Auto insurance is one of the necessities in life, and unfortunately it can be quite costly. Of course, you could try to skimp by going without insurance, but you risk losing everything, there are several types of insurance that everyone must have. So, since it is your legal obligation to have adequate coverage, you can at least try to minimize the impact on your wallet by shopping around.
Being Complacent Can Cost You
I’ll have to admit, for the past few years I’ve been content with our auto coverage. A few years ago when we purchased our house, we had to shop around for homeowners insurance. When we found a suitable policy for that, we were lured in to moving our auto policy over to them as well so that we could qualify for a multiple policy discount.
At the time, when we ran the numbers and determined that we could save about $170/year on the homeowners by bringing our auto policy over, and even though the auto policy was slightly more expensive, we would still realize a net annual savings of around $80. Granted, that isn’t a whole lot of money, but not only was it a small savings, but we consolidated with one company, which is convenient.
Well, a few years go by and we never bothered to look into our auto insurance as we were happy with the service and coverage, but last week I decided to run a quote on Progressive just for fun, which is who we had prior to switching. To my surprise, the initial quote for our two vehicles came in pretty low. I had assumed it was simply due to a high deductible or lower coverage amounts, which was partially true. It was a quote for a $1,000 deductible whereas we currently had $500. So, I adjusted the policy, and even then, the numbers looked good.
Long story short, after getting the policy to match our current coverage, it looked as if we could save close to $50/month, or $600/year. That is fairly significant, and even though we would lose the multiple policy discount on the homeowners, if we forget the $170 annual savings from that, we’re still up over $400 per year.
Shop Around at Policy Renewal Time
I’m not suggesting that everyone can go run a quote right now and save hundreds of dollars, but it is certainly to your benefit to review your options every six months or so when that policy is ready to renew, to help make sure you have the best car insurance policy. The insurance marketplace is constantly evolving, and you may find that there are better deals out there. Sure, it probably isn’t worth the hassle if you are only able to save a few bucks, but you won’t know if you don’t check. Be sure to check out these eight tips to help you save on auto insurance.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
Some people assume that because they have had an insurance policy that has been fine that when that policy expires they should just resign since they had no problems. This is crazy since it only takes a quick search online to realize there are hundreds of options out there and taking the time to look for one that fits your situation/budget best is out there and is a no-brainer to search for.
Be aware that Progressive will take advantage of you if it notices you renew a few times without going away. How? Progressive began using "rate optimization" and penalizing clients for their loyalty. They were going to hit me with a 20 percent increase for no reason (no claims, no violations, no increase in risk, and in fact I even moved to a safer neighborhood). Shopped around and got a rate nearly 50 percent less than Progressing he's new quote. Thanks, Meemic!
Insurance products that are renewable every year, including auto / car insurance should be reviewed every year also. There's no harm if you do it, and you might just find a good deal. You should always try to find out if you can get insurance discounts or other ways to lower your premium. Let your insurance agent / counselor help you.
I hear all the time about shopping around at renewal time, but I have never gotten a better rate. In fact, I did get quotes the past 3 renewal cycles and they have always been 2x to 3x higher from other companies. I simply don't understand the huge spread. If you have to consider: (1) if your credit score hasn't changed; (2) if your driving history hasn't changed (e.g. no tickets or accidents); (3) you are out of the youthful driving hazard range; (4) your marital status hasn't changed. Then, what is there to really change insurance premiums other than being a long term customer with existing insurance company vs starting new with a different company?
Great helpful article in general. I just want to add also that aside from potential savings or discounts that a policy holder may get from an insurance firm, another big consideration also whether to stick to one's current insurance agency or jump fence is the after sales customer service being rendered.
Sometimes, people forget to reassess their insurance needs and goals or are just plain lazy to have a talk to their insurance agent or financial adviser. When it comes to money matters, including insurance products, its very important not to get too comfortable with just one company. You don't have necessarily have to change companies, but at least know your options, whether at your current insurance firm or with a new one.
I agree. its important to review your all your insurance products / options every now and then. Don't get too complacent. Not only does the insurance industry change constantly, but also your personal circumstances and financial situation.
It only means that where shopping is concerned, you really have to be a wise buyer if you want to get the most of your money. Apparently, the same goes for car insurance. I thought all insurances are the same. I am aware that there are price differences but for what reason exactly, I am not certain.
There are so many people out there that are overpaying for their auto insurance for the simple fact that they don't take the time to get a series of quotes when it is time to renew their policy. By simply getting quotes you can save yourself hundreds of dollar per year.
This article was so helpful to me. I recently got in an accident. It scared me into checking on my car insurance policy. Thankfully, I am very well insured, but it is always good to check up on things like that to make sure you are covered.
Woww..Amazing article i must say..it would be pleasure reading this..Auto insurance or Car Insurance cover the risk of financial liability or loss, damage a auto. Owner can claim to the insurance agency if the auto is insured already for the damage of the Auto. Some states require a motor vehicle owner to carry some minimum level of liability. there are also many insurance quotes online available these days
WOW, great savings you got there! It definetely pays to compare car insurance companies by doing some quotes each year, especially as it's getting easier with the internet. In as little as 15 minutes you can get quote from up to 12 different companies. It cost nothing to do and this way you make sure you have the best deal, even if it's by staying with your current company.
Like some of the comments already mentioned, it often pays to stay with the same company. I'm currently with State Auto, a relatively unknown insurance company, but they have competitive rates and sizable discounts for staying with them and for having a good credit score. Occasionally, I look around, see what other companies offer, and my current company still offers the most competitive rates. So I just wanted to reiterate that people should not switch for the sake of switching, be smart in your decision-making process.
I've shopped around from time to time, but because I've been with my insurance company for close to ten years now, and have my apartment/renter's insurance with the same company, it's very well. The discount for staying with the company is pretty significant.
I think your key comment in your article is to shop around just prior to your renewal. I'm sure they all have a lead database that tracks expirations. You'll definitely be able to get the best deal at this time.
Keep in mind also that many auto insurance companies are starting to offer incentives to stay with them year after year. You can get additional discounts or other features added to your policy for free after a certain amount of time holding a policy or going accident free.
Well, everyone knows you can save 15% in 15 minutes or less just by calling... nevermind.
Seriously, though, I did just this, and I saved about $35 a month (25%) on my car insurance by switching companies.
Great job! A few hundred dollars a year makes a big difference! I did this just over a year ago when my wife and I got married and consolidated our home and car policies into one poilcy. We saved almost $100 per month! We haven't looked at any other companies since then, but it might be a good idea to get a quote sometime soon. We may be able to save a little more. :)
This is a great tip for people wanting to save a little extra money. I've actually done this myself and saved just over $200.00 a year just by taking the time to research different policies. As you mentioned, make sure to do this before the policy ends or you can be looking at paying out a penalty fee.