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Double-digit price increases have people shopping for less expensive insurance

MICHEL MARTIN, HOST:

You know, it's hard to turn on a television these days and not see a commercial for home or auto insurance.

(SOUNDBITE OF MONTAGE)

MELANIE PAXSON: (As character) What are you wearing, Jake from State Farm?

JAKE STONE: (As character) Khakis.

UNIDENTIFIED ACTOR: (As character) I can't believe how easy it was to save hundreds of dollars on my car insurance with Geico.

DEAN WINTERS: And your cut-rate car insurance might not pay for all of this.

(SOUNDBITE OF GLASS SHATTERING)

WINTERS: So get Allstate and be better protected from mayhem.

MARTIN: Despite this multibillion-dollar campaign for new business, most customers typically stick with the insurance company they already have year after year until now because of double-digit price increases. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Inflation figures show the average car insurance premium jumped more than 22% in the last year. Homeowners premiums are also going up at double-digit rates and not just in the traditional disaster-prone areas, like Florida and California. Andy Palen (ph) lives in a suburb of Milwaukee, but his homeowners policy recently jumped by $500 a year.

ANDY PALEN: We hadn't had any claims or anything like that, and it was a little bit eye-popping at the time.

HORSLEY: Palen was also beginning to wonder if he was getting the best deal on auto insurance. He'd been with the same carrier for about a dozen years. So he decided to check around.

PALEN: I did, like, I think, what most people do. First you go online, and you start looking around. And I'm like, OK. This was a lot to really take in at the time and really try to figure out what was the right fit for us and our family.

HORSLEY: With some help from a local insurance broker, Palen discovered that by switching insurance companies, he could save several hundred dollars a year. Other customers are having a similar experience. And that's stirring up the usually placid insurance market.

KATE FERRI DAWSON: I have never seen an increase in shopping to this level really.

HORSLEY: Kate Ferri Dawson is an insurance broker in Murrysville, Pa.

FERRI DAWSON: People are shopping because they're seeing a dollar amount that looks very different than it did a year ago or two years ago or three years ago.

HORSLEY: Insurance companies say they've had to raise premiums to keep up with rising repair costs, as well as increased storm damage tied to climate change. But many customers are not taking these price hikes lying down. LexisNexis Risk Solutions, which acts as a clearinghouse for the insurance industry, says 42% of auto insurance customers have shopped around in the last year, matching a record high. And there's a similar increase in shopping in the homeowners market. VP Chris Rice says even the most loyal customers are looking for a better deal.

CHRIS RICE: People that have been with a carrier for, like, 20, 30 years and then all of a sudden, they're like, hey, this has gone up so much. I don't know if I can really afford this. And they're getting off the couch and shopping.

HORSLEY: And it pays to shop around because while overall premiums are rising, there's a lot of variation among the different carriers. Doug Heller, who's with the Consumer Federation of America, says it's not uncommon to find one insurance company charging twice as much as another for the very same coverage. And which company is the cheapest can vary from place to place.

DOUG HELLER: If a gas station on one side of the street was charging $3 a gallon, and on the other side, it was $6 a gallon, everybody would line up to get the $3-a-gallon gas. But with auto insurance, people equally go to the $6-a-gallon gas because the shopping is not as easy, and the pricing is not as transparent.

HORSLEY: Shoppers do have to be careful to make sure they're comparing similar levels of coverage and deductibles. But Heller says after that, they should focus on the price. As much as insurance companies try to differentiate themselves with clever marketing, the coverage is pretty much all the same. After saving hundreds of dollars insuring his Milwaukee area home, Andy Palen is convinced.

PALEN: I would say do your due diligence. Take your time. Shop around. But also understand inflation is playing a role in a lot of different expenses for houses and families. So I would say shop around and see what could work for you and your family.

HORSLEY: Even if you wind up staying with the same carrier, shopping around puts your insurance company on notice. And Heller says insurers tend to save their best deals for customers who've made it clear they're willing to go elsewhere.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF LINK WRAY'S "RUMBLE") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.

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