How to decide when to shop for auto insurance

Inflation reached 9.1 percent in June 2022, and it's no surprise that the issue has affected car insurance rates, in addition to the other regular expenses we pay, such as groceries and gas. Furthermore, rising inflation, as well as ongoing supply chain disruptions, have raised car insurance premiums. This is because car insurance companies factor in labor and material costs when determining rates, and both are heavily influenced by inflation. As a result of the higher prices, car insurance premiums have risen, leaving many people wondering how they can save money on their auto insurance. If this describes you, you may be wondering what you can do to reduce the cost of your car insurance.

"Consumers certainly feel like inflation is impossible to avoid right now, given that prices have risen at the fastest rate in 40 years," said Sarah Foster, StrongInsurance U.S. Economy Reporter. "High inflation makes personal finance best practices even more important. This includes comparison shopping, creating a budget, and keeping track of your spending." Finding ways to save money may appear difficult, especially when it comes to car insurance, but StrongInsurance may be able to assist. Our insurance professionals will guide you through the process so you can maximize your savings.

Do I need to shop for my car insurance policy?

Before you begin gathering auto insurance quotes, you should consider whether you even need to shop. Rate increases are likely to be fairly widespread, but that doesn’t mean every driver will see the same percentage of increase or even higher insurance costs at all. If your company’s rates were relatively low before, you might still feel like your policy is within your budget even after an increase.

To decide if you should shop around, devote some time — 15 to 30 minutes should be plenty — evaluating your insurance. Consider answering questions, such as:

• Is your policy still appropriate for your needs?
• Is your premium still within your financial constraints?
• Are your interactions with your company still efficient and beneficial?
• Have your policy's coverage requirements changed?

If you still like your company and are comfortable with your auto insurance premium and type of coverage, there may not be a need to shop. Your situation is unique; only you can weigh the benefits and drawbacks of sticking with your current provider versus shopping around and switching carriers.

When is the right time to shop for auto insurance?

You may be wondering when to shop for car insurance if you want to get the best possible deal. The truth is that there is no set schedule for how frequently you should shop for car insurance policies. In most cases, you can change companies whenever you want. Some people prefer to shop for car insurance at least once a year, usually at the time of policy renewal, to ensure that they are getting the best deal possible.

You could, however, change companies mid-policy, at the end of your term, or even two days into your term. Some situations necessitate comparison shopping, and understanding these situations sooner rather than later can help you decide whether you need to shop before a rate hike affects your budget. There are generally no penalties for switching car insurance companies, but when shopping for new auto insurance, make sure you're comparing policies with the same coverage types and amounts to ensure you're looking at comparable coverage prices.

Increasing rates

Car insurance rates began rising in early 2022 as a result of inflation, supply chain disruptions, increasing claim severity, and labor shortages, and they haven't stopped since. With inflation remaining high, auto insurance rates are likely to rise further. When you receive your policy renewal notice, you may discover that your new insurance premium no longer fits within your budget. Maybe your policy isn't renewing yet, but you've noticed a rate increase because of a policy change, such as adding a driver or vehicle. Or you may not be facing a rate increase and are simply interested in finding cheaper car insurance coverage.

Because rates are rising, now may be an excellent time to shop around for more affordable coverage. When comparing quotes, make sure to select the same coverage limits that you currently have, or as close to them as possible, to ensure a true price comparison. Lower limits than you currently have will almost certainly result in a lower quote, but you won't know which company is offering the lowest price for the coverage you require.

Moving to a new area

If you relocate to a new state, you will need to obtain a new insurance policy. Because each state has its own insurance laws, car insurance policies do not transfer across state lines if you relocate permanently. Within 30 to 60 days, you will most likely be asked to update your vehicle's registration and insurance policy to reflect your new state. Insurance laws (particularly those governing necessary coverage types and levels), claim risks, and the cost of living vary by state and can all have an impact on car insurance rates.

If you move to a new city or even just a new ZIP code within your state, your rates will almost certainly change. Each geographical area has its own set of rating factors. Because insurance companies interpret these rating factors differently, rates vary by carrier. This means that any move, even if it is just across town, could indicate that it is a good time to shop.

Insuring a teenager

If you have a teen driver in the house, you should prepare to shop your policy when they get their license. According to StrongInsurance average premium study, adding a 16-year-old driver could raise car insurance premiums by an estimated $2,168 per year. Young adults are one of the most expensive age groups to insure, but with a little time and research, you can find cheap car insurance for teen drivers. But, before you start shopping, make sure you get a quote for the teen on your current policy. As a result, you'll have a price comparison benchmark. You might discover that your current company is the most affordable.

Purchasing a different vehicle

When it comes to how much you pay, one of the most important factors is the make and model of your vehicle. For full coverage, the average cost of insurance for an economy car like the Toyota Prius is $1,924 per year, while the sportier BMW 330i costs $2,270 per year. Premiums can be influenced by the cost and availability of parts and labor, the statistical likelihood of accidents, the safety features in your vehicle, and the overall value of your vehicle. If you purchase a new vehicle and your current insurer raises your premiums above your comfort level, you can shop around to see if another carrier offers a lower price.

How often should I shop for auto insurance?

In general, it's a good idea to shop for auto insurance when a life event occurs, such as the ones listed above, or when your premium is too high for your budget. Shopping around more frequently may help you determine whether your rate is still competitive, but most insurance professionals advise against switching companies too frequently. This will prevent you from receiving valuable loyalty discounts.

Furthermore, although it is uncommon, some carriers charge cancellation fees if you cancel your policy before it renews. Some companies also have "earned premium," which means that you forfeit a certain amount of premium to the company regardless of how quickly you cancel. Switching companies too frequently may result in cancellation fees and earned premiums, which may cost you more than it saves you.

How to shop for auto insurance

If the only thing keeping you from shopping for auto insurance is apprehension about how much time it will take, it does not have to be a daunting task. You may have heard that you should research your state's minimum requirements before shopping to avoid purchasing less than what you need to legally drive in your state. Because this isn't true, you can save time and skip the research. Insurance companies are not permitted by law to offer you a policy that falls short of the requirements of your state. As a result, you don't need to know your state's insurance requirements or do any research beyond a basic understanding of car insurance. You can do it, and it's much easier than you think! Here are a few pointers to get you started.

Know how to get quotes

Many insurance companies provide an online quoting tool, but you can also get a quote over the phone or visit a local agency, if one is available, if you need more assistance. One of the most important things to consider, especially if you get a quote online, is your coverage limits. To get an accurate comparison, make sure you get as close to your current coverage types and limits as possible. "Be wary of extremely low quoted premiums," advises Steve Ellis, an Assistant Vice President and Claims Field Manager. If one quote is significantly lower than the others, ask clarifying questions to ensure you're comparing apples to apples." Also, keep in mind that online quoting tools may have limited functionality when compared to the tools of an insurance agent. Some coverage types and discounts may not be available for self-quoting.

Double check that your coverage meets your needs

"There are a few things shoppers should keep in mind during the quoting process," Ellis says. The most important thing is to match your driving needs to the coverage that is available." This could include adding ridesharing coverage, emergency roadside assistance, or other endorsements, if necessary. Ellis also emphasizes the importance of properly insuring your vehicle for any modifications, such as lift kits or custom sound equipment, to ensure you are properly protected from damages.

Consider working with an independent insurance agency

If you are particularly nervous about shopping, working with an independent insurance agency may be a good idea. These companies have agreements with several auto insurers and will shop your policy for you. Licensed agents can also listen to your specific situation and assist you in crafting a policy that meets your needs, including your budget.

The bottom line

While you cannot avoid inflation, which could raise your car insurance rates, you can control your rates in another way. Because each car insurance company has its own rating system for calculating premiums, the same coverage may cost different amounts with different companies. You can take advantage of this by comparison shopping and selecting the best option for your budget.