The wrong message about cheap auto insurance

hand holding a toy car over a piggy bank

Those overplayed State Farm commercials drive me crazy, even if others can't get enough.

"Six callers ahead of us, Jimmy!" has even become an Internet meme. Go ahead, Google it.

But one commercial irks me more than the others for the poor message it sends.

The commercial features two women shopping in a fashion boutique. The women rush over to a purse that catches their eyes. One woman grabs the purse and sings the State Farm jingle: "Like a good neighbor, State Farm is there."

Her insurance agent magically appears. The woman asks him how much she saved on her insurance. He answers $150. The woman proceeds to buy the purse, presumably with her insurance savings.

The woman’s friend laments that she doesn't have State Farm and her pricier insurance policy left her without any spending money.

Now, there's nothing wrong with buying an expensive purse if you can afford it.

But if you're going to go to the trouble of switching insurance companies to save money, blowing your savings on an impulse buy means you're not really building your financial security.

There are other problems with the commercial's message.

The commercial ends with, “Having insurance isn’t the same as having State Farm” — seemingly a message about the company’s overall quality and customer service.

Top-Rated Auto Insurers

Region Company
California Wawanesa
West State Farm
Central Texas Farm Bureau
Southeast Farm Bureau Insurance — Tennessee
North Central Auto-Owners Insurance, State Farm
Northeast Amica Mutual
Mid-Atlantic Erie Insurance
Source: J.D. Power and Associates 2012 U.S. Auto Insurance Study

But it doesn't explain what the woman actually did to get her cheap auto insurance.

The implication is that she saved by choosing a company with lower rates, but you could also cut your premiums substantially by reducing the amount of coverage with your current company.

This is a bad way to save because it increases future risk in order to get a little more money now, a particularly poor idea if all you're looking to do is buy purses.

Better ways to lower your insurance premiums, as outlined by Consumer Reports, include improving your credit score, bundling your different insurance policies with a single company and, if you can afford it, increasing your deductible.

Decreasing your annual mileage and owning a vehicle that costs less to insure will also lower your premiums.

While many insurance ads focus on giving you the lowest premiums, consumers should focus not just on price but on the quality of service and protection.

One way to make sure you’re getting a good value is to collect quotes from different companies for identical amounts of coverage and see how the premiums and deductibles compare.

Who offers the most coverage for the best price?

Some insurance companies, like Progressive, offer online tools that do these comparisons for you.

It's also smart to check the company's financial strength rating at the A.M. Best Consumer Insurance Center webpage. This rating tells you about the company’s ability to pay claims. (State Farm has the highest rating of A++, in case you were wondering.)

Then, look at consumer satisfaction surveys, such as those conducted by Consumer Reports and J.D. Power and Associates, to see which insurers customers are happiest with.

For example, if you look at J.D. Power’s 2012 U.S. Auto Claims Satisfaction Study, you’ll find that quite a few national companies received the second-highest rating, "among the best," including The Hartford, Amica Mutual, Allstate, American Family and, yes, State Farm. (The only companies that received the top rating aren't open to all consumers.)

Similarly, the 2012 U.S. Auto Insurance Study will show you customers’ overall satisfaction with auto insurance companies by region. (State Farm performs above average in most regions).

Ultimately, there are many ways to save money through modifying your existing insurance policy or even switching to another company, but it’s not really as easy as singing a jingle.

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