A tip to help you save thousands on auto insurance
Several years ago, as a poor college student money was tight – especially when you add a wife and kids into the mix.
After some time of feeling a bit like we were on a tight leash with our budget, I became determined and started looking for additional ways that we could save money. As any other tech-savvy college student would do, I immediately took to Google in search of ways that I hadn’t previously thought about.
After a quick search of what took no longer than ten seconds, I immediately found hundreds of articles with different tips and ways to save money. Most of them I had already heard of and knew of, but there were a few that caught my attention.
One really interesting article that I came across posed the idea of comparing and shopping for new automobile insurance every 6-12 months. Since insurance companies regularly adjust their prices it made sense to check your current rates every so often to make sure that you are (still) getting the best deal for your situation.
I hadn’t thought much about our car insurance premiums since we signed up through a local agent. Truthfully, I assumed that the insurance company we had coverage with would always keep prices fair and adjust according to our driving and accident records, which at the time both my wife and I both had completely clean records. Unfortunately, that wasn’t (and isn’t) the case.
At first I wasn’t convinced one bit this was actually going to work. And even if it did, I questioned if it would save me enough money to be worth my effort.
I was extremely skeptical at first, to say the least. But wow, was I ever wrong. After researching the concept a bit more I learned two very important principles when it comes to auto insurance rates:
The first, rates can fluctuate quite dramatically, even over a 12 month period.
Second, the insurance industry is highly competitive, and companies are always fighting to get new business.
As a consumer, this has many advantages and it ultimately means that insurance companies will do just about anything to acquire a new customer since they know that they can increase their rates over time.
Needless to say, I started implementing the practice of shopping for new rates at least once a year and found out very quickly that I could save myself a decent amount of money.
When I first started doing this, I would submit online applications to at least 5-10 of the biggest insurance providers like State Farm, Geico, Progressive, Allstate, and a few others. I started with these one mainly because of how well-known they are, so they were the first ones to come to mind.
However, through the trusted Google search, I discovered literally dozens of other providers that could often give me as good of, if not a better rate. Eventually, this turned into a game of sorts to find the absolute best deal, even if by just a dollar or two. I would submit as many applications to as many providers as I could to see where I could get comparable coverage and at the best rate.
Now, once I found the best deal, I wouldn’t cancel my existing policy and take it right away. First, I would first take this quote back to my existing provider to see if they could match or beat the rate since changing policies and providers does require some additional work as well. If not, then I would make the switch and start saving my hard earned cash. The process was quite cumbersome at first, but after a few times, it isn’t as bad as it seems.
I still remember the first time I made the switch. It was incredible— we saved just a little over $65 every month on premiums for the entire first year. That’s more than $700/year in savings, which at that point in time, was a lot for us. And let’s be honest, regardless of your financial situation, $700 dollars saved is $700 dollars earned.
We ended up saving the difference each month and took a much needed (albeit small) vacation the next year. It was well worth the 2-3 hours that I would spend shopping for and switching insurance providers. When you think about it, it’s as if you’re paying yourself $200+ an hour for doing just a little bit of research. I even did it while watching a movie, so I guess you could say I got paid to watch a movie… Not a bad deal at all!
Luckily for me and you, several marketplaces for auto insurance have recently popped up that are dedicated to doing all of the work for you. Companies like Gabi and The Zebra have established networks of dozens of insurance providers and can get you a number of quotes all at once. The best part is that you only have to complete one application in order to provide the necessary information to get the quotes. What once took me 3-4 hours to complete, now takes me less than 30 minutes, and that includes the work of actually making the switch to the new provider.
If it has been some time since you have compared rates and made a switch then you will likely save a much larger amount of money the first time you switch. And while it’s very unlikely that you will save $700+ every year other than the first, you will at least save yourself the hassle of increasing your rates every single year, which really starts to add up over time.
This simple exercise has saved me thousands of dollars over the last few years and is a practice that I recommend to everyone. At a minimum, I tell people to check and compare rates at least once every two years. And if nothing else, you can at least rest easy knowing that you have the best rate.
So, ask yourself this. Are you willing to spend anywhere from half an hour to a few hours on research if it could save you a few hundred dollars every year?
I’ll answer it for you.
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