How to decide when to shop for auto insurance

When do I need to shop for new car insurance?

Before you start gathering auto insurance quotes, you may want to consider if you even need to shop for auto insurance. Rate increases are likely to be fairly widespread, but that doesn’t mean every driver will see the same percentage of increase or even higher insurance costs at all. If your company’s rates were relatively low before, you might still feel like your policy is within your budget even after an increase.

To decide if you should shop around, devote some time — 15 to 30 minutes should be plenty — evaluating your insurance. Consider answering questions, such as:

• Does your policy still fit your needs?
• Does your premium still fit into your overall financial budget?
• Do you still find the interactions with your company to be efficient and helpful?
• Have your policy coverage needs changed?

If you still like your company and are comfortable with your auto insurance premium and the type of coverage you carry, car insurance shopping may not be necessary. Your situation is unique to you; only you can weigh the pros and cons of staying with your current company versus shopping around and switching carriers.

When is the right time to shop for auto insurance?

If you want to get the best possible car insurance rate, you may be wondering when to shop for car insurance. The reality is that there is no set timeline for how often to shop car insurance policies. You can switch companies, in most cases, whenever you want. Some people opt to shop for car insurance at least once a year — usually at the time of their policy renewal —  to ensure that they are getting the best rate for their situation.

However, you could switch companies mid-policy, at the end of your term or even two days into your term. Some situations lend themselves to shopping around, and understanding these situations sooner than later can help you decide if you need to shop before a rate hike affects your budget. There is generally no penalty for switching car insurance companies, but make sure that you’re comparing policies with the same coverage types and amounts to ensure that you’re looking at prices for comparable coverage.

Your rates are increasing

Average full coverage car insurance rates increased 14 percent from 2022 to 2023. While rates are highly personalized and account for individual risk factors such as driving record and previous claims history, this increase was also due largely to inflation. Car insurance saw a delayed impact from the widespread inflation that took off during 2020 and 2021, according to the Insurance Information Institute. This, combined with an increase in claims as drivers got back on the road post-pandemic, may help explain the rate increases many drivers now continue to see. 

With inflation’s lasting effect, auto insurance rates are likely to continue increasing. You may receive your policy renewal only to find that your new insurance premium no longer fits in your budget. Maybe your policy isn’t renewing yet, but you’ve seen a rate increase sooner due to a change you’ve made to the policy, like adding a driver or vehicle. Or you might not be facing any rate increase, and you’re simply curious if you can find cheaper car insurance coverage.

Because rates are going up, this might be a great time to shop around for more affordable coverage. Just be sure to choose the same coverage limits that you currently have when doing comparison quotes, or as close as possible, so you get a true price comparison. If you choose lower limits than you have now, you’ll likely get a cheaper quote, but you won’t truly know which company is offering the lower price for the coverage you want.

You're moving to a new area

If you move to a new state, you’ll have to get a new insurance policy. Car insurance policies don’t transfer across state lines if you make a permanent move because each state has its own insurance laws. You’ll likely be asked to update your vehicle’s registration and insurance policy to your new state within 30 to 60 days. Insurance laws, coverage requirements, claims risks and the cost of living vary by state and can influence car insurance rates.

If you move to a new city or just a new ZIP code within your state, you’ll likely also experience a rate change. Each geographic area comes with its own unique set of rating factors, such as traffic density, frequency of claims, cost of labor, and rate of theft and vandalism. Insurance companies interpret these rating factors differently, which leads to rates varying by carrier. This means that any move, even just across town, could mean it’s a good time to shop.

You're insuring a new family member on your policy

Your policy accounts for you and all the drivers in your household, which makes life events like marriage or having a new family member move in with you a good time to reevaluate your coverage. When you get married, you may need to add your spouse to your policy or vice versa. Similarly, if you have a family member move in, you may need to add them to your policy if they are a licensed driver. Because each household member’s driving record will be factored into the rate, it might be a good time to shop around for the best quote. Married couples generally pay less for car insurance as insurance companies perceive them as more financially stable and less likely to file claims.

If you have a teen driver in your household, you may want to gear up to shop your policy when they get their license. Bankrate’s study of average premiums found that adding a 16-year-old driver could increase car insurance premiums to $4,392 per year, on average. Young adults are one of the most expensive age groups to insure, but you may be able to find cheap car insurance for teen drivers with a bit of time and research. Make sure you get a quote for the teen on your current policy first, though, before you start shopping. That way, you’ll have a benchmark to use as a price comparison. You may find that your current company is the cheapest.

You purchased a new vehicle

The make and model of your vehicle is one of the biggest factors when it comes to how much you pay for auto coverage. The average cost of insurance for a Toyota Prius is $2,117 per year for full coverage, while the sportier BMW 330i costs $2,513 per year. The price and availability of parts and labor, the statistical likelihood of accidents, the safety features in your vehicle and overall value of your vehicle can all impact premiums. If you purchase a new car and your current insurer increases your premium beyond your comfortable range, you may want to shop around to see if another carrier offers a lower price.

You've experienced a personal or financial shift 

Since car insurance policies take into account several personal rating factors, it can be a good rule of thumb to consider reevaluating your coverage or company whenever you experience an important life change. Maybe you previously had one or more driving incidents on your record, but those infractions are now several years old, and you no longer require high-risk coverage. Or maybe you’ve had multiple hard credit inquiries that have caused your credit score to drop and increased your insurance risk profile. Even personal life changes like getting a work-from-home job could be a cause to shop for auto insurance if it significantly reduces your driving frequency.

How often should I shop for auto insurance?

Generally, it may be a good idea to shop for auto insurance when a life event happens — like the ones mentioned above — or when your premium is too expensive for your budget. Shopping more often could help you decide if your rate is still competitive, but most insurance professionals recommend against changing companies too often. Doing so may prevent you from earning potential loyalty discounts.

Additionally, although relatively rare, some carriers charge cancellation fees if you cancel your policy before your renewal. Some companies also have “earned premium,” which means that, regardless of how quickly you cancel, you forfeit a certain amount of premium to the company. Switching companies too often could subject you to cancellation fees and earned premiums, which might end up costing you more than it saves you.

How to shop for auto insurance

If you're worried about auto insurance shopping being time intensive, you may find that the quote comparison process is quicker than you think, especially with online quoting tools. You may have heard in the past that you need to research your state’s minimum requirements before shopping to avoid purchasing less than you need to drive legally in your state. You can save time and avoid the research because this isn’t true. Insurance companies cannot legally offer you a policy below your state’s requirements. Because of this, you don’t need to know your state’s insurance requirements or research anything beyond a basic knowledge of car insurance. You can do this, and it’s easier than you might think! Here are a few suggestions to help you get started.

1. Know how to get quotes

Many insurance companies offer online quoting tools, although you can also get a quote by phone or visit a local agency, if one is available, if you’d like a little more guidance. One of the biggest things to watch out for, especially if you do the quote yourself online, is your coverage limits. Make sure you get as close to your current coverage types and limits as possible to get an accurate comparison. 

According to Steve Ellis, an assistant vice president and claims field manager in the insurance industry, shoppers should “be wary of extremely low quoted premiums. If one quote comes in extremely low, ask clarifying questions to ensure you are comparing apples-to-apples.” Also, keep in mind that online quoting tools may have limited functionality compared to an insurance agent’s tools. Some coverage types and discounts may not be available for you to quote yourself.

2. Double check that your coverage meets your needs

According to Ellis, “There are a few things shoppers should keep in mind during the quoting process. The most important thing is to ensure you are matching your driving needs to the coverage being offered.” This could mean adding ridesharing coverage, emergency roadside assistance or other endorsements, for example, if you need them. Ellis also points out that properly insuring your vehicle for any modifications, like lift kits or custom sound equipment, can help ensure you are properly financially protected.

3. Consider working with an independent insurance agency

Working with an independent insurance agency could be a good idea if you feel especially nervous about shopping. These agencies contract with several auto insurers and shop your policy for you. Licensed agents will also be able to listen to your specific scenario and help you craft a policy that fits your needs, including your budget.

Frequently asked questions