal more to us than it does to the guys who insure our cars. According to a leading consumer advocate group, the Consumer Federation of Americ<\/a>a (CFA), some of the bigger insurers may be engaged in an auto insurance pricing \u201cscheme\u201d\u2026where consumer loyalty is possibly being used to charge higher premiums to their unsuspecting customers, costing American drivers substantially more, simply by staying with them.<\/p>\n\n\n\n

So, the warning is out. There may actually be a high price to pay as a result of loyalty and the trust that you\u2019re getting the best rate possible. Don\u2019t be fooled into thinking that. The recent alert by the CFA describes how an expanding number of auto insurance companies are employing a new kind of pricing \u201cscheme\u201d \u2013 one that, essentially, penalizes their most loyal customers. Apparently, premium hikes are based on a statistical model developed to indicate the highest dollar amount that a policyholder is willing to bear before he or she is driven to begin shopping for coverage elsewhere.<\/p>\n\n\n\n

The practice is referred to as \u201cprice optimization\u201d and its main purpose is to squeeze the policyholder with increasing premiums based almost entirely on the probability that he\u2019ll become fed up with the higher rates and search for other insurance companies that might offer him a better deal. Meanwhile, they\u2019re profiting from that policy holder\u2019s loyalty. And, although this isn\u2019t considered universal practice among all auto insurance companies, it isn\u2019t uncommon either. As a matter of fact, it\u2019s quite common among the biggest insurers.<\/p>\n\n\n\n

Sadly, the study shows that many American drivers who have held a policy with the same insurer for a number of years mistakenly believe they\u2019re being rewarded for their loyalty\u2026and, for one reason or another; don\u2019t pursue their option of shopping for a better rate.<\/p>\n\n\n\n

The CFA also states that this particular technique is not exclusively used in auto coverage. Other various types of insurance policies are likewise being priced using the \u201cprice optimization\u201d model. However, auto insurance companies are the most prominent users of the practice and reap the most rewards. You may not be aware of it, but your loyalty could be burning a hole in your wallet as your insurer increases your premium by far more than he\u2019s taking off under your loyalty discount\u2026and, all because you\u2019ve been so loyal over the years.<\/p>\n\n\n\n

This practice is actually in violation of some state laws \u2013 those that prohibit insurers from deliberately and unfairly discriminating against certain consumers who share similar risk profiles as those who pay lower premiums. Unfortunately, no one is in any hurry to take action against abusers of the law. As usual, the consumer is pretty much on his own.<\/p>\n\n\n\n

One important thing to take away from this is \u2013 don\u2019t assume you\u2019re getting a great deal on your auto insurance simply because you\u2019ve been a loyal policyholder for five, ten, or fifteen years. There\u2019s a good chance you\u2019re paying more because of that loyalty.<\/p>\n\n\n\n

The Consumer Federation of America makes a valid point \u2013 shop around. It costs you nothing\u2026and, you might expose your insurance company as a \u201cprice optimizer\u201d.<\/p>\n\n\n\n

Never assume you\u2019re getting the best rate on your auto insurance. Why not get a free auto insurance quote today?<\/p>\n\n\n\n

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While many of us have the best intentions of showing our loyalty when it comes to our auto insurance company, it may be a one-way street. In other words, loyalty may mean a great deal more to us than it does to the guys who insure our cars. According to a leading consumer advocate group, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[33],"tags":[],"class_list":["post-367","post","type-post","status-publish","format-standard","hentry","category-auto-insurance-basics"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/367"}],"collection":[{"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=367"}],"version-history":[{"count":6,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/367\/revisions"}],"predecessor-version":[{"id":4480,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/367\/revisions\/4480"}],"wp:attachment":[{"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insureone.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}