Should I Switch Car Insurance After a Rate Increase?

In general, you don’t have much to lose by at least shopping around after a rate increase — in fact, it’s wise to do so. Getting and comparing several quotes does not obligate you to purchase a policy, and if you find that you’re not able to find a better deal, you can simply stay with your current provider.

Here’s what to consider as you’re shopping around and weighing your options.

Discounts

Keep in mind what discounts you’re currently getting from your auto insurance company, and check for which discounts you might be eligible for when getting quotes from other companies. Speak with an agent if you’re unsure, so you can trust that the quotes you receive are providing the lowest possible rate. That said, remember that even if you’re eligible for fewer discounts with a different company, it may still offer you a lower base rate, making a switch potentially worthwhile.

Coverage Level

When comparing new quotes to your current auto insurance premium, keeping coverages the same is key. If you get a cheap quote but it’s for only half your current amount of coverage, it may not actually be cheaper when you consider what you’re getting. Of course, if you decide you no longer need certain coverages or you’d like to lower your liability limits, you can do so. In this case, it would also make sense to see what your updated rate would be with your current company to evaluate whether it truly makes sense to switch.

Customer Service

While no insurance company is perfect, some tend to rank better for customer satisfaction metrics than others. This is a more intangible feature that you should take into consideration when weighing your options. If you’ve been happy with the customer service you’ve received from your current provider, especially if you’ve had to file a claim, it may be worth paying a bit more to stay with them. Some helpful resources for evaluating customer service ratings are the J.D. Power Auto Insurance Study for your region and the NAIC complaint index.

Loyalty Benefits

Depending on your insurance company, you may be eligible for certain loyalty perks for staying with them for several years. For example, several companies offer a loyalty discount if you’ve been with them for a certain amount of time, and it may even increase over time.

Some companies, such as GEICO and Progressive, offer complimentary accident forgiveness to loyal customers who remain violation-free. Nationwide, in particular, provides several loyalty perks, including fender bender forgiveness and car key replacement. Consider the value of any loyalty benefits you receive — they may or may not make it more enticing to stay with your current provider.

It’s worth understanding the reason for your rate increase before you leave your current provider, and it may inform whether you want to pursue switching companies. Here are the main reasons you may experience a rate increase:

• Violations: If you have a violation added to your driving record, such as a speeding ticket, at-fault accident, or DUI, your insurance rate will increase. The increase is generally proportional to the violation, meaning that you’ll pay more after a DUI than you will after a ticket. If your increase is due to a violation, you may be able to get a better rate from a company that tends to offer affordable rates to high-risk drivers.
• Filing a claim: Your insurance company may raise your rates after you file a claim, even if the damage was not your fault. In general, insurers view policyholders who file claims as a higher risk.
• Policy changes: This shouldn’t come as a surprise, but if you make certain changes to your policy, such as increasing your liability limits, lowering your deductibles, or adding coverages, your rate will increase. 
• Standard increases: Even if nothing changes in your driving record, claims history, or policy, it’s normal for insurance premiums to increase regularly. This is due to factors such as inflation, rising medical costs, increased claims in your area, and more, which require insurers to raise rates to keep up with their overhead and payouts.

Switching to a different auto insurance provider is usually pretty simple. If you’ve determined that another provider better fits your budget and you’ve finalized your coverages, you’ll need to finalize your purchase by making your first payment and activating the policy. Depending on which company you go with, you may be able to do this online, or you may need to go through an agent.

Once you’ve paid for your new policy, contact your old provider to cancel the policy. You can usually do this over the phone, and you should be able to select a specific date on which you’d like the coverage to end. Some providers may require you to send a written cancellation request. In some cases, your new insurer will take care of cancelling the old policy for you.

If you’re in the middle of a policy period, you may need to pay a cancellation fee, so be sure to verify this with the company in advance.

If you’re considering switching your auto insurance company due to a rate increase, it may be worth exploring how you can lower your rate with your current company in addition to comparing quotes. This is especially true if you’ve been happy with your provider.

• Lower your coverage: This is not necessarily an ideal option for everyone, but if your priority is saving money, lowering your coverage is one way to do it. This may mean lowering your liability limits or dropping certain add-on coverages that are no longer worth paying for. Be sure to assess your needs and potential out-of-pocket costs before making changes to your policy.
• Check for additional discounts: Ask your insurer if there are any discounts you’re eligible for that you’re not currently taking advantage of. This may include a telematics discount if you haven’t yet signed up for your company’s program and are open to trying it. 
• Look into pay-per-mile programs: If you drive less than average, you may be able to save a significant amount of money by switching to a pay-per-mile program. If your current insurer has one, get a quote so you can crunch the numbers. Switching to a different policy type can avoid you having to switch carriers altogether. 

If you don’t want to move forward with any of these ideas and have found another company offering you a great rate, switching is a great option.

In general, there’s no harm in shopping around if your auto insurance rate increases, especially if it’s more than you’d like to pay. It’s recommended that you shop around when your policy is up for renewal to check for better rates, but you can also switch before your policy expires if you find a better deal.

Keep in mind that auto insurance rates tend to increase each year as insurers try to keep up with rising costs, but each company determines risk differently, so you may find one that offers a better rate for your specific profile.

Looking to switch?  Check out our list of the best car insurance companies to find top-rated options, or compare quotes now if you’re ready to start shopping.