When to shop for car insurance
If you want to get the best possible car insurance rate, you may be wondering when to buy 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 the coverage they need.
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 an average of 26 percent from 2023 to 2024. 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 have experienced recently.
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 comparing 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 circumstances, such as traffic density, frequency of claims, cost of labor and rate of theft and vandalism. Insurance companies weigh these rating factors differently, which leads to insurance premiums 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 $5,421 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 $2,518 per year for full coverage, while the sportier BMW 330i costs $3,055 per year. The price and availability of parts and labor, the statistical likelihood of accidents, the safety features in your vehicle and the overall value of your vehicle can all impact premiums. If you purchase a new car and your current insurer increases your premium beyond a 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.
