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Auto Insurance Rates Increased by More than 10% in 2002

but consumers don’t shop for rates

 

SACRAMENTO, Calif., March 6, 2003 – InsWeb Corp., one of the largest producers of automobile insurance in the U.S., announced the updated results for its Auto Insurance Index based on fourth quarter 2002 data. The Index is designed to identify and track general pricing trends of personal auto insurance.

 

According to data from InsWeb, the index revealed that as a whole, prices for auto insurance nationwide in 2002 increased on average by approximately 11% over the prior year. For example, the average price quoted for a six-month auto insurance policy on InsWeb's marketplace during 2002 was $1,350 compared to $1,200 during 2001. Based on this data, consumers could be paying as much as $150 more for six-month policies when compared to 2001.

 

Statistics from the U.S Department of Labor indicate that the after-tax income for the average American household in 2001 was approximately $45,000. "According to this data, the cost of auto insurance based on a six-month policy in 2002 accounted for approximately 6% of the average household's income, a full percent increase over the prior year," said Hussein Enan, Chairman of InsWeb Corporation. "Auto insurance is a major expenditure for the average household. A few minutes spent researching alternatives can save most consumers several hundred dollars, and help them mitigate the effects of price inflation."

 

But in a survey conducted in March of this year by Progressive Auto Insurance, researchers found that people were more concerned with reusing wrapping paper than shopping for lower auto insurance rates.

 

Progressive Auto Insurance studies the rates of different companies each year in a variety of states, to determine the spread in auto insurance rates.  This year, they studied the rates of more than 107,000 consumers in 26 states, and found rates from different companies with comparable coverage could vary an average of $586 every six months. 

 

And, in a telephone survey that coincided with their annual rate survey, Progressive found that an astonishing 73 percent of consumers have shopped around to save money on groceries, 51 percent have shopped to save money on paper goods, but only 20 percent have shopped auto insurance.

 

“It’s no secret people want to save money and our survey found that they’ll do things like reuse plastic baggies, charge their friends a cover charge at parties and even ‘go on a corn diet because it’s cheap!’” said John Babagallo, product research and development director for Progressive.  “We want people to know that there may be an easier way to save a lot more money – just take about 20 minutes or so to shop around for auto insurance.”

 

Consumers need to keep in mind the “big picture” concept when attempting to save money. Recycling used wrapping paper and bows from Christmas packages can be a viable exercise in economizing, but the old adage of being “penny wise and pound foolish” certainly might apply here.

 

 

 

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