3 Reasons to Shop Around for Insurance Every Year

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Getting insurance quotes can really pay off. Here's why.

Drivers must have auto insurance in most states. As a result, for most Americans, car insurance is an essential purchase. It can also be an expensive cost to add to monthly budgets.

The good news is there are ways to keep the cost of coverage down. And for those drivers who don't want to pay more than is necessary to insure their vehicles, there are three good reasons why shopping around at least once a year for insurance could really pay off.

Here's what they are.

1. Insurers may charge more for drivers who don't shop around

Some car insurance companies engage in a practice called "price optimization." Although this isn't allowed in all locations in the U.S., it's permitted in many states.

Price optimization lets insurance companies take certain factors into account when setting auto insurance premiums, even though they don't have anything to do with a driver's chances of a collision.

When auto insurance companies are allowed to engage in this pricing practice, they'll often assess a lot of personal data to determine the likelihood that someone will shop around and compare car insurance quotes. If they believe that you aren't likely to comparison shop and consider switching companies, they may charge more.

Drivers shouldn't end up with an extra large bill just because they were being loyal to their auto insurer. So make sure to get quotes at least once a year from other insurers to see if there are any missing bargains.

2. Motorists may be able to save money if they switch insurers

Even if an insurer doesn't impose an added cost because they think someone will stick around, it's possible to find cheap car insurance by shopping around. As you age and your circumstances change, there may be an opportunity to find more affordable coverage with a different insurer.

If you can drop your premiums while still keeping the same level of coverage, this just means more money in your pocket. It only takes a few minutes to get online insurance quotes and see if you can save. The lower premiums paid month after month can be well worth taking the time.

3. Drivers might be able to get more comprehensive coverage

Coverage options vary from one insurer to another. By shopping around at least once a year for different policy options, drivers may find another insurer offers better car insurance coverage.

For example, some insurance companies allow new car replacement coverage to apply only for vehicles that are the most recent two model years, while others provide this coverage for three or four years after buying a brand new vehicle. This coverage ensures drivers can get a new comparable car if their vehicle was totaled -- rather than being paid only the depreciated value.

Ultimately, shopping around for auto insurance at least once per year can save money in several different ways, and drivers have nothing to lose by doing it. So get started today comparing insurance quotes.

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