We live in an age where loyalty holds value — whether to products, institutions or traditions. So there’s something unsettling in the notion that staying with what you know might not be the best course. This is especially true for seniors when it comes to auto insurance — the assumption that long-term customers are rewarded for their loyalty with lower rates turns out to be more and more of a myth. It turns out that sticking with one insurer can result in paying more, not less, for the same coverage. For many seniors, this revelation has made them think twice about their relationship to their auto insurers. By taking a fresh look, they are discovering the value of shopping around for quotes.
The Myth of Loyalty Discounts
Marketing has convinced many of us for decades that loyalty pays. Insurance ads and customer service pitches tell you that if you stick with us, we’ll eventually grant you a discount – rewards for your loyalty. For seniors, who make up a good chunk of those dealing with this problem, the message is prime consumer hypnosis. Fidelity and trust are highly regarded in the senior demographic. What could be more in line with those ideals than a discount for loyalty?
In reality, though, it’s often not so rosy. As a 2013 study in the Journal of General Internal Medicine showed, long-term customers don’t necessarily get favoured with lower rates. And there’s little question that insurance companies exploit ‘rate shock’ – namely, the fact that many customers are too lazy to shop around for a better deal, and that those who choose to stay with them year after year will see their premiums inch up automatically and without warning. This process, which the insurance industry understands as ‘price optimisation’, is particularly pernicious among seniors, many of whom are already on a fixed income and arguably more fragile to a ‘financial shock’.
The Cost of Convenience
The comfort factor is real. You get to know your auto insurer a little (or maybe a lot). You have a friendly relationship with your agent. You know your policy. Maybe you can even tell your agent, the crazy guy at the office, your spouse and your kids, as one does with numbers, that your monthly premium is $111.11. But there is a cost to this comfort. If seniors don’t continue to check auto insurance rates against those offered by other providers, they are probably paying more than they ought to be – or than they can afford. These savings could make a big difference in their life.
Competition in the insurance business is fierce; new entrants are appearing all the time and many specialise in products for senior citizens, with features and discounts that appeal to them. These, however, go unnoticed by those who assume that sticking with one provider with whom they have a longstanding relationship is the best bet.
The Benefits of Shopping Around
Just shopping around and getting quotes from a number of different insurers might be a first step toward learning more about the range of prices and options that are available and suitable to seniors. For many seniors, this will insurance companies as drivers with low mileage – and thus they’re eligible for discounts. Other insurance companies will offer special prices for seniors who’ve taken defensive-driving courses, or will give seniors who bundle their auto insurance with other types of coverage some kind of discount.
Furthermore, changing insurers doesn’t mean giving up on consumer satisfaction. In fact, most seniors find that newer companies have better customer service, more flexible terms, and greater transparency than their long-term providers. The landscape of insurance is changing, and it’s possible to be left behind by staying with one company out of inertia.
The Emotional Hurdle
After all, it’s not a purely financial decision to switch insurers: it’s emotional. If you’re a senior, you might feel like you’re betraying a company you’ve been with for decades. You’d be switching things up, rocking the boat. That emotional inertia is big. And the firms well understand it. They bank on inherent reluctance on the part of long-term customers to rock the boat, even when it would benefit them to switch.
But the move away to consider new choices should not be seen as a form of betrayal, but as a way of exercising self-care. It’s about making sure you’re getting the best value for your money, that your policy reflects what you need now, not who you knew in the past.
But the biggest pitfall in sticking with one company is that familiarity can make a senior complacent, lulled into overpaying for coverage that can be had at lesser cost elsewhere. Loyalty is one thing, but it is not always wise to stay with a single auto insurance provider and continue to pay higher premiums when there are less expensive options available. The best course of action for seniors is that every few years, they should reconsider their auto insurance needs, compile new quotes, and make choices based on their present needs, rather than on historical feelings of obligation.
