Dave Ramsey Recommends Shopping for New Auto Insurance in These 6 Situations

Don't assume sticking with the status quo on your auto insurance is always the right move.

Buying auto insurance is important to protect against loss of assets and to comply with the law. But while motorists may assume they can buy coverage once and never think about it again, that's simply not the case. In fact, it is important to shop around for coverage periodically.

Specifically, there are six situations when finance expert Dave Ramsey believes motorists should shop around to see if switching insurance makes sense. Here's what they are.

Six situations to look for new auto insurance coverage

Ramsey suggests shopping around and comparing car insurance policies under the following six circumstances:

1. After moving
2. After buying a new vehicle
3. After getting married
4. After getting divorced
5. After adding a teen driver to a policy
6. After a loved one who was on the policy has passed away

There's an important reason why Ramsey suggests these life events should trigger a comparison of insurance options. "Sometimes, major life events affect your premiums—and the company that was giving you the best deal before isn’t anymore," Ramsey explained.

How to shop for new insurance

While it may seem like a hassle to add shopping for car insurance to the list of things to do after experiencing a major life change such as a move or a divorce, the reality is that it's pretty easy to check out the available options.

Consumers shopping for a policy can check what their current coverage is to make sure it's enough and that no additional protection is needed. "Double-checking your current policy now will help you know what to look for when you start shopping for a new one," Ramsey explained. "After all, it’s kind of hard to shop for something when you don’t even know what you need."

After checking out current coverage, drivers should think about what types of asset protection they need and whether they should add on additional types of auto insurance, such as collision insurance or more liability coverage. Ramsey recommends having at least $500,000 in liability protection, even though the state-required minimums are much lower.

Armed with the information about what types of insurance to buy, consumers can compare quotes from multiple insurers online pretty quickly. It's easiest to do this using a car's VIN number, since insurers can automatically look up a lot of information about the vehicle when drivers provide this identifying number. Drivers shopping for coverage should also have details about their own accident history as well as the driving history of others who will be covered by the policy.

After getting quotes for coverage from around six to 10 insurers, motorists can make a decision about which company will provide all of the coverage that is currently needed for the best premium price possible.

Some motorists will find this is a different insurer than before if they are comparing coverage after the major life events Ramsey mentioned, while others may discover that sticking with their existing insurer makes sense after all. The only way to know if a change is needed due to changing life circumstances is to do the process of comparison shopping to explore all the options available.