How Often Should You Shop for Car Insurance?
Shopping around for car insurance should be done periodically to get the best deals on premiums. Research by MoneyGeek found that the same driver can be charged $800 more with one insurer than another, making it all the more important to compare auto insurance quotes regularly.
Annually comparing car insurance policies can help you get the coverage you need at the best possible rate for your situation. However, a study conducted by Statista showed that 39% of drivers in the U.S. never shop for lower car insurance rates.
Insurers often change their underwriting criteria, which can help drivers qualify for cheaper rates or better coverage. It can also mean more expensive premiums if you stick with the same provider. Insurance costs can also fluctuate every year, with average national auto insurance rates between 2020 and 2021 decreasing by $28.
Drivers who haven’t shopped for better policies between these years may be paying too much for their insurance, underscoring the importance of re-evaluating your policy and comparing quotes regularly.
Few drivers shop around for car insurance routinely. It’s crucial to compare policies yearly, as rates can change.
We recommend reevaluating your auto insurance policies after adding a new driver, getting a ticket or experiencing an accident, moving houses or getting an increase or decrease in your credit score.
Shopping around for car insurance doesn’t have to take long, as insurers have online quotes and car insurance comparison tools to make the process easier.
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When Should I Shop for Car Insurance?
When is the best time to shop for car insurance? MoneyGeek recommends shopping around for auto insurance at least once a year, but certain circumstances can also call for the need to re-evaluate your options sooner. Below are some common situations that should prompt you to shop around for car insurance.
At Least Once per Year
Rates can change each year based on many factors. At least once a year, take time to compare auto insurance quotes to ensure you aren’t overpaying for your policy.
For instance, the COVID-19 pandemic has led to fewer drivers on the road, which significantly reduced the rates for auto insurance in 2020 and 2021. Case in point: the average cost of premiums for full coverage auto insurance policies decreased by $28 between 2020 and 2021.
Note that shopping around for new insurers doesn’t necessarily have to be around your renewal date, as you can switch providers even mid-way through your policy’s term.
Before Your Policy Renews
Because auto insurance policies typically renew every six to 12 months, we recommend comparing quotes a little before your renewal date. This way, you can ensure that you’re getting the best deal for your money. Shopping around for a new policy also gives you leverage to negotiate and get a better deal with your current provider.
When Adding a New Driver
Adding a driver to your auto insurance policy can impact your rates, making it an ideal time to shop around for a new policy, find better options and avoid a lapse in coverage.
For instance, insuring a teen driver can be costly — if you have a policy that costs $1,424 and you add a student driver, your rates increase by $1,908, on average. Fortunately, shopping around can help you find providers that offer “good student” and driver education discounts that can reduce your premiums.
After an Accident or Ticket
Getting an infraction on your record — be it a speeding ticket or DUI — leads to significant increases in your insurance rates. A driver with a good record pays $1,424 on average for coverage, but a speeding ticket can increase this by $412; an accident could cause rates to go up $813. By shopping around for car insurance, drivers with infractions can find the cheapest rates available to them.
When Your Credit Score Changes
Insurers in most states — except California, Hawaii and Massachusetts — take your credit score in to account when determining your auto insurance premiums. A lower score increases your premiums, while a good score makes them more affordable. Case in point: drivers with a poor credit score pay an average of $1,246 more than drivers with good credit.
Whether you expect an increase or decrease in your score within your next term, take the opportunity to look for better deals to ensure you pay the lowest possible rates. Making the effort can help you find the most affordable auto insurance for drivers even with bad credit.
When You Move
When you move to a different location, factors like where you’ll store your vehicle and crime statistics in the area can positively or negatively affect your premium. For instance, moving from a suburban neighborhood to a large metro area can make your rates go up because the risk of damage to your vehicle is often higher.
Insurers also take into account other statistics based on the historical data of your new area, such as:
- Rates of vandalism, theft and accidents
- Number of insurance claims
- Likelihood of severe weather events
- Traffic patterns
- State insurance regulations
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After Other Life Changes
Any life change can call for a re-evaluation of your auto insurance policy — whether you’re purchasing a new car or buying a home — as some life changes can affect your premiums.
Buying a new car with modern anti-theft technology can qualify you for discounts, but note that the replacement value on your new policy will be higher compared to your old policy. These two factors can either increase or decrease your rates, which is why it’s also essential to consider which cars are the cheapest to insure before getting a new vehicle. On the other hand, if you buy a home and plan to insure it, a home and auto insurance bundle is often discounted and can help you save on premiums in the long term.
How to Shop for Car Insurance
Shopping around for car insurance is easier than ever, thanks to the availability of online quote tools from major insurers and car insurance comparison tools. While it takes less than half an hour to get a quote, you will need to do some preparation beforehand to make the process as smooth as possible. To help drivers, MoneyGeek has outlined how to shop around for insurance quotes below.
Determine the coverage and add-ons you need.
Before gathering quotes, examine your current policy and ask yourself if it’s meeting your needs. If it’s not, figure out what type of coverage and add-ons suit your current situation. For instance, if you recently received a DUI, you may need to file for SR-22 insurance. If you recently added a driver to your policy, you may want to increase your limits or purchase full coverage insurance.
Research potential insurers.
Take time to research the many auto insurance companies on the market. Check out their reviews and services, along with the discounts they offer drivers. Don’t skip over smaller insurers, as they sometimes have the biggest discounts or the best deals for drivers in their area.
Have necessary information on hand.
When requesting a quote through an online tool, you’ll be asked for specific information to determine your premium, including personal information, vehicle details, past insurance history, your driving record and more. Be sure to gather important documents and information ahead of time to simplify the quotes process.
Use a car insurance comparison tool.
To help save time, make use of a car insurance comparison tool. These resources can help you avoid the potentially time-consuming process of getting an individual quote from each insurer.
Shop around for multiple quotes.
Before buying a policy, make sure to compare quotes from at least three insurers. That way, you increase your chances of finding a policy with better pricing and coverage. If you aren’t satisfied with your quotes, you can always gather more.
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About the Author
- Statista. "How often do Americans comparison shop for car insurance?." Accessed August 30, 2021.