How often should you shop for auto insurance?

Most insurance companies review their rates annually. To stay competitive, they may cut rates from time to time. But here’s the thing – new customers, not existing customers, tend to benefit from a cheaper rate. This is because many insurance companies do not inform their existing customers of rate changes unless the customer asks for a rate change.

According to a study by Forbes Advisor, 58% of drivers feel they are paying too much for their car insurance. However, according to another survey by Reviews.com, 40% said they rarely look for cheap car insurance.

The Forbes poll also found that women are less likely to compare auto insurance quotes than men. Twenty-six percent of female drivers surveyed said they had never changed insurance companies, compared with 15 percent of male drivers.

These people take a “set it and forget it” approach to insurance. Once registered, they stay with the same insurer for years. If this is your approach, you may be missing out on lower auto insurance rates.

How much can you save by applying to another insurance company?

Drivers who switch to another insurance company can potentially reduce their insurance premiums by 10-20%, saving about $165 to $335 per year.

If changing car insurance companies can save hundreds of dollars a year, why doesn’t more people do it? Here are some of the reasons drivers don’t compare auto insurance rates:

• They are happy with the premium they pay with their current insurer.
• They are satisfied with their insurer’s customer service.
• They don’t have time to compare insurance rates.
• They don’t know where to start looking for new car insurance.
• They were under the impression that they would pay a commission for auto insurance quotes.

Many of these auto insurance quote myths can be dispelled. You can get free auto insurance quotes online in minutes. Even if you’re happy with your premium, if you dig a little, you can find a much better deal.

How often should you shop for auto insurance?

Most personal finance experts recommend buying car insurance at least once a year. The best time to do this is right before your annual policy renewal, when your insurance premium is likely to increase.

Changes to your customer profile may also reduce your risk level, resulting in a lower premium. These include:

• your personal circumstances. If you’re over 25, married, or bought a house, your auto insurance rate can drop significantly. Adding a spouse to your policy or combining car and home insurance can also be more cost-effective than having separate policies.
• You drive less. If you work from home, your auto insurer may lower your rate. Alternatively, you can upgrade to a mileage-based insurance policy.
• Your credit score has improved. Many insurance companies use credit scores as one of the factors in determining a person’s auto insurance rate. You may qualify for a reduced rate if your credit score improves.
• You have moved to a new location. If you move to a safer area or home with better security, your allowance will likely go down.

Why you should compare auto insurance policies

Insurance rates can vary greatly from one insurance company to another. Let’s say you’re a 35-year-old single woman in California who insures a Toyota Prius. One insurance company may give you a lower rate because they consider 35 year old women to be safer drivers. Another might up your bid because they think hybrid cars are more expensive to repair.

Here are a few more reasons why you should compare auto insurance quotes regularly.

1. You can find a better product

Price is not the only factor to consider. By comparing auto insurance policies, you may find a policy with a similar rate but with added benefits.

2. You can access discounts

Some insurance companies offer more discounts than others. These may include good driver discounts, military or veteran discounts, full pay discounts, and senior citizen discounts.

3. Your insurer may subject you to price optimization

Insurance companies will raise their rates to the highest price they think you can handle before moving on to another insurer. This is called price optimization. So your loyalty to your insurer may actually attract higher rates rather than lower ones.

Easy Steps to Find Cheaper Car Insurance

Finding cheap car insurance isn’t as difficult or time consuming as you might think.

First, contact your current auto insurer. If they understand that you are looking for cheaper car insurance, they may lower their rate to keep you as a customer.

Second, go online to compare several auto insurance quotes. Several insurance comparison tools can help you find the best auto insurance rates.

In most US states, auto insurance is non-negotiable with car owners, but paying inflated rates is non-negotiable. To find the best rates, always let your auto insurer know about changes in your circumstances and make it a habit to compare auto insurance quotes at least once a year.