How Often Should You Shop Around for Car Insurance?

how often should you shop for car insurance

Most insurance companies review their rates annually. To remain competitive, they may lower rates from time to time. But here’s the thing — new customers, not existing customers, tend to benefit from the cheaper rate. That’s because many insurance companies don’t inform their existing customers of a change in rates unless the customer asks for a re-rate.  

According to a Forbes Advisor study, 58% of drivers felt they were paying too much for their car insurance. Yet, according to another survey by, 40% said they rarely shop around for cheap car insurance. 

The Forbes survey also found that women are less likely to compare auto insurance quotes than men. Twenty-six percent of female drivers surveyed said they have never changed insurance companies, compared to just 15% of men.

These people adopt a “set and forget” approach to insurance. Once they sign up, they stick with the same insurance provider for years. If that’s your approach, you could be missing out on lower car insurance rates. 

How Much Can You Save By Switching to a Different Auto Insurance Company?

Drivers who switch to a different car insurance company can potentially reduce their insurance premiums by 10-20%, saving approximately $165 to $335 a year.

If switching car insurance companies can save hundreds of dollars a year, why aren’t more people doing it? Here are some of the reasons drivers give for not comparing auto insurance rates: 

  • They’re comfortable with the premium they pay with their current insurer.
  • They’re happy with their insurer’s customer service. 
  • They don’t have time to compare insurance rates. 
  • They don’t know where to start looking for new car insurance. 
  • They are under the impression that they will pay a fee for car insurance quotes. 

Many of these myths about car insurance quotes can be dispelled. You can get free car insurance quotes online in a matter of minutes. Even if you are happy with your premium, if you did a little sleuthing, you could come across a much better deal. 

How Often Should You Shop Around for Car Insurance? 

Most personal finance experts recommend shopping around for car insurance at least once a year. The best time to do this is just before your annual policy renewal, when your premium is likely to increase. 

Changes to your customer profile can also lower your risk level, leading to a lower premium. These include:  

  • Your personal circumstances. If you reached the age of 25, got married, or bought a home, your car insurance rate could drop significantly. Adding a spouse to your policy or bundling your car and home insurance can also be more cost-effective than having separate policies. 
  • You’re driving less. If you work from home, your auto insurer may be happy to reduce your rate. Alternatively, you can switch to a mileage-based insurance policy. 
  • Your credit score has improved. Many insurance companies use credit scores as one of the factors in determining an individual’s car insurance rate. You could qualify for a reduced rate if your credit score improved. 
  • You moved to a new location. If you moved to a safer neighborhood or a home with more security, your premium is likely to drop. 

Why You Should Compare Car Insurance Policies

Insurance rates can vary widely from one insurance company to another. Let’s say you are a 35-year-old single woman in California insuring a Toyota Prius. One insurance company may give you a lower rate because they view 35-year-old females as safer drivers. Another may up your rate because they consider hybrid vehicles more expensive to repair.  

Here are a few more reasons you should compare auto insurance quotes regularly. 

1. You could find a better product

Price isn’t the only factor to consider. By comparing car insurance policies, you could find a policy with a similar rate but with additional benefits. 

2. You could access discounts

Some insurance companies offer more discounts than others. These may include good driver discounts, military or veteran discounts, pay-in-full discounts, and senior discounts.  

3. Your insurer may be subjecting you to price optimization

Insurance companies will push up their rates to the highest price they think you will tolerate before switching to another insurer. It’s called price optimization. So, your loyalty to your insurer could actually attract higher rates rather than lower ones. 

Simple Steps to Find Cheaper Car Insurance

Finding cheap car insurance isn’t as complicated or time-consuming as you may think. 

First, approach your current auto insurer. If they realize you are shopping around for cheaper car insurance, they may be willing to drop their rate to keep you as a customer.

Second, hop online to compare multiple car insurance quotes. Several insurance comparison tools can help you find the best-priced auto insurance rates.  

In most U.S. states, car insurance is non-negotiable for car owners, but paying overpriced rates is not. To find the best rates, always inform your auto insurer of changes to your circumstances and make it a habit to compare auto insurance quotes at least once a year.

Andrew Herrig is a finance expert and money nerd and the founder of Wealthy Nickel, where he writes about personal finance, side hustles, and entrepreneurship. As an avid real estate investor and owner of multiple businesses, he has a passion for helping others build wealth and shares his own family’s journey on his blog.

Andrew holds a Masters of Science in Economics from the University of Texas at Dallas and a Bachelors of Science in Electrical Engineering from Texas A&M University. He has worked as a financial analyst and accountant in many aspects of the financial world.

Andrew’s expert financial advice has been featured on CNBC, Entrepreneur, Fox News, GOBankingRates, MSN, and more.

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