A lot of people think the wrong way about car insurance. For example, did you know that you should shop for car insurance every two years? Stop thinking about your car insurance policy the same way you think about a lease — that you’re stuck with it until it’s time to renew. Unless people are actively unhappy with their car insurance, many just accept whatever increase is asked for and sign up again.
Car insurance rates are based on many factors — your age, where you live, the car you drive, marital status, and so on. But each of these factors is always changing — and that means your rates are always changing, too. So why not make sure the change works for you?
Car insurance isn’t a lease you can’t break. It’s a financial decision you can change at any time based on data to maximize the benefit to yourself.
When You Definitely Should Shop
There are two times to strongly consider a switch, regardless of when you started your current policy.
First, any time you have a big life change, you should definitely think about switching insurance carriers.
For example, if you:
- Buy a new car
- Get married
- Have a child who turns driving age
- Buy a home
- Get into an accident
If you’ve had one of these events recently, it’s probably time to shop to be sure you’re still getting the best coverage — even if you’re in the middle of your policy year.
Most car insurance companies let you break your contract with no fee, so there’s no penalty for switching. In fact, even if you paid for a year up front, when you cancel your carrier must cut you a prorated check for the time left on your contract.
The reason major life events can get you better rates by switching insurers is because car insurance companies specialize in many different scenarios. Some focus on great rates for single drivers. Others offer excellent package deals for families or accident forgiveness.
Almost every car insurance company has something that they are particularly great at, so even if you had the best insurance coverage before, a big life event changes things and you may now need to switch providers to get the best coverage.
Another time to shop is when you’re approaching your renewal. Car insurance companies know they can rely on people to be creatures of habit.
When the renewal notice comes in, most of us simply sign up again because it’s the easy thing to do. This is one of the reasons why over the past decade, car insurance rates have risen an average of 3.5% every year! It might be simple to just renew with your current provider, but you know what else is simple? Comparing rates!
Getting quotes from competing carriers is as simple as a quick Google search. Go directly to an insurance company’s website to get a quote or use a website that allows you to comparison shop between providers in one place.
Why You Should Probably Shop Car Insurance Every 2 Years Anyway
What about the rest of us who haven’t had any big life changes? Well, you should probably be shopping, too!
We said the factors that determine your rate are constantly changing, and that includes little things you might not think about. Even if nothing big has changed — you haven’t had an accident, you haven’t moved or gotten married — at the very least, your car is now a year older, a year more used. At the very least, now that you’re driving a less expensive car, your rate should drop, right?
Funny how that never happens. Without shopping and possibly switching, you’ll be paying higher insurance for a less valuable vehicle, and that doesn’t make sense.
Things like accidents, tickets, and even claims you’ve made in the past also factor into your insurance rate. However, this isn’t a permanent record.
Depending on the state you live in and the insurance company’s policies, violations drop off your record over a set period of time. For some states and carriers, this can be as little as 2 years for minor violations. Without switching, you could be paying for past mistakes long after they’ve been erased from your record.
Another reason to shop? New providers you’ve never heard of are coming up all the time.
Many insurance startups use new technology to determine rates or cater to niche markets that have been historically underserved. Because they don’t have the massive footprint of some legacy providers (think of how many name brand insurance offices you see around town), they’re often able to offer their unique services at a much lower rate.
The final reason you should shop every 2 years is for your own education. Car insurance can feel complicated and overwhelming, but as long as you drive a car, it’s something you’re going to need. The more times you go through the process of shopping for and switching insurance, the better you’ll understand how it works and how to make sure your needs are met.
Every time you shop, you’ll improve your insurance and your understanding of how insurance works. Which makes switching up in the future that much easier and more productive.
Your insurance policy isn’t like a lease — you can make the move whenever you want.
Every time you go through a major life event, it’s in your best interest to shop providers. Your life has changed, which means your rate has, too, and different carriers specialize in different types of customers. Whatever happens, there is someone who can meet you where you are now. It’s worth seeking them out.
Switching your car insurance is easy and generally penalty free. At the end of the day, you’ll have better coverage and a better rate. By shopping regularly, you ensure you’re always getting the best coverage and continue to learn more about what you need when it comes to car insurance.