Most people instinctively like to renew their auto insurance policy with the existing car insurer as it avoids the hassle of starting the process all over again. But, if the renewal prices are going up then you might be interested in learning how to switch car insurance.
It can be extremely easy to sign on the dotted line when your insurance company calls for a renewal. However, you should take a pause and reconsider. It could be financially more rewarding to trade your car insurance and go with another car insurance company.
It is possible that your existing insurer or current policy might not be giving you the best value for you money. If you’re like so many people and are confused about whether to get new car insurance coverage or stick with the current insurance provider. This guide will walk you through the pros and cons.
Why is it Smart to Trade Car Insurance?
It is difficult for insurance companies to acquire new customers. Therefore, they may offer better rates and deals to new potential clients. You might not get the same benefits being an old customer. Here are some reasons why you might be better off by switching auto insurance.
Convenience is highly tempting and it can stop you from shopping around. However, everyone knows that there is cut-throat competition among insurers to come up with new deals and discounts.
The insurance business survives on acquiring new customers. Hence, you might just get better discounts and rates if you are ready to switch to a new provider.
You might believe that your existing insurer is giving you the cheapest deal because they did so last year. However, you should not fall into this renewal trap. Insurance companies use this tried and tested tactic of ‘hook and bait’ to reel in a customer and keep them from seeking new options. That’s why It is recommended that you at least compare prices before blindly signing the renewal.
The same can be said for when you are considering purchasing a new car. Rather than adding a vehicle to an existing insurance policy, see if you can get better deals on that new car.
Returns can be Significant
There are a number of areas in your household budget where even a dollar saved counts. For instance, even a marginal decrease in costs with a new insurer could better help you maintain your vehicle and pay off the auto loan on it faster. It is important that you avoid putting yourself in a comfortable niche when it comes to insurance companies.
One great way to save money is to find ways to get a cheaper deal on insurance policies. New car insurance coverage can be a great avenue to do just that.
Changes Can Happen
Insurers are known to change their policies and while you can always try to call your company to get a better deal, chances are good they will try to take advantage of your desire to take the easiest path and stick with a company even if they start charging you more. If you are sticking with a company year after year, it is quite possible that you missed out on a change which was a major reason for choosing the company in the first place. It could be related to claims settlement.
Most people do not even read the offer document and policy details before signing up for renewal. However, it is important that you look past the renewal amount. It could be time to trade car insurance if you are not happy with some of the clauses.
Why You Should Stick With Your Current Provider
As we discussed in the previous section, you should definitely evaluate the prevailing market rates at every renewal. However, if you find there is not much of a difference, then you may be better off not switching auto insurance. There are a number of advantages of being loyal to your current insurance provider.
Most insurance companies will consider qualifying a customer for accident forgiveness only after 3 years of business. You need to understand your risk factor as a driver. If you think you are prone to accidents, then it might be a salient idea to wait for accident forgiveness to set in.
Large companies have loyalty discounts built in to reward years of business. Many customers start to get breaks in the policy after about 3 years of business.
Bundling discounts are a frequently advertised loyalty discount in which you can qualify for lowered rates when you have several policies from the same company. Statistics show that an umbrella policy can bring down a homeowner’s auto insurance by 18%.
Better Customer Service
You can develop a strong agent relationship with your insurer that is more than just pure numbers. For instance, a working relationship with an agent can make way for a smoother claims process in the event of an accident.
Your agent will also be familiar with your driving habits and needs. He will be in a better position to recommend coverage options that can give you optimal protection while being cost effective.
Agents also tend to protect the interests of their customers. If you are unfamiliar with the workings of auto insurance, you can end up paying for coverage you do not need. An agent can help you identify your needs and the coverage you should get.
When Is it Not Advisable to Switch Insurers?
These are the circumstances when you should not consider switching insurers even when the other company is giving you a better deal.
- Price Match
There is no reason to switch when your current insurer matches the deal of the other company. It is best to speak with your insurance provider about the better rates offered by the other insurer. This is one of the reasons why you must always shop around before signing on the dotted line during renewal.
- Qualified for Accident Forgiveness
If you are qualified for accident forgiveness in your current coverage, then you should consider staying with the same insurer. Accident forgiveness can potentially save you thousands of dollars and even in the era of tax cuts that is something to write home about. Your insurance premiums are at a risk of skyrocketing whenever you meet with an accident.
Combined with the fact that qualifying for accident forgiveness is no easy feat, you should consider sticking to your current insurance provider. You can always change insurance providers once accident forgiveness coverage runs out.
- Bundled Policies
Sticking to the same company makes sense when you have multiple policies from the same provider. For instance, if you have a homeowner’s insurance tied to the same company that you have your care insured by, then you should not look towards another company for auto insurance. You can lose out on hundreds of dollars by canceling out umbrella insurance.
The Bottom Line
While it is beneficial to shop around for new car insurance coverage, it is advisable that you first speak to your current insurance provider to match the rates. There are a number of discounts that loyalty brings with itself. Many companies have ways of rewarding people who have been with them for a decade or more.
This could even result in benefits that are more than purely financial in nature. That said you should always do a cost-and-reward assessment. It may be time to finding new car insurance coverage if you find a better deal.
Your car loses value over time so why would the car insurance company raise the fees to insure your car since your car is worth less as time goes on? They would only do this based on greed and to increase their profit margin. There is nothing wrong with making profits – profits are one of the aspects that helps improve the quality of our lives but raising rates for unsound reasons is not ethical.