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Shopping for auto insurance on a regular basis may save you hundreds of dollars per year and thousands of dollars over a lifetime. What if we told you that simple life events could save you money on your auto insurance?
Most auto policies are on a six-month term. Shopping for new rates just before a policy renewal date is a good practice to keep, however, you can shop for new rates at any time. You may feel compelled to start shopping for new rates right away after checking out this list of things that can affect your rates!
- Your Track Record Has Improved – It is common for rates to decrease once a moving violation has come off your driving record such as, speeding tickets or a DUI. Did you also know, insurance companies also look at how long you have had car insurance in place? Car insurance is typically most expensive when you are purchasing car insurance for the first time or if you have had a lapse in coverage for more than 30 days. As with most car insurance discounts, rates will vary from one company to the next, so it is important to also be aware of any discounts you might lose by switching to a different company.
- You’ve Had a Birthday – Provided you maintain a good driving record, rates drop as you age. This is especially true for young drivers who are likely to experience significant savings around the age of 21, and again at 25, as well as, aging drivers as they begin to drive less. It is worth checking rates each year after a birthday since rates are likely to improve over time as you become more established.
- Insurance Rates Fluctuate – Depending on where you live, rates can fluctuate often. Major weather events (hail, tornados, hurricanes, etc.), fluctuations in population and even changes in legislation can impact rates. The more an insurance company must pay out in claims, the higher their rates will be. Historical data is often used in determining rates to predict future rates to ensure a company remains profitable.
- Vehicles Depreciate – The value of a vehicle decreases over time which is determined not only by age and mileage but condition and type of vehicle you drive. On average, a vehicle depreciates at 2.4% per year however if you own a luxury vehicle, the value of that vehicle may decrease as much as 20% in the first 5 years of ownership.
- Changes in External Factors – There are circumstances that are beyond your control that influence insurance rates. One such factor is when your insurance company insures a large portion of your community. While crime rate, weather and population contribute to rate fluctuation, you may be paying a higher rate for insurance because your company insures a large part of your local population. Shopping for a new carrier in your area may result in lower rates if they insure fewer drivers in your area.
- Changes in Life – Life events can often lead to discounts or rate decreases. Marriage, homeownership, earning a college degree, changing professions and increased credit scores are just a few circumstances which may lead to a rate decrease. It is important to note that some companies reward you more than others for these type of life changes. Often, these changes do not happen all at the same time, so shopping for new rates every six months will provide you with the best opportunity to take advantage of these rate changes as they occur in your life.
- Get the Best Deal When Your Teen Starts to Drive – A study in 2014 showed that car insurance rates increase as much as 79% when a teen begins to drive. The rate that insurance companies charge for youthful drivers varies wildly from one company to the next and it based on the number of claims they process for young drivers. However, many companies have programs for young people who earn good grades, participate in driver safety courses and sign driver safety contracts. Shopping for the best rates will help you avoid excessive surcharges on your policy.
- Make Sure Your Insurer is Reliable (Financially Sound) – Online companies like Standard & Poor’s or A.M. Best monitor insurance companies financial health, annually. A company’s financial portfolio indicates its ability to pay claims, as well as it’s ability to offer lower rates. The Insurance Information Institute recommends becoming familiar with your company’s rating and what it that rating means. An A+ with Standard & Poor’s is very different than an A+ from A.M. Best.
- Your Insurer Can Take You for Granted – While some may find it easy to stay with a company they are familiar with and receive good customer service from, it is naïve to assume that there are no other companies who can offer competitive rates and service. Some companies increase rates over time because they don’t believe long-time customers will switch companies for a lower rate.
- Gain Negotiation Power – By notifying your current carrier that you are shopping for a lower rate, you may gain bargaining power. The potential loss of a good policy holder often motivates companies to review policies and look of discounts that can be offered to keep your business. If you don’t tell your company that you are shopping around they can’t help, so ask!
Whether you just got married, had a birthday or you simply haven’t shopped around for new auto insurance rates in a while, now may be a great time to get a new auto insurance quote. Your current auto policy should have most of the information you need to begin the process. What have you got to lose? You just might save hundreds of dollars by switching today!