How do I find cheaper car insurance?
My policy is renewing and my rates increased by over $100 compared to the last term. How can I find cheaper car insurance rates?
So it's time for your auto insurance to renew and you get the sticker shock that comes along with higher rates. There could be several reasons for the rate hike including having a claim, your credit score dropping, getting a traffic ticket, or even just the insurance company making a rate adjustment to ensure their profitability. Now that you know you're going to be paying more, it's the perfect time to prepare to find cheaper car insurance rates!
Why did my rates go up?
Premium rates are based on many factors, so it can be really tough to exactly figure out why your rates increased. Here are a few more examples of possible scenarios that caused your rates to go up.
- You added a teenage driver to your policy (that's a big one)
- You had a liability claim (that really hurts rates because liability claims tend to be large)
- You hit a deer (not your fault)
- You backed into your neighbor's car (yup, your fault)
- You changed jobs and lost a membership discount (some companies offer discounts if you work for certain organizations)
- You switched your homeowner's insurance to a different company (lost a multi-policy discount)
- You dropped deductibles (lower deductibles cost more)
It's really hard to say exactly what caused your rates to increase, but if you didn't have any claims or didn't have a change in your personal risk factors, chances are your insurance company just had a rate change that caused the increase. They do this regularly to ensure that they stay profitable and you can occassionally see a rate decrease.
If an auto insurance company has a lot of claims paid out, let's say for example a large hail storm caused millions of dollars of damage within a particular demographic, then insureds in that area may see a rate increase to help offset those claims. Insurance companies are in business to make money for their shareholders, so that means you, the policyholder, is going to fork up the dough to ensure they stay in the black.
How can I find better rates?
Ok, so that's a little bit behind what may have caused the rate increase, but how can you find cheaper rates now that you know your rates are going up?
There are really three ways to compare car insurance rates. They are all similar, yet involve different commitments to finding the lowest rate.
- Talk to your local insurance agent. If you already have an agent, then you can call or visit them and talk to them about why your rates increased. They will probably have a good idea of what caused the jump in premiums because agents are generally aware if a company's rates are taking an increase.
If your agent is an independent agent, they will have other companies with which they can compare rates and see if they can simply move your coverage to a different company within their agency. But they will not have access to companies like State Farm, GEICO or Allstate because those companies are either captive agent companies or in GEICO's case, they only sell online.
If they are a captive agent, like with State Farm, Farmers Insurance or Allstate, then you are out of luck. Those agents are not able to quote coverage with other companies and you have no other options. So this option is out if your goal is to find the cheapest rate possible.
- Visit other agents or specific companies online. If your insurance agent is captive, then you'll want to compare rates from other companies. If you're a people person and like to sit down face-to-face with an agent to discuss coverages, then you will probably prefer to find other agencies in your area and get a rate quote. This takes a lot of time, however, and it's actually easier to just go online and get free comparison quotes.
If you know which companies you want to talk to, visit each of their websites and complete the quote forms in order to obtain current rates. Some companies actually just forward your information to an agent in your area, so you may not immediately see the rates, but rather will get a phone call or contact from an agent and they will assist you.
Below is a list of companies that most likely sell auto insurance in your area. Each link is directed to their respective car insurance pages and opens in a new window.
- State Farm
- Liberty Mutual
- Farmers Insurance
- Nationwide Insurance
- Auto Owners Insurance
- American Family Insurance
For arguments sake, let's say you go the option two route and get quotes from all ten of the companies listed. And let's say it takes five minutes to complete a quote form on each site. That's almost an hour of work entering the same information over and over again. Sounds exciting doesn't it? Almost as exciting as sitting down and reading your car insurance policy! So this option is probably not the best way to find lower rates if time is of the essence.
- Do it all online. As you can see by the length of the list above, there are a LOT of auto insurance companies in the U.S. And that list is only a partial list of the largest insurers. You will also have a lot of smaller companies that may only sell car insurance in a specific region of the country, or even just in your state. That's why the next method of finding cheaper car insurance is the smartest way to buy auto insurance. It saves you time and helps get more comparison quotes with less work. And time is money so without further ado, here's our recommendation for saving money on your next insurance bill.
Just about every major auto insurer participates in online rate quotes. I'm not talking about going to their own websites and getting a quote, but rather they pay for leads in order to get the opportunity to give you a rate quote. When one of these leads becomes available, multiple companies purchase them and provide comparison quotes based on the information submitted. It's like throwing chum into a tank filled with hungry sharks. Well, not exactly.
The benefit to the consumer is that they only have to submit their information one time. Then each company provides their best price based on the information you provide. You can choose the lowest quote or whichever one you wish. The key is that you compare as many rates as possible because that's the best way to find the cheapest auto insurance rates.
Option three is the clear winner in tracking down the lowest rates. It involves no driving to agencies, no need to visit multiple websites and enter the same stuff repeatedly, and the best part is, it's completely free to you. The car insurance companies pay to give you rate quotes. Sweet!
But where on the world wide web do you find one of these mystical quote forms? Just click here.
Enter your zip code, fill out a little information about your vehicles, driving characteristics, etc., and then submit the form. You'll be on your way to cheap car insurance nirvana in no time.
How can I save on my next renewal?
While we're on the topic of cheaper auto insurance, here are a few tips to keep in mind that can possible save you a little bit more on your next policy:
- Stop paying for coverages you don't need or use. If your car is older than dirt, why are you still paying for comprehensive coverage?
- Don't skimp on liability coverage. This one may cost you a little bit more now, but if you ever have a liability claim that exceeds your policy limits, you'll be paying it out-of-pocket.
- Do you really need a $100 deductible? Raising your comprehensive and collision deductibles can cut your premiums in half. Take a look at some higher deductibles when quoting and see if it makes sense.
- Are you paying for replacement coverage? Some companies allow you to add replacement cost coverage (rather than ACV or Actual Cash Value). This coverage may not be necessary.
- Can you bundle your policies? Companies want ALL your insurance business and will give you a discount if you bundle your home and auto policies with them. You might want to quote your homeowner's coverage along with your auto policy and see if the savings are greater than keeping your home insurance with a different company.
- Clean up your credit. Insurance companies use your credit rating to help determine the rate you're going to pay. If you credit rating is low, you're going to pay higher rates. If you have good credit (like 720 and above), your rates will be cheaper. Statistics show that consumers with better credit are more responsible drivers and that translates to fewer accidents and claims.
- Do you belong to a professional organization? A lot of companies will give discounts if you work for a certain company, are a federal employee, active in the military, etc.
- Quote and compare! The only way you'll know if State Farm is cheaper than GEICO is to compare rates for both. Or if Allstate is cheaper than State Farm, Progressive is cheaper than GEICO, on and on...
If you made it to here, chances are you have a few ideas on how to find cheaper rates the next time your auto insurance policy renews. Remember that prices are in continuous flux, and the rate you pay today will probably be different 6 months down the road when your policy renewal shows up in the mail.
It's a good idea (and a smart one, too) to comparison shop at every renewal in order to keep your rates down. Sometimes companys just "lose their appetite" for certain insured profiles, and if your rates take a significant hike, the chances of finding a better rate with a different company are very good.
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