How Often Should I Shop for Car Insurance?


If you’re trying to cut expenses, there are certain costs that can be done away with altogether if necessary (think that video subscription or those theme park passes). Car insurance, however, is one expense we simply can’t remove from our budgets as long as we own and drive vehicles.

But that doesn’t mean you can’t save money on auto insurance. By simply periodically shopping for better rates, you may be able to save yourself hundreds of dollars per year.

Just this year, I personally netted a $150 reduction in my 6-month premium by shopping and switching. If you haven’t shopped for a lower rate in a few years, you need to do so ASAP (or, at the very least, at your next policy renewal).

But what if you’re someone who recently switched? How soon should you shop your rates again? (Spoiler alert: It’s probably much sooner than you think.) Let’s take a look.

 

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How often should you shop your car insurance rates?

Most experts recommend that you shop around for car insurance every 6 to 12 months. Since most car insurance policies last for 6 to 12 months, an easy way to think about it is to simply make a habit of comparing quotes each time you receive your policy renewal.

It’s important to point out that you don’t need to wait until your current policy ends to shop for a new insurer. You can switch at any time. If you’ve experienced a major life change recently, for example, you may want to shop around even sooner. Before you end your current policy, however, check to see if your insurer charges any early cancellation fees.

You may be thinking, “But I paid for my entire 6-months policy upfront. I don’t want to waste that money.” Not to worry. Your new insurer should send a cancellation notice to your old insurance company. And once it’s been received, your old provider should send you a refund for your unused time.

Learn More: 6-Month vs.12-Month Car Insurance Policies

Factors that affect your car insurance premiums

Why should you shop for car insurance so often? One reason is that the auto insurance industry is competitive. An insurer that’s pushing hard to build up its client base may be willing to undercut your current rates to earn your business.

Another reason is there are a variety of factors affecting your premiums that may have changed since you took out your policy. Here are a few of the most common factors that can push your car insurance premiums up or down.

  • Driving History: Someone who’s had multiple tickets or accidents recently is likely to pay higher premiums than someone with a clean driving record.
  • Age: Statistics have consistently shown that younger drivers (especially young males) are more likely to be involved in accidents or receive a ticket. For this reason, premiums tend to go down as you age and gain driving experience. See the best car insurance for young adults.
  • Credit History: While your credit history may seem completely unrelated to your risk of insurance loss, multiple studies have shown a correlation between the two. Now some 95% of insurance companies use credit-based insurance scores as one of their underwriting factors in the 40+ states that allow them.
  • Marital Status: A 2004 National Institutes of Health (NIH) study found that single drivers were twice as likely to get injured in a motor accident. These surprising results caught the attention of the insurance industry. Today, many insurers will reduce rates for customers after they’re married (except for in states that have banned marital status as an underwriting factor).
  • Vehicle Type and Age: A 15-year-old car with high mileage isn’t nearly as valuable as a new car fresh off the dealership lot. Since new or luxury cars will cost more money for insurance companies to replace, they will also typically cost you more in premiums.
  • Safety Features: Insurance companies will often offer safety discounts for features like anti-lock brakes, airbags, electronic stability control, and anti-theft devices.
  • Home Address: Do you live in a sparsely populated rural area? If so, you’re likely to pay lower premiums than someone living in a metropolitan area with higher rates of accidents and theft.
  • Driving Frequency and Distance: The less you drive per day, the lower chance you have of being involved in an auto-related incident. For this reason, drivers with small commutes may qualify for better insurance rates than those who rack up a ton of miles each week.

With so many factors involved in your car insurance rates, there’s a strong chance that one of them will have changed in any given 6-month period.

Getting married, improving your credit score, moving to a new town, or switching jobs (especially to one closer to home) are just a few of the life events that could help you qualify for lower rates. Even simply having a birthday could be a good reason to shop your rates.

How the COVID-19 pandemic has impacted car insurance prices

In March of this year, I, unfortunately, got a speeding ticket while on vacation. For the next few months, I stressed about how much my next car insurance rates would go up when I received my renewal notice.

Yet, a few weeks ago, I was shocked to discover that my rates would be going down for my next 6-month term. How could this be? After doing a little research, I discovered that many insurance companies have been dropping rates in response to the new driving habits brought on by the COVID-19 pandemic.

Remember, the amount of miles you drive each week or month is one of the key factors that influence car insurance premiums. And since just about everyone has been driving less as a result of coronavirus lockdowns and social distancing requirements, many insurers have been dropping rates across the board.

For this reason, now is a fantastic time to shop for car insurance to make sure that you’re still getting the best deal available.

Related: 6 Financial Lessons to Learn From the Coronavirus Pandemic

Where to shop for car insurance

It’s never been easier to compare car insurance rates online. Most of the top auto insurers now offer online quotes, including Allstate, Progressive, and Liberty Mutual.

You could probably check your rates online with all five companies in about an hour or less.

Gabi _210x100If you’d like to get even more quotes in less time, you may want to consider using an insurance marketplace, like Gabi. With Gabi, you’ll just fill out one form. Then you sit back and let them do the comparison shopping for you. Gabi can also help you find discounts if you’re looking to bundle home and auto insurance together. The best part? You won’t pay a dime to use their comparison shopping tools.

Read more: Gabi Insurance Review: Shop for Home and Auto Insurance Online

Bottom Line

With there being so many factors that can impact your car insurance premiums, plan to shop your policy at least with each policy renewal to see if you qualify for a better rate. You may want to shop your policy even sooner if you’ve recently moved, need to add a driver to your policy, or are changing vehicles.

Just remember that the lowest-cost policy isn’t necessarily always the best one. Saving a few dollars in premiums isn’t worth it if it requires you to give up important coverage benefits that would leave you and your family underprotected.



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