5 tips for renewing your car insurance policy

Kathryn Hawkins

So, it’s time to renew your car insurance policy. And you're dreading what's next.

Before you freak out -- and well before you sign on the dotted line -- take the time to do some research, compare insurance quotes, and negotiate to make sure you’re getting the best rates available. In some cases, you may be missing out on hundreds of dollars worth of savings.

“There are a number of key factors most insurance companies use to calculate how much you’ll end up paying for your auto insurance,” says Douglas Nadeau, a spokesman for State Farm. “What’s important to remember is that you can control many of these factors.”

Insurance experts share these five tips on how to get the lowest rates and best value when it's time to renew your car insurance policy.

1. Make sure you’re not paying for more coverage than you need.

It’s in an insurance agent's best interest to help you buy as much coverage as possible. But depending on your circumstances, that’s not always necessary.

“If your vehicle is over 10 years old, the value of that vehicle has diminished greatly,” says David Isaac, senior product manager at MetLife Auto & Home. “As a result, it may not be worth it to continue purchasing ‘full’ coverage insurance, such as coverage for collision or comprehensive.”

If you’ll pay more in premiums than the car is likely worth, it's time to scale back your coverage. Collision and comprehensive coverage are optional; liability coverage is mandatory in every state except New Hampshire.

2. Bundle your insurance -- if it makes sense and saves money.

Often, insurance companies will give you a discount if you buy at least two insurance products, so consider bundling your policies, says Amy Bach, executive director of consumer advocacy group United Policyholders. Bundling may include coverage for more than one car, or a car insurance policy coupled with a homeowner’s or renter’s policy. Discounts can be substantial. For instance, Nationwide customers in some states receive as much as a 25 percent discount for bundling.

However, make sure the savings will add up before you make the switch. Companies that offer various types of policies typically charge more than auto-insurance-only companies, so bundling won’t always make up the difference. In a recent report from market research company J.D. Power and Associates, customers who bought auto-only policies expressed greater satisfaction than other customers, largely thanks to cost savings.

3. Claim discounts you’re eligible for.

You may be eligible for discounts based on age, driving record, memberships or other considerations. For example, Larkin-Thorne says drivers who are 55 and older typically qualify for a senior discount; they may also qualify for discounts as military veterans or members of certain organizations. If your household includes teen drivers, they may qualify for “good student” discounts, depending on their grades. Talk with your insurance agent or company about available discounts.

If you’re planning to switch policies, Jeff Evans, an insurance agent at Great Frontier Insurance in Colorado, recommends negotiating an "advanced quote" discount. “With most carriers, if you start a quote at least seven days before you start the policy, there is a discount for planning ahead,” he says. Additionally, Evans says, most insurers offer discounts if you choose to receive your bills electronically instead of by mail.

4. Make sure your insurance rates are based on accurate information.

Your car insurance company will determine your rates based on factors such as your age, your driving record, your credit history and your location, Larkin-Thorne says.

You may be eligible for a lower rate if you’ve recently modified your driving habits. Example: You now work from home rather than at an office, and are driving far fewer miles each week. Be sure to check with your insurance company or agent so your rates can be modified accordingly.

If your teenage children are driving, they're subject to higher rates, so verify that they’re associated with the correct cars in your household. “If a child is incorrectly listed as driving the 2012 Mercedes, for example, you will probably be charged a significantly higher premium,” Isaac says.

Also, it's not unusual for insurance companies to make mistakes.

Larkin-Thorne says that her own insurer miscalculated her community’s insurance rating, which made local policyholders’ rates jump by $400. After numerous calls from concerned policyholders, the pricing error was fixed. If you notice a sudden jump in rates, don’t be afraid to question the reasons behind it, as they may not be valid.

5. Shop around for a better deal.

If you think you can get better coverage for the same amount or less from a policy with another insurance company, obtain quotes online and talk with insurers before your policy is up for renewal.

“Don’t be afraid to switch,” Bach says. “It’s one of the consumer myths that if you stay with a company for longer, you’ll be treated better, but we haven’t found that to be the case.”

Ted Hughes, a spokesman for MetLife Auto & Home, takes issue with that statement.

"For most companies, there is a benefit for being a long-term customer in terms of discounts or extra coverage. For example, at MetLife Auto & Home, customers who have been with us for 20 years or more can receive up to a 20 percent discount off their premium," Hughes says.

Bach says that if you’re otherwise happy with your current insurer, you should tell the company that you're looking at switching to another carrier. The insurer may be able to give you a better deal to keep your business. “If you have a good driving record, it pays to try to negotiate,” she says.

What to do when your policy renewal arrives

When you receive your car insurance policy renewal, don’t sign it until you’ve taken these four steps.

  • Check for changes. Compare the policy renewal language with your existing policy to catch any changes in coverage or price. If there are changes, call your insurer to find out why.
  • Re-evaluate your needs. If you're driving fewer miles per week than you had been, you might be eligible for a lower insurance rate. Likewise, if you have an older car, you may decide you can do without optional collision coverage.
  • Compare providers. In addition to getting a quote from your current insurance provider, seek quotes online or by phone from several competitors.
  • Choose the policy that offers the best value. When making your choice, don’t focus on price alone, but on the amount of coverage offered for that price. Compare items such as deductibles, exclusions and coverage limits.

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