How do I know if I am overpaying for my car insurance?
If you're worried you could be overpaying for car insurance, enter your ZIP code below. Our free comparison tool will generate insurance quotes from local car insurance companies so you can compare your rates against what other drivers might be paying for coverage in your neighborhood. You can use these quotes to buy a new car insurance policy online with us.
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UPDATED: Jun 21, 2022
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- Insurance rates are customized based on several factors
- Examine your policy closely to see what little extras you’re currently paying for
- The insurance company will only pay up to the plan limit
In many cases, you can lower your insurance premiums by going with another company or just changing the electives with your existing plan.
Here are a few ways for you to determine if you’re currently paying too much for the coverage you have. Start comparing car insurance rates now! Enter your zip code above to get started!
Understand Why Rates May Rise
Insurance rates are customized based on several factors. You may be able to look at the average insurance premiums for your area, but it’s entirely possible that you’ll pay more than that amount based on your driving record.
If you find out that you’re paying more than a friend with a similar car, you may ask yourself if any of these conditions may be forcing your rates up.
Here are a few things that may increase your rate:
- Driving Record – A clean record that’s free of accidents or tickets will result in lower premiums.
- Parking Location – If your car is routinely stored in a garage, then share that information with your company. Vehicles parked on the street typically have higher insurance rates.
- Your City of Residence – Insurance rates are based in part on the crime, vandalism and accident rates in the city you live in.
- Age and Gender – As drivers age, their rates usually fall. People under the age of 25 will typically have the highest rates. Women tend to get in fewer accidents, so females usually receive lower rates.
- Credit Rating – A low credit score can lead to higher rates because some insurance companies believe that people with poor credit are more likely to file claims.
- Your Vehicle and Coverage Amounts – Some cars, like sports cars, just cost more to insure. This is why it’s a good idea to check out insurance rates on a car before making the purchase. Low deductibles and high coverage levels also play into higher overall rates.
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Checking Your Plan
While you cannot change your age or gender, you can make some other changes to your plan. It’s wise to review your coverage occasionally and see if you’re paying for protection that you really don’t need.
When it comes to your auto insurance, the two big questions are whether to carry comprehensive and collision on an aging vehicle and if your liability limits are high enough to protect your assets.
You can substantially lower your premium by dropping comprehensive, but you should carefully weigh this decision.
Here are a few questions you might ask yourself:
- Is your car currently paid for? Finance companies require that you maintain this additional level of insurance.
- If your car is totaled, do you have the money available to buy another one? Remember that the insurance will not pay anything towards your loss without this coverage.
- Do you have money in a savings account to cover the cost of repairs in the event of a minor accident? You won’t be able to file a claim for the damages if you don’t have this protection.
Another consideration is your current liability limits. State minimums are more affordable, but they can leave you open to lawsuits.
If you cause an accident and destroy a brand new car, then the damages could easily exceed $30,000.
The insurance company will only pay up to the plan limit, so if your liability coverage is for $10,000, then you could wind up having to pay the other $20,000 out of your own pocket.
Ideally, your limits should be high enough to shield your assets in the event that you an accident and are sued by another party.
What are the little extras?
Examine your policy closely to see what little extras you’re currently paying for. As you streamline the insurance plan, you make it easier to find a comparable program that you might save money on.
If you decide to stay with your existing company, then you’ll still appreciate the savings.
Here are a few extras that you may not want include:
- Rental Reimbursement – This is unnecessary for someone who has an extra car or can use public transportation when necessary.
- Roadside Assistance – Not only do you rarely need this, but you may already have protection through AAA, OnStar or even certain credit cards. Look at the cost and ask yourself if it’s worth it for the rare occasion that you need a tow truck or jumpstart.
- Life Insurance – If the kids are grown and you’re in good shape financially, then you may decide that you can happily forego this coverage.
- Low Deductibles – If you never file claims, then you can easily go with a higher deductible to save money every month.
Inertia is Expensive
The insurance industry is constantly evolving, and the laws of supply and demand still apply to this industry.
As companies try to bring in new customers, they offer special incentives, new discounts, and other program options to make their plans more attractive.
While new customers are given the special savings, most companies won’t automatically lower the rates on an existing customer.
This means that you may find savings by simply calling other agencies to see what they have to offer.
According to CNBC, this may be the single largest mistake that consumers make. However, you may be able to lower your premiums by simply calling around for quotes.
Here are a few tips on making the comparison process easier:
- Refine your coverage levels first to ensure that you’re looking at comparable quotes
- Check the financial stability of agencies with companies like A.M. Best. A company with a solid performance record is more likely to be there when you need them, but you may pay a little more for their service.
- Use comparison tools online so that you can easily review information without having to make dozens of phone calls.
- Always ask about discounts. You may qualify for savings based on your career, the number of policies you have with a given company, and the safety features on your car.
The insurance rates you’re paying now could be way too high, but the only way you’ll know is to do a little research.
While a young adult male won’t receive the same low prices as an older man with a pristine driving record, it’s still possible for him to save on rates by shopping around.
You may also make changes to your existing policy to bring the rates down without actually switching.
Start comparing car insurance rates now! Enter your zip code below to get started!
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