How often should I shop for car insurance?

Smiling woman driving a car and wondering how often to shop for car insuranceImage: Smiling woman driving a car and wondering how often to shop for car insurance

In a Nutshell

If you want to get an idea of whether you’re getting the best deal on car insurance coverage, consider shopping for a new rate each year. Insurance companies regularly adjust their prices, so shopping for car insurance on an annual basis can help you save money and become more insurance savvy.
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Your finances change over time. And car insurance rates can, too. That’s why it can be a good idea to shop for car insurance every year to help make sure you’re getting the best deal for your situation.

The car insurance industry is competitive — the carrier who gave you the best rate last year may not do so today. The only way you’ll know is to shop for new car insurance quotes.

Let’s take a look at the benefits of shopping for car insurance each year, as well as ways you can increase your odds of finding a better auto insurance policy.

When should I shop for car insurance?

You don’t need to wait until you receive a renewal notice from your current insurance provider to begin shopping for a new policy.

The sooner you begin your search, the more time you’ll have to compare auto insurance quotes.

If you find an insurance policy that works better for you, you can cancel your existing coverage before it expires. Some insurance companies might refund the unused portion of your premium, but they might charge you an early cancellation fee along with other fees.

If you do find a better deal, consider sharing it with your current insurance company. They might try to match it or offer an even lower rate to keep your business.

The benefits of shopping for car insurance

Even though you may not always find a better deal, shopping around is a good way to be sure you’re not missing out on savings.

According to Experian, when you get insurance quotes, credit report inquiries from certain insurance companies won’t affect your credit history. This type of inquiry is known as a “soft inquiry,” like your own requests to view your credit reports.

Here are potential benefits of shopping for auto insurance each year.

1. It could save you money

The average car insurance premium rates increased 2% to 3% from 2016, according to a J.D. Power 2017 U.S. Insurance Shopping Study.

Insurance companies regularly adjust their prices, suggests Bill Hebert, a spokesperson for Mercury Insurance.

“There’s a good chance you may find a more competitive rate,” Hebert says.

How to find good, cheap car insurance

2. It may improve your understanding of auto insurance

Each time you shop for insurance, you’re improving your knowledge of the auto insurance industry and what the different options for coverage available to you might be. This can make it easier for you to spot potential opportunities to reduce costs.

For example, you may decide you can accept a higher auto insurance deductible, which is the amount you must pay out of pocket first before your insurance kicks in to pay for any damage.

A higher-deductible plan typically has a lower monthly premium. The amount of savings varies widely depending on a variety of factors, including the make and model of your car. But be careful if you’re considering raising your deductible — it’s important to try to choose a deductible you can afford to pay if you must file a claim.

3. It can reduce the cost of insuring teen drivers

When you add a teen driver to a family policy, comparison shopping becomes essential, because teens often cause auto insurance rates to soar.

There’s good news though — some carriers offer insurance discounts for teen drivers who …

  • Maintain a good grade point average
  • Take a safe-driver training class
  • Attend school at least 100 miles away and keep the car at your home

When shopping around, be sure to check whether each car insurance company offers teen driver discounts.

Tips for shopping for auto insurance

When shopping for car insurance, there are a few things you can do to improve your chances of finding a better policy.

Check your credit history

California, Massachusetts and Hawaii don’t allow the use of credit-based insurance scores as a factor for setting car insurance rates. But if you live in a state that does, check your credit reports before you shop to get a general idea of where your credit is at. Then dispute any errors to help make sure your information accurately reflects your credit. Take note: Investigating disputes generally must be resolved within 30 days, though in some cases it may take up to 45 days.

How do your insurance scores affect your car insurance rates?

Try shopping online

It can be easy to shop for insurance online. Some websites will allow you to compare rates and policy features. Make sure you’ve gathered some basic information about your vehicle before you begin, like your car’s current mileage and the vehicle identification number, or VIN.

An insurance agent can also help you explore potential policy options to find the best car insurance for your needs.

Bottom line

Shopping around for auto insurance coverage on an annual basis and reevaluating your policy could result in lower insurance premiums. You can easily shop around for auto insurance and explore multiple auto insurers’ offerings by starting your search with Credit Karma.

If you purchase a new car insurance policy, just make sure you’re not sacrificing coverage to save some cash — or neglecting to get coverage required by your car loan lender or state law.