Key Takeaway: Consider shopping for car insurance at least once a year, ideally a month or two before your policy renewal date, to make sure you’re getting the best rates. If you have a standard six-month policy, consider shopping twice a year, instead.
You should typically shop for car insurance at least once a year, starting around 30 to 45 days before your policy renewal. Certain events, such as moving ZIP codes or buying a new car, can also create good opportunities to shop.
Car insurance premiums are roughly 50% higher than in early 2020, according to the Bureau of Labor Statistics — which means the rate you locked in even a year ago may no longer be competitive. Those with six-month policies should consider shopping more often, at least twice a year.
But, if you’ve been in a car accident recently or aren’t near the end of your policy term, then switching may not be the best idea. You could be quoted higher rates, lose out on loyalty discounts or face early termination fees. The good news: comparing quotes only takes a few minutes, and it’s the fastest way to find out if you’re overpaying.
- How often should you compare car insurance rates?
- What events should make you shop for car insurance?
- When should you not switch car insurance?
- Does shopping for car insurance affect your credit score?
- How to compare car insurance quotes
- Next steps: Shop for car insurance
- FAQs about shopping for car insurance
How often should you compare car insurance rates?
You should plan to compare car insurance rates at least once a year, but ideally, you should shop every time your policy is set to renew, starting about 30 to 45 days before the renewal date.
How often your policy renews depends on your term. Those with six-month policies should plan to shop at least twice a year, while those with annual insurance policies should compare rates at least once a year.
Many insurers are increasingly favoring six-month policies over year-long plans because they can update their premiums faster, so you may find yourself shopping more often than you thought.
If you 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.
What events should make you shop for car insurance?
While the end of your policy term is a great time to start shopping, it’s not the only time you should consider switching car insurance providers. Here are some other events that could trigger your car insurance search:
- Moving to a new ZIP code: Your rates are heavily dependent on where you live. A new ZIP code could mean hundreds of dollars in savings.
- Getting married: If you and your spouse move onto one car insurance policy, you may be able to save money. Insurance providers also sometimes view married couples as less risky than single drivers and may charge them a lower premium as a result.
- Turning 25: Your rates could drop simply from getting older. Drivers under 25 are typically rated as higher risk by insurers. Once you turn 25, many insurers move you into a lower-risk class, which can lead to lower premiums.
- Adding a teen driver to your insurance: Teen drivers are the most expensive demographic to insure, so you can expect your insurance rate to rise if you have to add one to your policy. Shopping around could minimize that financial impact.
- Paying off your car loan: Paying off your car means that you’ll have more flexibility when it comes to the coverage you’d need, which is why it’s a good time to shop for a new policy.
- Improving your credit scores: Depending on where you live, your credit-based insurance scores can impact how insurance providers view your credit risk. By improving your scores, providers may be willing to offer better rates.
- Getting an accident or violation dropped from your record: Traffic violations and car accidents tend to fall off your driving record after a set period of time. Without these marks on your record, you could have an easier time shopping for insurance.
- Reducing your yearly mileage significantly: If something has caused you drive much less than usual, such as getting a fully remote job or retiring, then you may be able to get better rates based on your reduced mileage. You may even benefit from usage-based insurance, which sets your premium based on factors like your driving habits and mileage.
- Buying a new car: The type of car you own affects your premium. You may get lower rates if you have a newer, more reliable car.
When should you not switch car insurance?
While certain events and circumstances create good opportunities to switch insurance providers, others do the opposite. Here are some of the times when you likely shouldn’t switch your plan:
- You’d lose out on crucial coverage. If your new policy is cheaper but doesn’t provide enough coverage, you won’t truly be saving money in the long run. You’d likely wind up paying more if you ever needed to make a claim.
- You’d be charged cancellation fees. If you cancel mid-policy, you might get charged cancellation fees. These fees are often minor, but short-rate cancellation fees in particular can be high because the issuer calculates how many days the policy was active and prorates what’s owed.
- You’d lose out on strong loyalty discounts. Many providers reward loyalty, especially for customers with a good driving history. If you’ve been with your provider for a while, you might find it more cost-effective to ask them about discounts instead.
- You’ve recently had a car accident or had gotten a violation. If you were recently in an accident and you were considered at fault, you could have a hard time switching to a cheaper policy. The same goes for getting a traffic violation. More than likely, your rates would rise, instead.
- You’d have a gap in your coverage. If you cancel your old policy before your new one starts, you’ll have a gap in your coverage. If this gap is long enough, your quoted premiums may even be affected. Plus, you’d have no protection if you get in an accident during that time.
Does shopping for car insurance affect your credit score?
No, your credit scores won’t be affected if you start shopping for car insurance. Insurance providers only perform soft inquiries on your credit reports, not hard inquiries. These soft inquiries give insurance carriers a view of your credit without impacting your scores in the process.
Your credit-based insurance scores, which are slightly different from typical credit scores but based on the same underlying factors, do tend to play a role in the rates you’re offered. That’s because providers use them as part of their decision-making process — unless you live in one of the states where using credit scores for auto insurance purposes is illegal. Those states are:
- California
- Hawaii
- Massachusetts
- Michigan
Other states, like Maryland, Oregon and Utah, also have heavy restrictions around using credit history as part of premium calculation, but they don’t outright ban it.
Because credit can affect your premium in most states, if your credit scores currently fall in the poor to fair range, consider spending some time building your credit before you shop around again.
How to compare car insurance quotes
You can improve your chances of finding a better policy if you follow these basic steps as you shop for car insurance:
- Start a new policy before canceling the old one. This will allow you to avoid a coverage gap, also called a coverage lapse, which is a period of time where you’re uninsured.
- Check your credit history. If you live in a state that allows insurance companies to factor in your credit-based insurance score, it’s a good idea to check your reports before you shop. Dispute any errors you find to make sure your credit information is reflected accurately.
- Gather information about your car and auto coverage needs. How many miles do you typically drive in a year? How much coverage do you need? Have you ever been in an accident or gotten a traffic ticket? Answering these questions, along with knowing your VIN and your car’s year, make and model, can make it easier for you to shop based on your needs and qualifications.
- Get quotes from at least 3 to 5 insurers. Be sure to compare car insurance rates from plans that have equal coverage levels and deductibles.
- Factor in available discounts. You may be offered a loyalty discount for sticking with your current provider. If you also have homeowners or renters insurance, ask about bundling discounts — insuring multiple policies with the same provider can often lower your overall cost.
- Check insurer reputation and claims satisfaction. If customers typically have a hard time getting their claims accepted and paid out, it might be worth going with a different provider even if its plan is more expensive.
Next steps: Shop for car insurance
Shopping around for auto insurance coverage at least once a year could result in lower insurance premiums.
To see competitive rates in one place, check out online insurance marketplaces and comparison tools. You can shop for auto insurance and explore multiple offerings with Credit Karma, for example. If you want professional advice as you shop, consider working with a licensed insurance agent.
As you look at new insurance policies, just make sure you’re not sacrificing important coverage to save some cash. It’s important to maintain at least the level of coverage required by your lender and state.
FAQs about shopping for car insurance
Some examples of events that could create a good opportunity to shop for car insurance include turning 25 years old, moving to a new ZIP code and paying off your car loan. If you’ve recently retired or have gotten a job that significantly reduces the miles you drive per year, you should also consider shopping around.
The best way to switch car insurance companies without a coverage gap is to start your new policy before you cancel your old one. By doing this, your two plans may overlap, but you ensure you don’t go a day without coverage.
The best time to buy car insurance is after a life event that could impact your rates or around the time your policy is set to renew. There’s no time of year that is inherently better than another, although December is typically considered a good time to search, based on general auto industry trends.
You can typically switch your car insurance mid-policy, but you could be penalized for it. Some companies charge early termination fees or short-rate cancellation fees, which can be based on your unpaid premiums. But, many companies don’t charge these fees, and even if yours does, your new provider may be willing to cover the cost of the fees. If you paid your old provider in advance, you could also wind up getting refunded a prorated portion of your premium when you switch.