I just moved to Philadelphia, PA from Houston, TX and wanted to update my auto insurance policy (with Allstate). I gave them a call, and with 1:1 coverage options AND a newly-acquired (ie I did not have this in Houston) multi-policy discount, they told me my monthly premium would go from ~$190 to ~$415. This seems outrageous to me. A quick google search informs me that the average car insurance in Philly is ~$870/year and my new policy is all of a sudden more than 5 times the average? Granted, I am 24 y/o, (I know this increases my insurance rate), and have pretty comprehensive coverage but still... 5.5 times more expensive? Are they ripping me off? What's going on here?
Part 2 of this question. In case this is reasonable given my situation... is it a bad idea to reconfigure my coverage options to get a lower premium? As a general concept, is that a good idea?
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5I'm not sure this is best answered on Money.SE. The best way to know if that quote is a "rip off" is to get competitive quotes for the same coverage from other insurers. An independent insurance agent can help you do that, or you can get the quotes yourself. In terms of changing your options to get a lower premium - that's really a personal decision for you, based on your own risk tolerance.– dwizumCommented Aug 21, 2019 at 20:16
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3You mention a multi-policy discount; are you sure the $415 is for just this one auto policy, or could it possibly be the combined total of the multiple policies?– yoozer8Commented Aug 21, 2019 at 21:34
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Assuming the new premium isn't for multiple cars (as yoozer hypothesises)... to get some idea of whether a 5.5-times multiplier is "expected", how does your $190/month compare with "average car insurance" in Houston? Alternatively, try and narrow the averages you're seeking to 24-year-olds.– TripeHoundCommented Aug 22, 2019 at 7:19
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First, you should also ask the quote after no-claim discount (NCD) . Get the policy itemised the coverage. Since Philadelphia auto theft is way lower than Houston, maybe there are many unnecessary loading inside the quotes. E.g. floods, mirror damage, tyres theft, etc. Some auto-insurer may insist one to install those anti-theft, theft tracking system.– mootmootCommented Aug 22, 2019 at 7:51
1 Answer
Auto insurance prices vary heavily between regions/states of the US, as the laws and regulations not only differ but so do the rate of claims and losses, nature of competition in each market, etc.
The only way to define a good rate or a bad rate is to get competing quotes from other companies. With the internet this has become much easier and less time consuming than it used to be. You can go online and check out Progressive, Esurance (owned by Allstate), GEICO, American Family, etc, and see what they are offering.
You may also want to request additional quotes for different coverage amounts, as just because high coverage costs the least with one company does not mean low coverage would also cost the least with that same company.
As a rule of thumb, if you get comparable rates from 3 different independent/competing insurance companies, then no matter what the rate is that is effectively the baseline you may have to pay. You can also hunt around with more companies and hope to get less, and sometimes you can get lucky - sometimes not.
From working for an insurance company for a little while, I learned that internally the rate models that are used have become sufficiently complicated that for most companies even their own reps have limited ability to explain why the rate is what it is, and an answer for "why" between markets tends to only be understood to their actuaries/analysts and is not something they can or will attempt to explain to a customer. The rate is what it is. The companies can often provide some cost breakdown, and will generally tell you if there are special costs determined by governing agencies - but the bulk of the cost is the special sauce of that company, based heavily upon observed and/or predicted losses from the last X number of years.
The models and costs are provided to government insurance regulators for approval in most (all?) states, so they generally must be determined to be within some range of "reasonable" or at least "technically legal" - but in the US insurance companies are allowed wide discretion in the range of prices they charge.
Still, this is cold comfort when you get quoted a high price, especially one much higher than you had in a previous state (been there!). The only meaningful option I'm aware of is to just request quotes from competing companies and try alternate quotes with different potential coverage options and see what options you have. Then go with whatever the best option available is - which may or may not be awful, but when you are legally required to carry insurance, your options can be more limited than any of us would like.
