Surveys show that most American drivers stick with their insurer through thick and thin. This means that the majority of Americans could be paying less for car insurance.
Auto insurance companies constantly change the formulas they use to calculate rates. Your existing provider might have offered you the best deal last year, but it’s likely another company can offer you a better rate now. Shopping around regularly is key to ensuring you always get the best car insurance rates.
According to a 2017 InsuranceQuotes.com survey, 39% of policy holders have never shopped around for a better rate on auto insurance. Respondents aged 37 to 52 were most likely to stick with their existing provider, with 44% admitting they have never gone comparison shopping for auto insurance. Respondents in the 18 to 26-year-old age group were most likely to shop around for vehicle coverage, with 42% saying they check rates at least once a year.
Comparison shopping is just the first step to finding ideal auto coverage. Once you’ve found the best car insurance deal, there are a number of other steps we recommend following before signing a contract.
1. Contact Your Current Insurer
No business likes losing customers and car insurance providers are no different. If a new insurer offers you a great rate, it’s worth taking a few minutes to contact your existing insurance company. You might be surprised at how flexible your old insurer becomes once they can sense that you’re ready to leave.
Car insurance companies generally leave wiggle room when it comes to your rates. Your current rate might not actually be the best rate your existing provider can offer you. For example, you might be missing out on certain discounts and rewards. If a rival car insurance provider has offered to lower your rate by 5%, your existing insurer might be able to match that rate. In return, they may ask you to take a few simple actions, such as taking a safe driving course or agreeing to auto-pay your monthly payments
2. Think About Potential Rewards You’re Giving Up
Before leaving your old provider for good, think about whether you’re prepared to lose the benefits you’ve accrued as a loyal customer. Many car insurance companies promise to reward customers who drive responsibly. For example, a company may promise not to increase your rates after your first at-fault accident if you’ve previously driven at least 3 years without filing a claim.
Obviously, each insurer is different when it comes to rewards. Some insurers go to great lengths to keep customers happy, while others don’t offer any incentives to stay. Before leaving your car insurance company, weigh the potential benefits of staying versus the benefits of getting a reduced rate elsewhere.
3. Weigh the Penalties of Leaving
Standard vehicle coverage usually lasts for 6 months to 1 year, although your provider can’t legally stop you from switching before the end of your contract. If you leave before the end of your coverage period, your insurer will refund the unused portion but probably charge a small cancelation fee. Cancelation fees usually stand at around $25-50 or a small percentage of your annual premium.
Obviously, it’s always a good idea to weigh the cancelation fee against the benefits of leaving early. When you buy insurance through an agent, you can ask that agent to help you cancel your old policy. If you’ve been paying your old provider by auto-pay or electronic funds transfer, then you may need to speak to your bank or credit card provider to get this canceled.
4. Make sure you’re no longer being charged by your old insurer
Ceasing all payments to your old provider is just one step in the process. In order to be completely certain that you’re off the hook, you should always contact your old insurer to tell them you are ending your policy–and always ask for written confirmation.
Getting official confirmation is about more than just billing–it’s also about credit. Insurance companies report to the credit bureaus. If an insurance company thinks you’re still a customer but you stop paying them, this can damage your credit score, affecting your ability to take out loans, mortgages, and credit cards. If you see that your credit score has been affected by incorrect information from a car insurance company, you can show the credit bureaus your confirmation letter to have them amend the error.
5. Avoid Coverage Gaps
When it comes to switching auto insurers, the most important thing to do is to make sure your new provider starts covering you the day your old coverage ends.
Driving without coverage for even one day carries significant risks. First, drivers in 49 states (New Hampshire being the only exception) are legally required to have liability coverage. Officers are authorized to ask for your registration and insurance papers, and they can even find out if you’re insured once they have your license plate number. Also, getting into an accident while uninsured could mean having to pay liabilities out of your own pocket as well as fines or jail time in certain instances.
How to Comparison Shop for Car Insurance
The first step to switching car insurance is to do some comparison shopping. Comparing rates is simple and shouldn’t take more than a few minutes of your time. One way to do it is to request a car insurance quote directly from several different insurers and compare yourself. Another is to use an online comparison engine to pre-qualify for multiple insurers with one online form.