Savvy savers know that when you’re shopping for auto insurance, it’s important to shop around. But why do drivers need to do this, and how often should they shop around for quotes?
The biggest reason it’s a good idea to shop around for auto insurance quotes is that it’s a competitive business. Your rate will change based on your driving experience, where you live, and what type of car you drive. However, it also varies between providers, since each company uses unique formulas and algorithms to determine premiums. That means you might not get the same rate from the same company every year. Shopping around may land you a better rate at a different provider.
What’s the best time to shop for insurance?
You may think you should only be shopping when your premium expires each year, but this isn’t necessarily the case. Shopping a few months before your insurance is up gives you more time to check out other providers and see what rates are out there. Then, instead of a frantic scramble to get a better rate the week before your insurance renews, you’ll already have an idea of the current prices.
The longer this step is delayed, the more likely it is that people will skip comparison shopping entirely. Studies show that only about one-third of drivers comparison shop—but those who do save an average of $356 on their premium.
So, how often should you shop for insurance?
The truth is, you likely won’t get the best possible rate without comparing quotes every six months.
This may seem excessive, but think about everything that can happen in six months. Maybe you recently got married, or improved your credit score. These are both things that can affect your rate. You may not even be aware of changes that could improve your rate. For example, perhaps an old driving violation fell off your record—this can also improve your rate! These are just a few factors that could change how insurance agents determine your rate. Other factors include vehicle depreciation and changes to state laws.
Some companies will also give better rates to drivers who are new to that company. If you’re not sure whether you’ll like your coverage or service, you can opt for a 6-month contract.
So, yes, it might still feel excessive to shop for quotes every six months. But various factors (many of which are outside your control!) can significantly change your insurance premium. Fortunately, getting quotes has never been easier. In fact, online tools take shopping for car insurance from a labor-intensive chore to a task that can be completed in minutes. You have nothing to lose except sky-high premiums.