When it comes to managing your finances, one area we often overlook is our car insurance policy, especially if you opt for annual rather than monthly payments and forget about it for the rest of the year.
Car insurance rates are influenced by a bunch of factors — like your driving record, your age, and the type of car you drive. Additionally, insurance companies adjust their rates based on market trends, claims data, and their own financial health.
Since these factors are in constant flux, rates change all the time. So, don’t assume that once you’ve gotten coverage, there’s no need to look for a better deal. Not doing so could cost you big money in the long run.
Finding the sweet spot for savings
To determine how often to shop for car insurance, strike a balance between saving money and maintaining coverage. For example, if money’s tight, you’ll want to focus on finding lower premiums. But if you’re financially stable, you might prioritize having comprehensive coverage, even if it costs a bit more right away. Ultimately, you want the best possible protection for your vehicle while keeping your savings account happy.
Here are 5 things to keep in mind:
- Start with an annual review: It’s a good idea to take a look at your car insurance policy once a year. Even if everything in your life is still the same — same address, same car, same commute — some insurance companies will tweak their prices every year. This yearly check-up makes sure you’re not missing out on potential savings.
- Life milestones can impact your policy: Big life moments can sometimes mean it’s time to adjust your car insurance. Things like getting married, adding a new driver to your household, or paying off your car loan can affect how much you pay for insurance. That’s when it’s smart to check out different insurance options and see if you can get a better deal.
- Watch for rate increases: Even if nothing much changes in your life, it’s important to monitor for rate hikes. Sometimes, insurance companies raise their prices due to factors beyond your control, such as industry-wide claims trends. If you see your premiums suddenly go up without a clear reason, it’s a sign to start shopping for a new plan.
- Online tools can save time and money: These days, it’s a breeze to shop for car insurance online. For example, our car insurance quote tool takes in your information and uses it to canvas top-rated auto insurance providers on your behalf. This saves you time and makes it easier to find customized coverage at a great price.
- Loyalty Doesn’t Always Pay Off: Sticking with one insurer year after year is admirable, but it might not save you money. In fact, you could be paying more than you need to. Sometimes, the better deals go to new customers to get them on board, so don’t be afraid to look around for other options.
Know what influences your car insurance premium
If you’re considering switching, it’s important to understand what goes into determining your insurance quote. Providers use a combination of criteria to assess the risk they take on to insure each individual driver.
Here are some key factors they consider:
- Your driving record: Your history behind the wheel plays a big role. If your record is clean, with no accidents or traffic tickets, it suggests that you’re a responsible and low-risk driver, making you eligible for lower rates. On the other hand, a history of accidents, tickets, or DUI convictions can lead to higher premiums.
- Your age and gender: If you’re younger and less experienced, your rates are usually higher because younger drivers have more accidents. Gender can matter too, as some age and gender groups tend to have more accidents statistically. However, in many places, they’re moving away from using gender to set rates because it’s seen as fairer.
- Your location: Where you live also affects how much you pay for insurance. If you live in a place with lots of traffic, crime, or bad weather, your rates might be higher. But if you’re in a rural area or a ZipCode associated with low crime, rates can be lower.
- Make, model and year: Cars with good safety ratings and advanced safety features usually get you lower rates because they’re safer. However, luxury cars, sports cars, and high-performance vehicles typically come with higher premiums due to the increased repair costs.
- Vehicle usage and mileage: The more you drive, the higher the risk of accidents, which can lead to higher premiums. Plus, if you mainly use your car for commuting to work or business purposes, your rates may be higher compared to someone who primarily uses their car for leisure activities.
- Your credit score: Maintaining good credit can help you save on insurance costs. A higher credit score indicates responsible financial behavior, which can lead to more favorable insurance premiums.
- Your chosen coverage and deductibles: Go for more coverage and lower deductibles, and you’ll likely pay higher premiums. However, this choice gives you more protection if something happens, like an accident.
- Marital Status: depending on where you live, married drivers often get slightly lower insurance rates than unmarried drivers. This is because statistics suggest that married people are less likely to be involved in accidents.
- Claims History: If you’ve made a lot of claims in the past, insurance companies might charge you more for coverage as they’ll see you as a higher risk with a higher likelihood of making future claims.
- Driving Habits: Some insurers provide usage-based insurance, which means they calculate rates based on how you drive, looking at things like when you drive, how you accelerate and brake, and your overall driving behavior. So, if you drive safely and responsibly, you might be offered lower premiums as a way to reward safe drivers.
The art of policy switching
Before making the leap to switch car insurance policies, ensure you’ve thoroughly reviewed the terms, coverage limits, deductibles, and any additional perks offered by the new provider. While saving money is crucial, maintaining adequate coverage and quality customer service should also be priorities.
Switching car insurance too often can have downsides. Here are 6 things to think about:
- You might miss out on loyalty discounts: Many insurers give discounts to long-term customers. If you switch a lot, you might miss out on these savings.
- Higher upfront costs: New policies often involve higher initial premiums due to things like setup fees, first-time administrative charges, and adjustments in payment plans.
- Lack of stability: Frequent switches can lead to inconsistency in coverage and make it harder to build a long-term relationship with an insurer.
- Potential impact on credit score: Some insurers check your credit when providing quotes. Frequent inquiries might impact your credit score.
- Potential for gaps in coverage: When you switch policies, you need to be careful to make sure there’s no gap in your coverage, which could leave you unprotected in case of an accident.
- Loss of relationship: Staying with the same provider might lead to a better customer-insurer relationship and more personalized service over time.
Finding the Right Insurance Fit
As you can see, there’s no one-size-fits-all answer for how often to shop for car insurance. Checking your policy regularly is a smart way to make sure you’re not paying too much and to give yourself peace of mind.
Shopping around and comparing quotes from different companies is the way to go. If you need some help, the team at Guided Solutions can assist you in evaluating car and truck insurance options, and we’ll compare rates and find a policy that’s a perfect fit for you.
Let’s get started on saving you some cash and getting you the right coverage.