Most experts advise policyholders to get alternative quotes and compare them with each other at least once a year. Many people start searching for better rates out of curiosity and are surprised to save a lot of money, even though it is normal. Many people think that their vehicle insurance providers would regularly check for the best rates and latest discounts they get and apply them automatically. It isn’t up to your carrier or agent to look into your current coverage, think about how to improve it and start checking for cheap automobile insurance quotations. Besides, you never know how competitive the current premium is unless you compare prices.
Even if you find lower rates would it be worth the time you spend on it? The answer is unequivocal yes as one study found the US policyholders can save on average $850 by shopping around for lower rates. It is over $70 a month? It is not an ignorable amount of money for most household budgets and you don’t make any sacrifices for it since you are getting the same coverage from a different source. The only sacrifice you make is the initial time you devote to finding the cheapest vehicle insurer.
Nearly 40% of the US policyholders never shop around. Even worse, nearly 30% bought their policy after getting only 1 quote. Clearly many people don’t realize the importance of shopping around, thinks it take too long or don’t think they can save money.
It may sound like too much work to check prices and switch companies. It really is not the case when you can call a broker and let them do the work for you. And it only takes an hour to get quotes online and complete automobile insurance shopping. Once you fill one proposal form it is much easier to fill a few more. It should only take you between 5 to 8 minutes to complete each form and get an instant quote online. You just need to fill in a few details about yourself, listed drivers, coverage and the car.
Your time may be more valuable and it isn’t worth your time to shop for auto insurance, if you are a hotshot stock broker making hundreds of thousands of dollars in a year. However, many people would be happy to save $100 when they spend a few minutes. Besides, even if you are so busy you can still drop an email to a broker asking them to get alternative quotes again at renewal.
The same study also finds that 70% of policyholders haven’t switched in the last 4 years. Only 16% of policyholders shop once a year. So, the reason why people stay put isn’t because they couldn’t find better value alternatives or it takes too long to check. Many people pay high auto insurance premiums not because they have poor credit score or driving history but they keep renewing with their expensive providers year after year without shopping around.
Now we know we can save money and it doesn’t take long. So, here is how to shop for Vehicle insurance step by step;
- Before you start the search you need to know what protection to get. It isn’t just about finding the cheapest policy but also making sure that you have sufficient coverage so that you are not left high and dry when you have a claim. Most companies would pay a legitimate claim sooner or later. But you need to have the coverage for the loss suffered before you can claim. One of the first things you should do is to make sure you have sufficient liability protection because injury claims especially can be high even in a moderate accident. Usually, the limit of your own losses is the value of your automobile. However, there is no limit to the possible amount of liability.
- Have the details handy to avoid getting up and looking for something. Find the current schedule of coverage, driver licenses and registration documents. Get a phone and drink. And, of course, turn on the laptop. The best way to carry out this task is in the comfort of your home but you can let your agent do their thing as well by asking them to shop around for you.
- Start with getting a few automobile insurance quotes online. You can get them directly or through a comparison website. Each quote takes about 8 minutes so you should be able to get enough of them in less than 1 hour.
- Compare them for price, coverage and reliability of the carrier. Check for any special conditions or enforcements and check for payment options if you need to pay by installments. Remember that it needs to meet your personal circumstances and be inline with your preferences. For example, quite a few people prefer to pay a little bit more if a more reputable carrier could insure them.
- Don’t hesitate to call any of the carriers for clarification or further advice. It is fine if you just want to run through the options and coverage once more with an agent on the phone before buying. Sometimes a good agent can point you in the right direction. But you should watch out for the ones who will see this as an opportunity for up-selling. The beauty of vehicle insurance shopping online is that there is nobody nagging you. It is totally up to you which way you take the search. You can also call a broker in the area and see what they can find for you. If you start the search early you will not be pressured to make a quick decision.
Always remember that you are on the driving seat here. You can buy a policy online and be done with it. You can decide to sleep on it before making a decision or contact more places another day. All the while remember that if you can save $800 in a couple of hours of work you would be making $400 an hour. That is money well earned and can be spent on something nice. But don’t be disappointed because you saved only $100. This means that you had low rates to start with and you have been spending only fair amounts.
Why Do You Need to Shop for Auto Insurance Often?
We are made to believe that being a good loyal customer will always pay. This notion and laziness may make you pay higher premiums. There are several studies that show customers who regularly compare prices save more money than loyal customers. Now, we will answer why is it important to check for alternatives every so often?
1. You may need to switch to take advantage of new discounts
Underwriters work hard to come up with new and attractive policies. Furthermore, they constantly check for different factors that affect rates. So, often different coverage combinations and discounts are introduced to the market. Today, financial positions and credit score may be more important to some underwriters than having an accident on record. For example, if you see a large car insurance premium increase after an accident you would do well by searching for a company who cares less about the past accident and place more importance on what is the chance of you making another claim based on who you are. Quite a few providers try to predict the chance of any future troubles rather than just doubling premium for a past accident.
2. Your Insurer may be raising rates due to recent difficulties
Do you think that they will set the rates once and do nothing about it for a while? Each carrier has an actuary department filled with hundreds of smart people trying to work out how they can make more profits. Slight changes in the financial environment, competition in the market, statistical increase in risks or operational losses suffered by them require adjustments on rates. That in turn requires shopping for auto insurance often. Think about other hundred companies that are doing the same? By the time the next renewal comes you have a whole new set of rates in the market. If you are not getting new quotations you will be oblivious to those changes. Why do you think most of them only sell 6 month car insurance policies? It is because they are aware of the risks and therefore don’t want to be tied down for 1 year. Companies clearly know a lot can change in 6 months.
3. Shop for automobile insurance when circumstances change
Maybe it is coming up to three years since you had that speeding ticket and points on your driver’s license. They will drop off record by next renewal. Or it is coming to three years since you last had an accident. Many companies are not going to consider that one accident after 3 years when calculating premiums. Is the current carrier one of them? You may have changed address, job, car and marital status since. These are only a few of the things that can affect premiums.
You shouldn’t actually wait until renewal to get new quotes when you have big changes in circumstances like moving into a first home, getting married, changing the car or job. You will have to inform them of the changes and they will have to recalculate the premium anyway. So, why not look around a little before agreeing to new terms with the existing firm?
4. Changes in External Factors Can Make Switching Beneficial
Even if there is no change in your life, maybe vandalism increased in your zip code, the company suffered large losses or state laws changed. These are the external factors that can affect rates.
Switching car insurance companies at renewals isn’t a problem either. All you have to do is to set up the new policy to take over from the renewal date. Also, you must cancel any auto renewal payment instructions you have in place. If you are changing carriers mid-policy, you need to cancel the current policy when you arrange a replacement. You may need to pay a small cancellation fee but you will get the unused portion of prepaid premiums.