Sarah Travers
Auto insurance costs have surged by approximately 20% from last year, as reported by the Bureau of Labor Statistics. This spike has put additional financial pressure on many drivers who were already dealing with substantial insurance premiums. As a result, searching for new car insurance has become a crucial tactic for maintaining affordability. However, before making a change, there are five vital questions every driver should consider.
When Does My Current Policy Expire?
Knowing the expiration date of your current policy is essential. Contrary to what some might believe, you don’t need to wait until your car insurance policy is about to expire to look for a new one. In fact, delaying could be detrimental. Gaps in coverage can be seen as risky by insurers, potentially leading to higher rates with new companies.
Furthermore, some insurers provide discounts for seeking coverage well ahead of the renewal date. Drivers can find their last day of coverage on their insurance cards or policy documents. If they choose to switch, they should notify their current insurance company to cancel the policy. If the coverage was paid in advance, they will receive a prorated refund, ensuring no financial loss during the transition.
Is My Coverage Adequate?
While shopping for new quotes, it’s an excellent opportunity to review your existing coverage to ensure it’s adequate. Drivers must maintain at least enough coverage to meet their state’s minimum car insurance requirements. Those with a leased or financed vehicle may also need collision and comprehensive coverage.
Beyond the minimum requirements, additional coverage can be highly beneficial. For instance, new car owners might prefer new car replacement coverage instead of accepting the car’s depreciated value if it’s totaled. By outlining the specific coverage and limits desired, drivers can better compare and shop for insurance that meets their needs.
Am I Satisfied With My Deductible?
The deductible is the out-of-pocket cost a driver faces when filing a claim, significantly impacting monthly premiums. A higher deductible generally reduces premiums, while a lower deductible increases them. Reviewing the current policy to check the existing deductible is a crucial step.
Drivers should then decide whether they want to maintain their current deductible or opt for a higher or lower one based on their financial comfort level and risk tolerance. This decision will play a significant role in shaping their new policy and its associated costs.
How Does the New Company Handle Claims?
Claims handling is a critical aspect of car insurance that often gets overlooked until it’s needed. An insurer with efficient claims handling can make a stressful situation more manageable by providing the necessary funds promptly and without excessive hassle. The insurer should also communicate clearly about the claims process so drivers know what to expect.
Not all insurers excel in claims handling. To gauge a company’s performance, drivers should research customer reviews and consult resources like the J.D. Power U.S. Auto Claims Satisfaction Study for their region. Paying a bit more for a company with high claims satisfaction ratings can be worth the peace of mind and smoother claims experience.
What Are the Actual Savings?
The primary motivation for switching car insurance is often to save money. However, the savings need to be significant to justify the switch. If the potential savings amount to just a few dollars, it might be wiser to stick with the current insurer, especially if they are known for excellent claims handling.
Drivers should consider any recent life events that could lower their rates, such as getting married or turning 25. Informing the current insurer of these changes might result in savings without the need to switch companies. Each driver must evaluate their specific circumstances to determine if switching insurers is the most beneficial move.
Switching car insurance can lead to substantial savings and better coverage, but it requires careful consideration. By asking these five key questions—about policy expiration, coverage adequacy, deductible satisfaction, claims handling, and actual savings—drivers can make informed decisions that best suit their financial situation and insurance needs.
