Switching Auto Insurance: The Money-Saving Move?

Changing auto insurance can save you money, with 26% of policyholders saving $200 or more a year after switching providers. However, there are several factors to consider when deciding whether to switch car insurance. Firstly, it is important to have a new policy lined up before cancelling your current one to avoid a lapse in coverage, which could result in fines or legal trouble. You should also be aware of any cancellation fees or penalties that may apply when switching policies. In addition, it is crucial to compare multiple quotes and consider the coverage options, discounts, and customer service offered by different insurers. Overall, switching auto insurance can be a great way to save money, but it requires careful research and timing to ensure a smooth transition.

Life events: marriage, relocation, change in employment status, or adding a teenage driver

Life events such as marriage, relocation, change in employment status, or adding a teenage driver can impact your auto insurance rates and coverage needs. Here are some things to consider for each of these life events:

Marriage:

Married couples often qualify for lower car insurance rates. Insurance companies view married couples as more financially stable and responsible, and they tend to be involved in fewer accidents. Combining policies can also lead to significant discounts. According to Insurance.com, the average marriage discount is about 12% nationwide, but the actual amount varies by insurer. Additionally, if you own a home or are planning to buy one soon, you can insure it with the same company as your car insurance for additional discounts. However, if one spouse has a poor driving record or bad credit, it could temporarily increase the overall rates until those issues are resolved.

Relocation:

Relocating to a different ZIP code or county can impact your auto insurance rates. Insurance rates can vary depending on your location, so it's a good idea to compare quotes from different providers in your new area. Additionally, if you're moving to a different state, keep in mind that insurance regulations and requirements may differ, so ensure your coverage meets the new state's minimum requirements.

Change in employment status:

A change in employment status can affect your auto insurance in several ways. Firstly, if you previously had job-based health insurance and lost it due to leaving your job, you may be eligible for a Special Enrollment Period to enroll in new health insurance outside the yearly Open Enrollment Period. Secondly, if your new job requires a different commute or mileage, you may want to consider switching to pay-per-mile insurance, which can save you money if your annual mileage decreases. On the other hand, if your annual mileage increases, shopping around for insurance can help you find more cost-effective coverage.

Adding a teenage driver:

Adding a teenage driver to your policy can be expensive due to their lack of driving experience, which insurance companies view as a risk factor. However, some insurance providers offer discounts for young drivers. For example, State Farm offers a good student discount of up to 25% and a Drive Safe & Save app that can save up to 30% while teaching your teenager safe driving habits. Additionally, seeking out discounts for good grades, driver education courses, and safe driving habits through telematics apps can help reduce costs. The cheapest car insurance for teens is typically offered by Travelers and Geico.

Cheaper rates: switching insurance companies could help you save money

Switching car insurance companies can save you hundreds of dollars a year, and it won't cost you anything to shop around for cheaper rates. It's recommended to compare car insurance quotes at least once a year to make sure you're getting competitive rates.

When to switch

You should shop for car insurance before your old policy is up for renewal or if there's been a major change in your life. There's no downside to shopping around for a better price than you're currently getting on car insurance, so you can check for better rates as often as you want. But you're especially likely to find a big difference in price when you experience a life change that impacts how insurance companies calculate their rates.

You should check for a better deal on car insurance if you:

• Add or remove a driver, especially a teenager
• Get married or divorced
• Improve your credit score
• Move to a different address or state
• Add or remove coverage

You should also compare car insurance if it's been a few years since you were in an at-fault accident or had a ticket. If your rates went up because of an accident or speeding ticket in the last few years, it's worth checking back every year to see if you can get a lower rate. Your rates will gradually decrease over time, and your current company might not be the cheapest anymore.

How to switch

The first step to changing car insurance companies is shopping around for a new company, which you can do by getting free online quotes. Take your time to find the best car insurance company that offers you the right mix of cheap rates, useful coverage options, and dependable customer service. The more insurance companies you get quotes from, the better.

Tips

• Car insurance quotes don't last forever. If you get a quote from an insurance company, write down your reference number so you can come back to it later. And keep in mind that it may expire after 30 days, so don't delay too long when shopping around.
• While you're collecting quotes, think carefully about whether you should change your coverage or if there are any new discounts that you may be eligible for.
• After you've found your best rates for insurance, give your current insurance company a call before you commit to switching to the new company. See if your current company will match the quote you got from a competitor and ask in detail about the company's cancellation process.
• Once you've decided to switch insurance companies, buy your new policy and confirm it's active. Then you can move forward with canceling your old insurance policy.
• Even a brief gap in coverage can lead to fines and much higher insurance rates, so make sure you have a new policy before canceling your current one.

Customer service: switching may be a good idea if you're unhappy with your current insurer

If you're unhappy with your current insurer, switching to a new provider may be a good idea.

While it may be tempting to stick with the same auto insurance provider, shopping around for car insurance can help you reduce your monthly expenses and ensure you have a policy that matches your needs.

When considering a switch, it's important to compare rates and policies from multiple providers. This allows you to find the best coverage and price for your situation. In addition to price, it's essential to consider other factors such as customer complaints and coverage options.

You can also ask your current insurer if they can match a lower offer before committing to a change. If they can't, find out how to cancel and request the policy's end date in writing.

It's also crucial to avoid a lapse in coverage by ensuring that your new policy starts on the same day your old policy ends. This will prevent you from being considered an uninsured driver and facing higher rates or penalties.

In summary, if you're unhappy with your current insurer, switching can be a great way to find better customer service and a policy that better suits your needs. Just be sure to do your research and timing to avoid any gaps in coverage.

Discounts: you may be eligible for additional savings opportunities

Discounts are a great way to save money on your auto insurance. There are many types of discounts available, and you may be eligible for more savings than you think.

One of the biggest discounts you can get is the multi-policy discount, also known as bundling. This is when you buy multiple policies from the same company, such as car insurance and home insurance, or car insurance and renters insurance. The discount for bundling is typically between 5% and 25%. For example, State Farm offers an average discount of 23% for multi-policies, while American Family and Farmers offer an average of 18%.

You can also get a multi-car insurance discount if you insure more than one car with the same company. This discount is usually advertised as up to 8% to 25%.

If you have safety features on your car, such as anti-lock brakes, airbags, and daytime running lights, you may be eligible for a vehicle safety discount. Airbag discounts can be as much as 40% applied to your medical payments or personal injury protection coverage. Cars that are less than three years old may also qualify for a new car discount, often between 10% and 15%.

Anti-theft features on your car can also get you a discount of up to 5% to 25% off your comprehensive coverage. Examples of anti-theft devices include GPS-based systems, stolen vehicle recovery systems, and VIN etching.

Good driver discounts are another way to save. If you have a clean driving record with no accidents or violations, you can often find discounts of 10% to 40%. For example, Geico offers up to 26% in potential savings if you haven't had any accidents in five years.

If you're a student, you may qualify for a good student discount. This usually requires the student to maintain at least a B average and be between the ages of 16 and 25. Good student discounts typically range from 8% to 25%.

There are also discounts for students who are away at school and don't have a car with them. This discount usually applies if the student is under 25, more than 100 miles from home, and only has access to the insured car during school vacations and holidays.

You can also save money by paying your policy in full upfront, as many companies offer a discount for this. The discount typically ranges from 6% to 14%.

Other discounts to look out for include electronic funds transfer (EFT) discounts, paperless billing discounts, online quote discounts, and occupational discounts.

It's always worth asking your insurance agent to review the available discounts to see if you're eligible for any savings. By taking advantage of these discounts, you can significantly reduce your auto insurance costs.

Credit score: improving your credit score can help you access lower car insurance rates

Changing auto insurance can save you money, and one of the most effective ways to access lower car insurance rates is by improving your credit score.

Credit-based insurance scores are used by auto insurance companies to help them decide whether to offer you a policy and to determine the premiums for that policy. These scores are based on your consumer credit report, and while they are not the same as the credit scores that lenders use, they are influenced by similar factors.

Your credit-based insurance score is influenced by your payment history, including whether you have missed payments, the length of your credit history, and the types of credit you use, such as credit cards and loans. A higher credit score will usually lead to a decrease in your car insurance rate.

Improving your credit score can be done in several ways. Firstly, ensure you make all your payments on time, as missing payments will negatively impact your score. It is also beneficial to pay down debts and keep credit card balances low, as having outstanding debts and high credit card balances can hurt your score. Applying for new credit should be done sparingly, as multiple applications in a short period can result in hard inquiries that may temporarily lower your score.

By taking these steps to improve your credit score, you can access lower car insurance rates and save money on your auto insurance premiums.

Frequently asked questions