May 25th, 2009 
Buying insurance is not like buying a can of peas at the grocery store. If a ten year old buys the can of peas, it’s going to cost exactly the same as if a forty-two year old buys them. Insurance works differently. The cost of the same coverage varies according to who buys it.
If you’re twenty-four years old, have two speeding ticket, and you’re driving a $50,000 sports car, you’re going to pay a lot more than a forty year old mother of three who’s driving a five year old, $18,000 mini-van. Why? Well, don’t take this the wrong way, but the twenty-four year old is quite a bit more likely to get into an accident than the mother of three.
To adjust for this the insurance company charges all its twenty-four year olds more for their insurance than it charges its forty year old moms.
Exactly how insurance companies come up with their rates is beyond this article. They actually use very sophisticated mathematical models and computers to arrive at their premiums. There’s a whole profession of people who do nothing but crunch numbers all day long for insurance companies. They’re called actuaries.
So, does that mean that you just can’t get a lower premium for car insurance? Not at all! There are more factors at work here than the iron laws of mathematics.
For one thing, there’s the free market. Different companies price their products at different price points in order to compete with each other. After all, if all companies offered you the same price for the same coverage, what would be your incentive to pick one company over another?
In addition, what gets insured affects how much you pay.
For instance, if you own a house and two cars, your insurance company might very well give you a break on all your insurance in order to cover both the house and the cars. That’s a lot more money for them from essentially the same amount of work. For you that’s a savings where you don’t have to sacrifice anything.
A good way to get your insurance company to offer you a lower premium is to call around and get quotes from several companies. Pick the companies you like the best then call them back and tell them you have a lower quote from another company. Now, don’t lie. You need to actually have the quote in your hand. If your company wants to call you on this, they can always ask you to fax them the quote, and if you don’t actually have it, you’re not going to be helping your case. But if you have a legitimate lower quote, and then you’ve got something to work with.
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