Car Insurance Buying Guide | The bank rate


2022 is shaping up to be an expensive year. With inflation at 40-year highs, it’s no surprise that auto insurance rates are getting more expensive. Since auto insurance rates take into account the cost of repairing damage to vehicles, increases are expected to continue until inflation begins to normalize. If your budget is already stretched, you might want to buy your policy from other companies to see if you can find a lower rate.

“Consumers certainly feel like inflation is impossible to hide right now, given that prices have soared at the fastest rate in 40 years,” Bankrate reporter Sarah Foster said on the American economy. “High inflation makes personal finance best practices all the more crucial. This includes shopping, budgeting, and tracking your expenses. Although the process of shopping for your insurance policy can be daunting at first, don’t worry. Bankrate can guide you through the process, from knowing when and why to buy your policy to how often you should buy.

Should I shop around for my auto insurance policy?

Before you start collecting auto insurance quotes, you might want to ask yourself if you even need to shop around. Rate increases are likely to be quite widespread, but that doesn’t mean every driver will see the same percentage increase or even higher insurance costs. If your company’s rates were relatively low before, you might still feel like your policy is on budget, even after an increase.

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

  • Does your policy still meet your needs?
  • Does your premium still fit within your overall financial budget?
  • Do you still find interactions with your business to be effective and helpful?
  • Have your policy coverage needs changed?

If you still love your business and are comfortable with your auto insurance premium and type of coverage, there may be no need to shop around. Your situation is unique to you; Only you can weigh the pros and cons of staying with your current company rather than shopping around and changing carriers.

When is the right time to shop for car insurance?

There is no official guideline for when to buy your car insurance policy. While it may be convenient to shop around your renewal date, you don’t have to wait until then. You can shop and change carriers at any time during your policy term. Some situations lend themselves to shopping around, and understanding these situations as early as possible can help you decide if you should shop around before a rate hike hits your budget.

Price increase

Auto insurance rates began to rise in early 2022 due to inflation, supply chain disruptions, increasing claims severity and labor shortages, and these increases n haven’t stopped yet. With inflation continuing to climb, auto insurance rates are expected to continue to rise. You may receive your policy renewal only to find that your new insurance premium no longer fits your budget. Maybe your policy isn’t renewed yet, but you saw a rate increase earlier due to a change you made to the policy, such as adding a driver or vehicle. . Or maybe you’re not facing any rate increases and you’re just curious if you can find cheaper car insurance coverage.

With rates rising, this might be a great time to look for more affordable coverage. Just be sure to choose the same coverage limits that you currently have when making comparison quotes, or as close as possible to get a real price comparison. If you choose lower limits than you currently have, you’ll likely get a cheaper quote, but you won’t really know which company is offering the lowest price for the coverage you want.

Moving to a new area

If you move to a new state, you will likely need to purchase a new insurance policy. Car insurance policies are not transferred from state to state if you move permanently, as each state has its own insurance laws. You will likely be required to update your vehicle registration and insurance policy in your new state within 30-60 days. Insurance laws (especially regarding the types and levels of coverage needed), claims risk, and cost of living vary by state and can influence auto insurance rates.

Even if you move to a new city or just a new zip code in your state, you will likely experience a rate change. Each geography comes with its own unique set of rating factors. Insurance companies interpret these pricing factors differently, resulting in varying rates depending on the insurer. This means that any move, even across town, could mean it’s a good time to shop.

Insure a teenager

If you have a teenage driver in your household, you may want to be prepared to purchase your policy when he gets his license. Young adults are one of the most expensive age groups to insure, but you can find cheap auto insurance for teen drivers with a little time and research. Make sure you get a teen quote on your current policy first before you start shopping. This way you will have a benchmark to use as a price comparison. You may find that your current business is the cheapest.

Buy another vehicle

The make and model of your vehicle is one of the most important factors when it comes to how much you pay. The price and availability of parts and labor, the statistical probability of accidents, the safety features of your vehicle, and the overall value of your vehicle can all affect premiums. If you get another type of vehicle and your current insurer raises your premium beyond your comfortable range, you can shop around to see if another carrier offers a lower price.

How often should I shop for auto insurance?

In general, it’s a good idea to buy car insurance when a life event happens – like those mentioned above – or when your premium is too expensive for your budget. Shopping around more often might help you decide if your rate is still competitive, but most insurance professionals recommend not switching companies too often. This can prevent you from earning valuable loyalty rewards.

Also, although relatively rare, some insurers charge cancellation fees if you cancel your policy before your renewal. Some companies also have an “earned bonus”, which means that no matter how quickly you cancel, you give up a certain amount of bonus to the benefit of the company. Changing companies too often could expose you to cancellation fees and earned bonuses, which could end up costing you more than it saves you.

How to shop for car insurance

If the only thing stopping you from getting car insurance is your worry about how long it will take, it doesn’t have to be intimidating. You may have heard in the past that you should find out about your state’s minimum requirements before shopping to avoid buying less than you need to drive legally in your state. You can save time and research because it is not true. Insurance companies cannot legally offer you a policy that is less than your state’s requirements. For this reason, you don’t need to know your state’s insurance requirements or research anything beyond a basic knowledge of car insurance. You can do it, and it’s easier than you think! Here are some suggestions to help you get started.

Know how to get quotes

Many insurance companies offer an online quote tool, although you can also get a quote over the phone or visit a local agency, if available, if you want a little more advice. One of the most important things to watch out for, especially if you’re doing the online quote yourself, is your coverage limits. Be sure to get as close to your current coverage types and limits as possible to get an accurate comparison. According to Steve Ellis, Assistant Vice President and Claims Field Manager, buyers should “be wary of extremely low premiums. If a quote is extremely low, ask clarifying questions to make sure you’re comparing apples to apples. Also keep in mind that online quote tools may have limited functionality compared to tools from an insurance agent. Some types of coverage and discounts may not be available so you can quote yourself.

Check that your coverage meets your needs

According to Ellis, “there are a few things buyers need to keep in mind during the quoting process. The most important thing is to make sure you match your driving needs with the coverage offered. That could mean adding carpool 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, such as lift kits or custom sound equipment, can help protect you properly against damage.

Consider working with an independent insurance agency

Working with an independent insurance agency might be a good idea if you’re feeling particularly nervous about shopping. These agencies contract with multiple car insurers and buy your policy for you. Licensed agents will also be able to listen to your specific scenario and help you craft a policy that suits your needs, including your budget.

The bottom line

While you can’t avoid inflation that could raise your auto insurance rates, there are other ways you can take control of your rates. Each auto insurance company uses its own rating system to calculate premiums, so the same coverage will likely cost different amounts with different companies. You can use this to your advantage by comparing your purchases and choosing the best option for your budget.

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