Proof That Loyalty Is For Suckers: Best Customers Get Penalized With Higher Bills

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We appreciate your business. And as thanks for being a loyal customer all these years, we’re going to overcharge you.

Auto insurers and other service providers don’t say this explicitly, of course. But that’s the message sent via the rates they charge different customers.

The curious, but obviously profitable business model, in which new customers get wooed with discounts and special deals, while the oldest, most loyal, best customers are “thanked” with bills that escalate over time, is standard practice among pay TV and wireless providers. The companies play up the idea that their products and services come with special introductory rates for new customers, rather than noting that there are penalties for customers who stick with the business for the long haul and don’t complain. But no matter which way the rate changes are spun, the results are the same.

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Insurance companies are in the same boat, of course, especially in terms of auto and home insurance. Personal finance experts say that to get the best rates, it’s necessary to shop around at least once a year and call up your providers with specific demands — as well as the willingness to jump ship when a better offer presents itself. Fail to do so, and you’re all but guaranteed to pay more than is necessary.

Just how much extra will you be charged for being a loyal customer? A new report from the Texas Office of Public Insurance Counsel estimates that a driver who has been with the same auto insurer for eight years would save an average of 19% on premiums by switching providers.

The study notes that nearly 60% of drivers rarely or never shop around for auto insurance policies, and that, for a variety of reasons, less than 10% say they’re likely to switch insurers. The insurance companies understand these tendencies quite well—they’re in the business of estimating risk and likely behavior—and as a result, push premiums higher and higher on customers who they assume will stick with the business regardless of whether it has the absolute best deal on the market.

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A customer who does take the time to shop around and switch, however, can save a bundle: On average, customers who have been with their auto insurers for eight or nine years would trim their premiums by 19%, or $194 annually. Shopping around can take up as little as 15 or 20 minutes, but even if it eats up a few hours, the savings probably makes it worth the effort.

While the study only examines auto insurance, the authors state “there is no reason to believe the pattern wouldn’t apply to other lines as well, such as homeowners insurance.”

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For that matter, the same principles apply for customers seeking the best rates from wireless and pay TV providers and other subscription services. The longer you’ve been a customer, the more likely it is that you’re paying too much—and that it’s therefore more worthwhile to make those annoying phone calls, shop around, and find a better deal.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.