Question: My co-workers say I should shop around for auto insurance rates instead of just renewing each year with my current insurer. Is cutting car insurance costs as easy as shopping around?
Answer: It can be. It has been shown that comparison shopping you can save hundreds, if not thousands, in annual premiums. (See “Pocket $1,102 by shopping around”)
If you’ve been with the same car insurance company for years, you may be receiving discounts for persistency (keeping continuous coverage with the same insurer for three or more years) or just for renewing, but that doesn’t mean that another car insurance company wouldn’t offer you different discounts that give you cheaper rates -- or even without discounts give you a lower overall premium.
There are a lot of variables that go into your rate, including where you live.
Each auto insurance provider has its own rating system. One will charge higher rates for certain rating factors than another insurer. By shopping around you can find the auto insurance company that fits best with your particular combination of rating factors.
If something has changed since the last time you shopped for insurance -- you married, had an accident or added a teenage driver -- then it is an especially good time to shop.
If you haven’t shopped around in several years, then there are new types of discounts that you may be eligible for, or want to try out.
For instance, pay-as-you-drive (PAYD) and usage-based (UBI) programs are offered by certain car insurance companies now.
If you let an insurer monitor your driving behavior by placing a telematics device in your car and the insurer likes what it sees in your data, then large discounts may be offered -- 20 to 45 percent depending upon the car insurance company.
Don’t forget to also compare rates with your own car insurance company. Make certain it has up-to-date information on you and your vehicles. Updating information with your current insurer may help lower rates with it and make it the cheapest choice for auto insurance.
For example, if you now telecommute for work, got a new job closer to home, moved or retired, then the amount of miles you drive should have dropped.
By comparison shopping with other insurers, and your own, you can indeed cut costs; however, you won’t know how much until you spend the time, 15 minutes is all it may take, to do it. (See “The best way to save on car insurance”)
A tip for shopping: keep your current policy handy so that you’re comparing the same coverage and limit amounts with all insurers -- apples to apples as some say.