Car insurance is quite the business. We all have to have it because most of us can’t afford to even fix the damage of our autos out-of-pocket after an accident, let alone handle the liability that could come from injuries in an at-fault accident. And the industry is hugely profitable. Even at an average of 9 percent profit per policy, insurers make big profits because of volume business. Everyone has to have auto insurance, so with hundreds of millions of policies, that adds up to big bucks. In the pre-pandemic year of 2019, the industry pulled in revenues of $285 billion. At 9 percent profit, that’s about $25 billion pocketed by insurers after all costs and claims were paid.

The average insurance company does pretty well. But then there’s Progressive. Yes, they have cute and funny ads with big-haired Flo and her quirky sidekick Jamie. And they do offer some decent rates … with a catch. First of all, Progressive has an industry-best profit margin that runs typically at more than 11 percent. And there’s apparently a reason for that. My story is frustrating to me, but it seems to be more typical of how Progressive does insurance than I first realized.

More than four years ago, Progressive was there for me when I had trouble finding car insurance because of a few at-fault claims. (That’s another story, and another reason I don’t trust most insurers. I’ll explain later.) They picked up my wife and myself, albeit at an exorbitant price, but at least we were insured. And for more than four years, we drove with perfection, and we saw our rates decline along the way.

A few months ago, that changed. My next door neighbors (some young guys who don’t always think too far ahead) parked one of their cars in my blind spot, halfway into the cul-de-sac. I couldn’t see the car and there was another parked almost directly behind me, so I had to cut the wheel sharply to avoid hitting the guy behind me. Slam! I hit the kid’s Lexus in the front passenger wheel well and left a nice dent. My SUV suffered almost no damage. In fact, I was able to rub out the scuff and push the bumper back into place. We exchanged insurance information, and I called Progressive to report the incident. Because I hit his car — regardless of how illegally he was parked — Progressive paid the claim instantly. Of course, had this been a traffic accident, the situation would have been completely different. With his car being parked illegally, I would not have been at fault and he would have gotten the ticket. Since no police were involved, there was no ticket. (I checked with a friend about the fault and he agreed that it was probably on me, even if the kid was a bonehead for parking the way he did.)

This is where Progressive really came through for me. My policy renewed in November, and I didn’t really bother to check the amount. I had actually forgotten about the accident because it was so minor. But around the first of the year, I checked my bank account and saw a massive difference in what Progressive was auto-debiting. Previously, my policy was running at $226 per month for two cars. Now, the new amount was $384! If you’re good at math, you’ll realize that’s an increase of $158, or a 70 percent increase! I called to confirm and the Progressive customer rep confirmed that, yes, my policy went up that much because of the driveway incident, and that caused me to lose my “safe driver discount.” It’s nice to know that one incident in my driveway makes me an unsafe driver, and that because of that I get to pay 70 percent more for the exact same product I was receiving before.

I politely told the customer service lady that I would soon be a former customer of Progressive, and she said she understood. So I set off in search of new insurance. I ruled out Allstate. They were my former insurer, and they had canceled my policy because of three at-fault claims in three years. Mind you, we had a clean record for about 20 years before that, and two of the claims were less than $500. The third claim wasn’t even theirs. Before we got married, my wife got in a big accident that was covered by her former insurance company. And because between the two of us, we had three claims in three years, Allstate said sorry, but not sorry. Allstate had collected probably close to $50,000 in insurance premiums from us and paid out maybe $1,000 in car repairs, but when the chips were down we were considered a bad risk.

So I focused on three of the other big TV advertisers: GEICO, State Farm and USAA. I made sure to inform all three about the at-fault driveway incident, and all three came in at least $60 per month less than Progressive. Surprisingly, USAA had the highest premium — around $320 per month. (I was really hoping to go with them because of the military tie-in.) State Farm was next at $284. And GEICO slammed them all — $204 per month for exactly the same coverage offered by Progressive. And that’s with the claim intact. Again, we’re safe drivers. No tickets and no claims other than the knucklehead neighbors since 2015.

I talked to a friend of mine who is an independent insurance agent. He says he writes for a lot of companies, including Progressive. He says without fail that Progressive is not bad until you have a claim. Then they slam you and jack up your rates, just as they did with me. Just as it happened with Allstate, Progressive collected about $15,000 in premiums from us over time and then didn’t even question who was at fault, did not protect me as their customer, paid the small claim and jacked our rates through the roof. And I don’t pretend to think that GEICO won’t raise my rates if I have another accident or, God forbid, I have three in three years. It’s the nature of the beast we have to live with. Unfortunately, I didn’t know that the Progressive beast would eat my bank account without a second thought at the first sign of trouble.

(As a follow-up, my friend said that I’m the typical customer who focuses on what car insurance can do for me and my car. However, the car insurance industry doesn’t really care about me, and especially does not care about my car. Fixing a car is no big deal for the industry, but physical claims are a big deal because that’s what makes up two-thirds of every premium. When someone goes to the hospital you can count on the settlement reaching six figures, and that’s where the $50,000 I paid to All State over the years and the $15,000 I paid to Progressive in the past four years ultimately went — to pay someone else’s claims. It’s how the system works, but at least now I’ll be paying less to a company that at least agrees to charge me less, and that tends to do that across the board for all of its customers.)

So, as you’re watching TV and you chuckle at the antics of Flo and Jamie, do not be deceived. They may welcome you on the front end with open arms, but when you really need them, it will be Progressive laughing with the contents of your wallet all the way to the bank.

Copyright © 2022 Doug DeBolt.