If you are serious about saving money, you must be prepared to change to another insurance company. This is not like deciding whether to change from one brand of ice cream to another. We are talking about the possibility of saving hundreds of your hard-earned dollars. Yet the evidence from the insurance industry is that only about 10% of policyholders change when renewal comes round. No one really knows why people are so reluctant to save money by switching to cheap auto insurance. To be allowed to sell insurance in your state, every company has to be licensed by the local Insurance Commissioner. Everyone has to follow the same code of conduct and is bound by the same regulations. You should not be afraid to change.
Almost all policies are written for twelve months so just before your renewal notice is due, spend a little time doing some comparison shopping. You should know what the current rates are before deciding whether to renew. Now come to the renewal notice itself. Has your insurer given all the discounts you are entitled to receive? If there’s any doubt, make a formal query to ensure you are being quoted the right rate. You should also consider whether there are any ways to reduce the amount you pay. Look very carefully at the scope of the coverage you are paying for. It may be there are savings to be made by removing some of the discretionary elements included in the premium, e.g. for roadside assistance should you have an accident or renting an alternate vehicle while yours is being repaired. You should also think about changing the amount of the deductible or bundling policies to include more vehicles or combine both home and auto insurance.
While this process is going on, remember there’s no fee or penalty for changing insurer at this time. Many policies impose charges if you try to cancel early. This is usually about 10% of the amount of the annual premium remaining unpaid. So do the simple math if you want to cancel early on in the run of a premium. If your annual premium is $1,000 and six months is left to run, the cancellation fee will be $50. Now look at how much you are saving by changing policy. But no insurers are allowed to charge cancellation fees during the renewal period. This must be an absolutely free choice based on the quoted rates. Remember when you get quotes for cheap auto insurance from other companies to ask for exactly the same cover you have now. That way you are comparing like with like. You will never get the right decision if you currently have the minimum liability cover and get quotes for liability cover up to $500,000. Finally always look at the results of complaints published by your local Insurance Commissioner. If your current company has been found guilty of multiple infringements of local regulations, change to a better company.