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As a consumer, you're often rewarded for your loyalty. But when it comes to your auto insurance policy, sticking with the same company year after year could be costing you. Insurance companies often reevaluate how they set rates, so it's a good idea to frequently shop around for coverage to ensure you're still getting the best rate. Here's when it makes sense to do it.
Should You Look for New Insurance Every Year?
Auto insurance policies typically last six or 12 months, after which you'll need to renew your coverage, potentially at a higher rate. In 2023 alone, car insurance premiums increased by a staggering 20.3%, according to the Bureau of Labor Statistics.
But while policy premiums are getting more expensive across the board, you may still be able to save by switching to a new auto insurance provider. Shopping around typically doesn't take much time and, depending on your situation, could save you hundreds of dollars.
Insurance experts recommend drivers evaluate their auto coverage and shop around for a better rate at least once a year. One option is to compare rates shortly before your policy renews. You should receive a notice several weeks before your renewal date with any changes for the upcoming period, including your new premium.
That said, you can switch insurance carriers anytime. In particular, December can be a good time to compare rates because that's when some insurers set new rates for the upcoming year.
Life Changes That Could Prompt a Car Insurance Change
In addition to reviewing your coverage and rate once a year, there are certain life events that can potentially help you save some money:
- Getting married: Married couples typically pay lower rates than single people. Additionally, many insurers offer discounts when you insure multiple vehicles with the same company. Even if you plan on keeping other aspects of your financial lives separate, you could save money by combining auto insurance coverage.
- Buying or renting a home: Insurance companies typically offer discounts when you bundle certain insurance policies, including homeowners and renters insurance. Additionally, if you move to a new city or state, you may be able to find cheaper coverage with a different provider.
- A change in employment: If you recently retired or switched to a job that allows you to work from home, you likely won't be driving as many miles per year as before. With less time on the road, you could be eligible for a lower rate.
- Reaching a certain age: For the most part, auto insurance rates go down as you get older. However, during your 20s, the annual decreases can be significant. The same is true once you reach your 50s.
- Buying a new car: One of the factors that helps determine your rate is your vehicle model. Depending on the model of the car you're buying and the one you're getting rid of, you may be able to get a lower rate.
Another good time to shop around for a policy is when a major violation falls off your driving record or you've decided to raise or lower your coverage amounts.
How to Shop Around for Car Insurance
Whether you've experienced a life event or you're doing an annual review of your coverage, here are some steps to help you ensure you get the best rate possible:
- Review your coverage. Before you start the comparison process, review your current rate and coverage. If your situation and budget has changed, it could make sense to increase or reduce your coverage options, levels and deductibles.
- Use a comparison tool. It's best to obtain a quote from at least three to five insurance providers. But going through the online quote process with each one individually can be time-consuming. With services such as the Experian auto insurance comparison tool, you can get personalized quotes from multiple insurers with a single form, saving you time and making it easier to compare options side by side.
- Look at more than just the rates. As you compare quotes, it's crucial to ensure that you're comparing policies with the exact same coverage. That said, some insurers may offer different types of coverage and discounts that could impact your rate, so consider those factors as well.
- Choose a provider. Based on what you find, you may decide to stick with your current insurance company or switch to a new one. If you decide to cancel your existing policy in favor of a different provider, you may receive a partial refund from your old carrier. That said, be sure to align your new policy date and your cancellation date to avoid any lapse in coverage.
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Improving Your Credit Can Help You Save on Auto Insurance
As you look for ways to save on car insurance, an unlikely suspect for higher rates could be your credit score. In many states, auto insurers use a credit-based insurance score to help calculate your premium.
Check your credit score and Experian credit report for free to evaluate your credit health. If your score is in fair or poor shape, taking steps to improve your credit can help you save on your auto insurance policy.