Articles >> Auto and Homeowners Insurance

The way insurance companies barrage you with television ads promising to save you money, you might think they were paying you instead of the other way around. In the case of the GEICO googly eyes or actor Dennis Haysbert hawking Allstate policies, at least it’s private companies pitching their wares. But then there are the auto insurance ads touting the $388 saved, on average, by people who switched to plans offered through AARP by The Hartford Financial Services Group. The ads also say that AARP members who own homes might save an additional $148 by switching their homeowners coverage. In this case, the trusted nonprofit is lending its name to a commercial venture. Pay less, get the AARP imprimatur ... What’s not to like? Read on to find out.

As part of our continuing analysis of AARP’s financial services products (earlier stories covered AARP mutual funds and AARP life insurance and annuities), we wondered how well the huge organization was treating its 40 million members with the homeowners and auto policies it sells. So we examined the coverage and compared AARP/The Hartford prices with those of Allstate, State Farm, GEICO, and Progressive in three zip codes to answer the question, Should you put AARP on your policy shopping list?

Our answer: If you are shopping on price alone, no. You can save money — in some cases a lot of money — by taking your business elsewhere. But the policies do offer a few appealing features that you might find are more than worth the extra cost. And The Hartford has an impressive customer service record.

AARP has marketed The Hartford’s homeowners and auto policies for 25 years and deserves credit for choosing a quality partner. The Hartford was among the top five insurers in J.D. Power and Associates’ 2008 homeowners and auto insurance customer service surveys. “They have a reputation for working with their customers and trying to solve problems without litigating claims, compared to some of their competitors,” says Amy Bach, executive director of United Policyholders, a San Francisco-based organization that advocates for consumers on home and auto insurance. The number of complaints filed against The Hartford, as tracked by the National Association of Insurance Commissioners, is below the industry average and has been declining for the past several years.

AARP’s homeowners and auto policies are often not the least expensive, however, which echoes what we found with its life insurance offerings. “There is a cost to having some of the features in the program,” acknowledges Richard Hisey, president of AARP Financial, the for-profit arm of AARP. “We believe that if you’re comparing apples-to-apples features, we will be cost-competitive.”

For our price-shopping survey, we asked AARP/The Hartford, Allstate, State Farm, GEICO, and Progressive for quotes for a 53-year-old AARP member driving a 2008 Nissan Rogue and living in a $250,000 wood-frame house. And since the cost of the same insurance can vary by zip code, we requested quotes in Charlotte, N.C.; Scottsdale, Ariz.; and Schaumburg, Ill. We told the insurers to apply any standard auto discounts available based on his driving record and profile. Since AARP’s auto rates were for 12 months and the others were for six months, we divided AARP’s figures in half.

For auto insurance, AARP/The Hartford was the priciest insurer in Scottsdale and Schaumburg and in the middle of the pack in Charlotte. Progressive was the least expensive in Scottsdale, costing a whopping 42 percent less than AARP/The Hartford. GEICO was the cheapest in both Charlotte and Schaumburg, charging 28 percent less and 15 percent less, respectively, than AARP/The Hartford.

Scottsdale, AZ $486 $284 $328 $352 $445

Schaumburg, IL $325 $311 $276 $314 $306

Charlotte, NC $445 $480 $319 $458 $331

For 12-month homeowners policies, AARP/The Hartford was in the middle in Charlotte ($686), but again the most expensive in Scottsdale ($1,467) and Schaumburg ($1,075), charging more than double Progressive’s $706 and $504.

Scottsdale, AZ $1,467 $706 $861 $963 $1,123

Schaumburg, IL $1,075 $504 $513 $831 $587

Charlotte, NC $686 $674 $902 $729 $655

When it came to bundling homeowners and auto insurance, AARP/The Hartford was the second least expensive in Charlotte ($1,452 a year), but was once more the highest in Schaumburg ($1,675) and Scottsdale ($2,386).

Scottsdale, AZ $2,386 $1,159 $1,517 $1,365 $2,013

Schaumburg, IL $1,675 $1,083 $1,066 $1,219 $1,199

Charlotte, NC $1,452 $1,635 $1,538 $1,462 $1,318

 

So what about AARP’s claims about saving customers hundreds of dollars? Insurance advisers, who say other insurers make similar boasts, recommend you ignore them. While the comparisons typically represent the average savings of all customers who switched insurers over a given period of time, people often reduce their coverage when they swap companies. So the savings figures are somewhat specious.

This survey makes a strong case for the need to shop around for auto and homeowners insurance, since none of the five insurers was the cheapest in all three locations. And the savings could be substantial: In our Scottsdale example, a homeowner who bundles his auto insurance would save more than $1,200 a year by choosing Progressive over The Hartford. Keep in mind that even if you live in one of the survey’s three cities, your rates could be vastly different from what we found. Since auto and homeowners policies are underwritten individually, your rate quote could be much higher than your neighbor’s, even if you drive identical cars and live in similar houses.