One way to be sure you’re getting the best rates on auto insurance is to re-shop for coverage regularly. Money expert Clark Howard recommends doing so every three years. This article covers everything you need to make shopping for lower car insurance a breeze, including:
How To Re-Shop Your Car Insurance
According to CBS News, car insurance rates, “have risen more than $240 on average” this year. But — as Clark has explained — when it comes to how much your insurance might increase, there are big disparities from company to company.
While your rate for car insurance is impacted by things like what you drive and your driving history, there are other factors — including who your insurer is — that are totally out of your control. If your rates are increasing — especially when nothing has changed in your driving history — consider re-shopping your car insurance to see if you can get a better rate.
To re-shop your insurance, you’ll need to do four things:
- Gather key documents so that you can easily provide potential insurance companies with the right information for the most accurate quotes.
- Review the different types of coverage and coverage limits that are included in your existing insurance policy. Determine if it’s still what and how much you need.
- Shop around by getting quotes from at least a few different companies. Compare how much each company is quoting you based on the same amounts of coverage.
- Make the switch. Select an effective date for the policy with a new insurance company, then cancel your policy with your existing insurer. Be sure the dates don’t create a lapse in coverage.
Let’s look at each step more closely.
1. Gather Your Documents
Before you begin reaching out to insurance companies, there are several documents you’ll want to have handy. Every company you call will need some identifying information on you, and they’ll also need details on your car. Here’s what you should be ready to share about yourself, any other drivers on your policy, and your car(s):
- Personal information: Name, date of birth, address, driver’s license number, marriage status, credit score, driving history (ex: any prior accidents, tickets, etc.), the highest level of education completed
- Vehicle information: make, model, trim, vehicle identification number (VIN), current mileage (odometer reading), estimated average mileage driven per week/month/year
- Current insurance information: insurance company, types of coverage, coverage limits
If your car has special features — such as safety features — that might impact your rate, be sure to have those details handy too. Even if the insurance agent doesn’t ask, you might get a lower rate by sharing.
Also, you might find that some insurance companies can see information about your existing policy while you’re getting new quotes. This was the case when I re-shopped my insurance. But sometimes the info they see can be old or inaccurate. Be sure you verify any details that auto-generate whether you shop online or speak with somebody directly.
2. Review Your Coverage
As you’re gathering your documents, review your current policy to know what type of coverage you currently have and what your coverage limits are for each type. There are six common types of car insurance. This includes:
|Type of Coverage|
|Liability: pays for damages, losses and/or injuries to others and their vehicles resulting from an accident you caused|
|Comprehensive: pays for damages to your vehicle caused by events other than an accident (example: you hit an animal or your car is damaged by a weather-related event)|
|Collision: pays for damages to your vehicle after an accident, regardless of who’s at fault|
|Personal Injury Protection (PIP): pays for your medical-related expenses and certain financial losses after an accident, regardless of who’s at fault (example: medical bills and lost wages)|
|Uninsured/Underinsured Motorist: pays for damages, losses and/or injuries to you and your vehicle resulting from an accident caused by an uninsured or underinsured driver|
|Medical Payments: pays medical expenses for you and your passengers after an accident, regardless of who’s at fault|
Once you’ve reviewed your current policy’s coverages and coverage limits, consider whether you need to make any changes. Check out our guide on how to get car insurance for a breakdown of these coverages. And we also have a guide to help you determine how much car insurance you need, but here are some things to consider:
According to the Insurance Information Institute, every state has financial responsibility laws that make you responsible for damages resulting from an accident that you cause. The types of coverage and the minimum amounts of coverage you’re required to have varies from state to state. But every state requires liability coverage. If you only have enough liability insurance to meet your state’s requirements, you have what’s called state minimum coverage.
To see your state’s laws, check out the III’s list of minimum insurance requirements by state. While some people opt for state minimums to save money on premiums, a state minimum policy might leave you very underinsured if you have any assets. And if you’re involved in a car accident, not having enough insurance puts your assets at risk.
Consider this: In Florida, there’s a $10,000 state minimum for property damage liability per accident and for personal injury protection. If you listen to The Clark Howard Podcast, you might have heard Clark’s cautionary tale about a doctor in Florida whose teenage daughter was at fault for a car accident. The doctor ended up bankrupt because the state minimums were not enough.
“State minimums won’t pay for 30 minutes for somebody at a hospital emergency room. So, you don’t want to leave yourself exposed.”
To figure out how much liability coverage you need, consider the value of your assets.
“The more assets you have, the more [coverage] you should make sure you have,” Clark advises. When you’re at fault for an accident, your insurance will only pay up to your coverage limit for any damages or losses. But you’re responsible for covering whatever’s left. And if you don’t have the money to pay out-of-pocket, the victim(s) of your accident may pursue a claim and come for your assets to make up the difference.
“You don’t want to leave yourself exposed to getting sued and then money you’ve worked hard to save ends up being taken from you because you didn’t have adequate coverage,” says Clark.
If you’ve got a considerable amount of assets, you might also want to look into an umbrella insurance policy. You can read about umbrella insurance and how to know if it’s worth it here.
Comprehensive and Collision
When it comes to comprehensive and collision coverages, the general rule is: When the cost of comprehensive and collision exceeds 10% of your vehicle’s value, that’s the time to dump it. The formula looks like this:
Let’s look at an example. Say your vehicle is worth $4,000. If you’re paying anything more than $400 annually (that’s 10% of $4,000) for comprehensive and collision, it no longer makes any financial sense. You can estimate your car’s value using companies like Edmunds, Kelley Blue Book, or the National Automobile Dealers Association.
One notable exception to this rule is: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying coverage.
For personal injury protection (PIP) and medical payments coverages, you should consider state minimums and any other health insurance policies you may have. Your health insurance may overlap with PIP or medical payments coverages. But having PIP can include additional protection such as compensation for wages lost after sustaining accident-related injuries.
See why Clark recommends that every driver has uninsured/underinsured motorist protection.
3. Compare Quotes
So, you’ve got your documents ready, you’ve reviewed your coverage and now you’re ready to shop around. We recommend getting quotes from at least three different companies. Not sure where to start?
An easy way to shop around is by reviewing our list of the best auto insurance companies and choosing a few companies to call directly. If you have other lines of insurance (ex: homeowners, term life, etc.) from a company that’s different from your current auto insurer, add them to your call list too! You might be able to get great savings by “bundling” policies (or buying multiple types of insurance from the same company).
In addition to calling companies directly, you can also comparison shop online or with help from an insurance agent/broker. No matter how you choose to shop, the most important thing to remember is: always compare quotes for the same types and amounts of coverage!
For example, let’s say you get a quote from Company A for $100,000 bodily injury per person, $300,000 bodily injury per accident and $100,000 property damage per accident (or 100/300/100). When you talk to Company B, make sure your quote is also for 100/300/100 in liability.
Otherwise, you risk being enticed by lower rates which might leave you with less coverage. After you get quotes from several companies for apples-to-apples coverage, look into the customer satisfaction for those companies. Don’t get sucked in by a cheap premium; make sure you’re going with a quality company, too.
Let’s look more closely at ways to get car insurance quotes.
Comparing Quotes Online
When it comes to getting quotes online, you can go directly to insurance company websites, use sites with comparison tools, or use lead generation sites that show quotes for multiple companies at once. While lead generation sites can make it easy to get quotes fast, Clark has a caveat about their lack of transparency.
“The hazard is some of the big [insurance] companies have been buying those sites, and they only refer you to the people behind the curtain.”
But that doesn’t mean these sites are all bad. “Anything that gets you thinking about comparison shopping from one insurer to another is a good thing,” Clark says.
You can use lead generation and comparison sites as a starting point for shopping around. You might learn about new companies, get a better idea of a fair price range for the coverage you need, and use quotes to narrow down your list of companies to call.
For any company you’re interested in, however, you’ll still need to visit the individual company’s site and/or call the company to get a final quote and enroll.
Comparing Quotes Through an Agent/Broker
You can search for insurance agents (or brokers) near you online. An insurance broker helps you find and compare rates for coverage. They may charge a flat rate and/or earn a commission from your insurer once you get a policy. Many lead generation sites also have phone numbers to connect you with their own agents if you’d prefer that over using their online tools.
My Experience Shopping Around
While re-shopping my car insurance this year, I tested out different ways to get quotes. I found that calling insurance companies directly was the best way to get the most accurate quotes — and ultimately save time — while shopping around.
Even though comparison sites can give you quotes for lots of companies at once, they typically provide estimates. So, there’s a good chance that the quotes you get will be higher or lower than each company will actually charge you. And different comparison sites use different criteria to provide quotes, which also impacts the estimates you receive.
I called several insurance companies and used two comparison sites (The Zebra and Insurify) for quotes while shopping around. Each comparison site gave me different estimates for the same companies. Here’s an example of the different rates I was quoted for one company:
Estimate 1: $167/month according to The Zebra
Estimate 2: $138/month according to Insurify
Actual rate: $141/month according to the insurance company
It’s a nice surprise whenever actual rates are lower than the estimates, but not so much when you learn an actual rate will be higher than the estimates. So, while the comparison sites seemed great initially — especially since I only had to enter my information once to get quotes from more than ten different insurers at a time — they weren’t always reliable.
Calling companies didn’t take long, especially because I had all the info I needed ready to go beforehand. Ultimately, I’m saving $480 this year on car insurance with a new policy from one of the major insurers on our top ten list!
4. Choose Your New Insurer
Once you’ve found an insurance company that fits your needs, you can select an effective date (start date) for your new policy. Be sure that your start date will not create a lapse in coverage, or period of time when you’re uninsured. One way to do this is to make the effective date of your new policy the same day as your previous policy’s termination (or end) date.
Auto insurance policies can be canceled at any time. Depending on your existing insurer, you may have cancellation fees. So, you might want to contact your existing insurance company and ask about penalties or fees before canceling. If you’ve paid ahead for your premium, ask about refunds. You’ll likely get a prorated refund for any unused days of coverage.
Based on your insurer’s fees and refund policy, decide how quickly you want to make the switch. You might find the savings with a new insurer outweigh any waiting periods or fees for quickly terminating your existing policy.
When you’re ready to make the switch, simply sign up for coverage with your new insurer. Be sure to confirm whether the policy is effective immediately or will be starting at a later date, then contact your existing insurer to cancel your old policy. This step might be done for you if you work with an agent or sign up for a new policy online. But we’ve got a guide on how to switch insurance and cancel an old policy that walks through each step of the process.
How To Save Money on Car Insurance
When you’re re-shopping your insurance, don’t forget to ask about discounts! Although the availability of discounts can vary from company to company, here are a few that are quite common:
- Defensive driving
- Good student
- Low vehicle usage/low mileage
After any discounts have been applied, if you’re still looking for lower premiums, you might want to consider pay-per-mile coverage.
You can also save on your premiums by taking on the highest deductible that you can afford and that your insurer will allow.
To learn more about the discounts above and other tips that’ll keep money in your pocket, check out our guide on how to save money on car insurance.
Shopping around is an easy way to save money on car insurance. Just know how much coverage you need, then compare quotes from multiple insurers. Remember, the key to comparison shopping is getting quotes for the same types and amounts of coverage.
Be sure to look at customer satisfaction reviews and/or ratings for the companies you’re considering. You don’t want to end up with a company that’s cheap, but won’t treat you well when you need them.
Take a look at our list of the best auto insurance companies to get started!