Have You Shopped Your Auto Insurance Policy?
Switching can leave you with more money in the bank.
Millions of drivers received refunds on car insurance when the pandemic hit, but rates still continue to rise. More natural disasters, distracted driving accidents, and increasingly expensive vehicle technology all contribute to increased costs of claims for insurers, which translates to rate hikes for you. By regularly shopping your car insurance, you could end up saving quite a bit. Here are some tips for shopping and comparing your options:
- Determine your state’s minimum requirements. Many states only require liability coverage, while others mandate additional coverages like personal injury protection, underinsured/uninsured motorist coverage, collision, comprehensive, and gap coverage. You’ll want to find a plan that covers all of your state’s minimum coverage requirements, plus any requirements that are important to you. Certain protections, even if not required, are usually a good idea. No matter the required minimum, it’s a good idea to set your liability limits at the highest amount you can afford so you’ll be protected in the event of a serious accident.
- Review your deductible. While raising your deductible reduces your premium, you should be realistic about how much you could afford to pay out-of-pocket, especially if your financial situation has changed as a result of the pandemic. If you can afford to pay the first few thousands of dollars in repairs yourself, choosing a relatively high deductible can save you in premiums over the long run.
- Look beyond the premium. Though a lower premium may seem appealing, you often get what you pay for. When shopping your policy, carefully compare quotes line-by-line to understand what’s actually covered. For example, make sure you understand plan options for underinsured/ uninsured motorist coverage, which provides protection for you in an accident if the other driver injures you or damages your car, but doesn’t have sufficient insurance. On average, you can expect to pay about 5% of your premium for this coverage, but it could end up saving you thousands. You’ll also want to pay attention to an insurer’s ratings for customer satisfaction and complaint resolution.
- Consider your changing needs. Make sure you’re getting the right coverage, service, and pricing to suit changes in your circumstances, including marriage, moving, buying a new car, or adding a driver to your plan. Many families are shocked to learn that adding a teen driver to a policy increases rates by 168%, on average.1 Moves to states like Michigan or Florida– with the highest auto insurance premiums in the country – also necessitate some shopping around. If you’ve had a recent accident, DUI, or other traffic violation, experts recommend shopping in the month after the third and fifth anniversaries of the incident.
So how often should you shop your auto insurance? Even if you haven’t experienced a life event, consider shopping and comparing rates twice a year. Insurance companies regularly adjust their prices, so shopping frequently can help you save money.
1“The Cost of Teen Car Insurance,” Quotewizard.com, September 2020.