3 Signs You're Paying Too Much for Car Insurance

by Christy Bieber | Published on Sept. 6, 2021

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Drivers should watch for these three red flags that suggest they are paying too much.

Overpaying for auto insurance is not the best financial choice, especially since auto insurance premiums must be paid every year for as long as a person drives a vehicle.

So how can drivers tell if they are paying too much for car insurance? Forget to do any of the following and chances are you're paying more than you should.

1. Shop around for coverage

There can be a lot of variation in the cost of auto insurance premiums from one insurer to the next. And there's a lot of variation in how much each insurer charges people with different driving profiles.

Even if a motorist originally shopped around to compare multiple car insurance quotes, their insurer may not stay the cheapest option. Other insurers might lower their costs, new insurance options may come on the market, or a driver's advancing age or changes in their driving record could mean a different insurer now offers more affordable coverage.

As if this wasn't reason enough to shop around, there's also another important incentive. Insurers in some states are allowed to consider factors other than driving history in setting prices. And if that's the case, it's common for insurers to assess which customers likely won't shop around and then charge them higher rates.

That means a driver whose auto insurance company doesn't think they will compare rates could get stuck with much higher prices. To avoid this fate, it's crucial to check prices each year before renewing an auto policy to make sure coverage is still the best deal.

2. Ask for discounts

Insurers offer discounts for all sorts of things ranging from good grades to completion of a defensive driving course to vehicle safety features.

Often, though, drivers don't think to ask about the savings they could receive. It's worth calling an insurer once a year -- or reviewing discount options online -- to make sure motorists are taking advantage of all potential opportunities to save. Otherwise, they very likely could end up overpaying for a policy.

3. Update annual mileage

A motorist's accident risk changes based on the number of miles driven. Many people in recent years have reduced their mileage due to working from home or because they are taking fewer annual road trips due to COVID. If a driver has reduced their time in their vehicle and hasn't reported the reduction in annual miles to their insurer, they are likely paying more than necessary.

Fortunately, it's easy for drivers to correct these three mistakes. Accurately reporting miles, asking for discounts, and researching insurance options annually takes just a few minutes -- and the rewards could be substantial if a policyholder can save on premiums for years to come.

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