Do you know when you should switch car insurance companies?
The New Year prompts reflection and, for many of us, offers the opportunity for a fresh start. As you tick through your list of resolutions, we urge you also to consider taking stock of your auto insurance policy. We’ve written about the importance of regularly shopping around before, and while that advice still holds, we’d like to add some more: certain life events can have a big effect on your car insurance premium, and your new needs might not be adequately covered by your old company. Below, see six major life events that could mean it’s time to reevaluate your current policy and perhaps even switch car insurance companies.
Consider updating your policy — and possibly switching companies — if any of the following occurred in your life:
1. You Graduated
Going by common sense, you’d probably think that, upon graduation (from high school, college, or even graduate school) your car insurance premium would go down: if auto insurance is based on risk, it would stand to reason that graduates would be less risky, on the whole (more responsible, able to get a better job, etc.). However, if you sign up for your policy as a student, graduate, and don’t shop around or ask your current carrier for any other available discounts, there’s a solid chance your premium will rise, for the simple reason that you would no longer be eligible for student discounts. The “good student” discount offered by many companies can reduce your premium by 10-30%. But once you graduate, that discount no longer applies.
Many big and small auto insurance companies offer discounts for graduates, but the rates vary (usually between 5-10%). So, you’ll need to shop around to find the best price-service combo, since while the company you used as a college student might’ve offered a great discount, their graduate discount might not be the best you can get.
Remember to alert your carrier to major life changes, such as graduating, otherwise you could be committing insurance fraud.
2. Your Kid Left for College
When your (formerly) little one dashes away to college, your family insurance needs will change, so it’s a good time to check in with your agent—and you might even save on your monthly premium. As we previously wrote, when a child attends college more than 100 miles away and doesn’t take his or her car, the family premium can go down 10-20%. And if your child will be keeping a car on campus, your carrier will need to know, because rates are likely to be different, and you don’t want to be an unwitting perpetrator of insurance fraud.
3. You Bought a New Car
Any newly purchased vehicle must be insured before it’s driven off the lot anyway, so buying a new car is an excellent time to call your auto insurance agency and see what they can offer. You’d also do well to shop around to see what other companies have to say. Your current auto insurance situation might be just fine for your 10-year-old, 100K mile-plus vehicle, but if you’ve just purchased a brand new ride, you almost certainly will have increased insurance needs. Conversely, if you’re downsizing in the vehicle department, your auto insurance (and monthly premium) should follow suit.
Depending on what type of car you buy, you might need special insurance. For example, if your newest vehicle is a classic car, simply adding it to your current policy is likely to cost you money.
4. You Got Married
As Edmunds.com writes: car insurance is usually less expensive for married couples, but there are a few caveats. For instance, if one of you has a very poor driving record (think: lots of speeding tickets, other moving violations, accidents, or a DUI), you might be wise to keep policies separate.
If you get married and take no action (beyond telling your insurance company), Edmunds says you’ll likely save 10-12% because insurers know, statistically, that married people are less of a risk. Combining policies can lead to even greater savings, and it’s worth your while to shop around and compare rates offered by more than just your carrier and your new spouse’s.
5. Your Premium Increased
Auto insurance isn’t necessarily something the average driver thinks about every day, and with good reason. Insurance is something we have to protect us in the event of an emergency, which we hope is a rare occasion. But every six months, or every year, when your auto insurance policy renewal rolls around, it’s a good idea to think carefully about your finances and insurance needs, even though doing so isn’t high on most people’s list of fun, exciting activities.
In fact, not shopping around and comparing rates every year (or every two years) can actually cause your insurance premium to rise. As we’ve written about before, some insurance companies will increase rates for their loyal customers simply because they know they can: the studied and proven truth is that if your policy increases just a small amount, you’re unlikely to spend the time (and hassle) shopping for a new policy. But small increases each year can really add up (to over $500 extra per year just because you let inertia keep you loyal for five or 10 years).
So, if your premium increases, call your agent and ask for an explanation. And even if they have a good reason, or even if they immediately offer you a discount, spend some time shopping around online or calling a few different companies. You might find better service, or a better rate.
6. You Had a Bad Experience with the Company or Agent, or Didn’t Like How a Claim Was Handled
Car insurance is a rather competitive industry. Companies compete tooth and nail for their customers, and they know that customers can jump ship relatively easily at any time, so most do what they can to keep customers happy. So as the customer, you are the one in control. If you have a bad experience with your current company, or if you feel they didn’t meet your needs either with coverage, service or customer relations, by all means, shop around. As mentioned above, loyalty isn’t rewarded in the insurance industry.
We know it’s easy to keep pushing car insurance shopping to the end of your to-do list, but comparison sites like The Zebra take a lot of the pain away, and saving money and feeling well taken care of by your insurer is worth the time.