Critical Thinking Moment

Everyone has seen the commercial where the progressive insurance guy tells you that people switching to progressive saved an average of $332 on their car insurance. Except that you see similar commercials from State Farm, Geico (albeit with a more fetching mascot) and probably several others.  How can this be?  Who really offers the lowest rates?

The fact is that none of these commercials tell you a damned thing about which insurance company will offer you the lowest rates. What they tell you, all they tell you, with remarkable consistency, is that it takes an average savings of $300 to get people to switch insurance companies.

They keep running these ads because they count on the public not to know math.  I’ve no doubt that this is a successful campaign for them too.  Hug a math teacher today.

3 comments

  1. Actually, I believe them all, and here’s why.
    A) Every insurance company uses a slightly different rate formula, and as your situation changes, different plans become better or worse for you.
    B) People will probably only bother to make the effort to change when a different plan is signifcantly cheaper.

    So, you turn 25 and change from State Farm to Progressive and save $330. Then you get a traffic ticket, and your insurance goes up $1100, so you switch to ING and save $500. Two years later you get married, and Geico now has the best rates for you, and you save another $270. Your insurance is now back where it started, but you have changed 3 times, and averaged over $350 in savings!

    The moral of the story: shop around for rates every few years.

  2. *I* have not seen the commercial. 🙂

  3. Kevin – exactly – they are all believable, they’re not lying. It just doesn’t say a damned thing about the relative cheapness of any particular carrier, which is clearly what they’re trying to imply.