I saw a brief Progressive car insurance ad last night on TV promoting their name your own price online car insurance tool. This tool, available on Progressive‘s website, has been around for a couple of years, but it has not been promoted by Progressive as much recently as it was when it was first launched.

I was dismayed to see the TV ad last night, because the name your own price tool is a great sales gimmick, helping Progressive increase sales. But for customers, it does the exact opposite of the goal of this website:  to find the best combination of price, coverage, and service, which can only be accomplished by shopping your auto & home insurance with ALL the leading insurance companies, and getting quotes for comparable coverage.

Naming your own price can lead to not having the coverage you need, and to paying more for the coverage you do have, than you could have paid for the same coverage with another insurance company.

Furthermore, it is misleading when Progressive states Progressive is the only insurance company where you can name your own price.

You can name your own price with ANY insurance company, and some insurance companies may come closer to matching your price with better coverage.

Smart car insurance buying, which I preach on this blog and my website, means deciding on the insurance coverage you need, then shopping with ALL the leading insurance companies, and having the insurance companies quote you the same level of coverage, so you can compare rates fairly, and find the auto insurance companies with the best prices.

The car insurance company with the best price for you may have great customer service, too. But once you find the insurance companies with the best prices, you want to use the information on my website, to make sure you are choosing an insurance company with a good price AND good service.

The sneaky thing about using Progressive’s option to name your own price for car insurance, is it takes shopping among competing insurance companies for the best price out of the equation.

When you name your own price, Progressive is getting you to set the price you are willing to pay, rather than you shopping for the best price among insurance companies. You don’t need to shop for a better price when you have already decided what you want to pay.

Although Progressive’s website can show you the price of competing insurance companies, it does not compare its price with other insurance companies, when you use the name your own price online tool.

If, as I say, shopping with all the leading auto insurance companies to find the best price is smart insurance shopping, going to only one insurance company and naming your price, is “dumb” insurance shopping. I will give you an example, to show you why this is true.

But first, let me clear up a misconception about what name your own price means.

Auto & home insurance rates are NOT negotiable. Every insurance company has to file their insurance rates with the state in which you reside, and charge all customers, with the same risk profile, the same price for the same coverage.

You can’t say you want to pay $25 a month for “full coverage” (click the link to read my blog post to find out why you are NEVER fully covered), when the lowest rate for which you can qualify,  and still have the minimum required coverage for the state, and coverage for damage to your car, is $60 a month.

This name you own price option is particularly misleading for people, for whom even the minimum required auto insurance coverage is expensive, due to their age, years of driving experience, or driving record.

You may be 17 years old, or have a DUI, and pay $250 a month for the state minimum coverage with your auto insurance company now. You see Progressive’s name your own price ad. You get excited about it. You go to Progressive’s website, name your own price at what you can really afford, which is $150 a month, only to find out Progressive’s lowest price for you is $245 a month.

It can be even worse: Progressive’s best price for you might be $300 a month. That’s not really naming your own price.

So, you can’t name ANY price and get it.

Progressive’s name your own price does the same thing any insurance company can do for you: you tell the insurance company what you want to pay, the insurance company gets the information from you it needs to show you an accurate price, then adjusts the coverage to match your price to what you want to pay as close as possible.

Here is the problem with shopping for auto insurance this way:

Two insurance companies may be able to meet your budget at $100 a month, but one insurance company is giving you much better coverage. Or, an insurance company may seem to have the lowest price for you, but they are really quoting you less coverage. If other insurance companies quote you the same lower coverage, they may have a better price for you.

Naming your own price keeps you from getting the best price and the best coverage for you.

Here is an example:

You have an auto insurance policy on a car with higher than the state minimum liability coverage, and $500 deductibles for Comprehensive & Collision coverage. You pay $100 a month.

You want to save a little money, so you name your own price with Progressive at $75 a month. Progressive quotes you at $70 a month by either taking the state minimum liability, or choosing $1,000 deductibles for Comprehensive or Collision.

The average consumer often thinks “full coverage” is “full coverage,” and may not realize they are not saving money, but buying less coverage than what they have now.  Let’s assume you understand what coverage you have now, and you are okay with less coverage to save money, so you choose the Progressive option with the higher liability coverage you have now, but with the $1,000 deductibles.

Congratulations, you saved money on your auto insurance. But here is what you don’t know:

You could be paying $70 a month, $5 less a month than the $75 a month with Progressive, if you stayed with your old insurance company and raised your deductibles to $1,000.

You could be paying $65 a month, without having to take less coverage at all — you keep the higher liability and $500 deductibles for Comprehensive & Collision — had you shopped with all the leading insurance companies, and found a good insurance company with the lowest rates for you.

Progressive can have competitive rates, and they may even have the best price for you, but you are not likely to find their best price, when you name your own price.

Don’t name your own price with ANY insurance company. Shop with all the leading insurance companies to find the best price, for the coverage you need, with a good insurance company.

Once you understand Progressive’s name your own price website tool is not a substitute for shopping with all the leading insurance companies to find low rates, it can be a very useful tool to understand how changes in your coverage can influence your premium.

For example, you have shopped with all the leading insurance companies based on the same coverage. The best price you get is $50 a month. You use Progressive’s name your own price website tool, and Progressive can offer you the same coverage for $48 a month.

You have a $250 Comprehensive deductible,which pays for damage to your car, above the deductible, if it is stolen, vandalized, gets hail damage, glass damage, and other causes of damage other than collision.

Using the name you own price tool shows you can have a $100 Comprehensive deductible for only $2 more a month. For $50 a month, you can have the same insurance coverage, but with a lower Comprehensive deductible.

The advantage of the the name your own price tool is it does a very good job at showing you the relationship between the insurance coverage you choose and the price charged for it.

However, the name your own price online tool on Progressive’s website is not a short cut to really saving money on car insurance.

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