Is This a Valid Saving Tip?

Family Handyman magazine says in its July/August issue that you can save $50 on your car insurance by shopping early. Not too early, mind you, but not too late either. Their thoughts:

Everyone should shop around for new insurance rates every three years. Insurance companies reward early shopping (30 days before renewal is perfect) by giving better rates. Last-minute shopping (less than 10 days before the policy expires) makes insurance companies think you're irresponsible, and that will be reflected in a higher quote.

My thoughts/questions on this suggestion:

1. Let's start with the fact that I LOVE the idea of shopping around for car insurance and I've featured the tip many times on this site. So I'm 100% with them on the idea of getting different estimates to compare rates.

2. But is there really a "good" time to do this and is 30 days that time? Is 10 days really bad? Of course you don't want to wait too long or else you may be forced to stay with your current provider just to maintain coverage, but does this savings for 30-day people versus 10-day people really exist? Anyone know for sure?

We usually start calling about three weeks before renewal time. Not sure if this is good, bad, or in the middle based on the suggestions above.

I'm confused...

Comments

[Jo]

I don't think 10 days is too late, depending. I just recently switched insurance companies so that my fiance and I could have the same company (actually turned out that we could be on the same policy, even though we live in two different locations.) Anyway, I called like 10-14 days before and was fine, I pretty sure I even got a discount for calling before my policy was up.

[Dave]

I am in the process of swiching insurance companies. The rate quote that I recieved from the new company does includes a discount because it is more than 30 days until my current policy expires.

[Journey]

This is so true. I just moved to a new state that is more densly populated than my old state. I had esurance and my monthly payment went from 135 to 199 at my new location. I got a quote with Erie for my new location and there monthly payment for the same plan as I had before was cheaper than the 135 I paid in the state I moved from. I actually wish I shopped around more in the last 5 years for auto insurnce. I could have saved at least a couple hundred dollars.

[MelMoitzen]

I'm not sure why the period of time you call in relation to your renewal date with your current carrier would have any impact, or why you shouldn't be shopping this stuff all the time if you're serious about saving money on car insurance.

Far as I know, the law is that you're entitled to a pro-rated refund of paid premium if you cancel an auto policy. So even if you've just paid a six-month premium and are a few weeks into your renewal, you can simply put the new insurance into force, cancel the old policy effective the same day, and get most of your money back from the old carrier.

You will need to float the cost of the new policy for a week or so while waiting for the refund. Most carriers allow you to charge the first premium payment (if not all of them) on a credit card.

[Cynthia]

We got another car and decided to shop around for insurance. I ended up saving $780 by changing providers. We were with Progressive and changed to Geico. The crazy part is that I moved to Progressive from Geico for the same reason - price!

I was within the 30 day time frame,but it was by accident. And while Progressive asked me what they could do to make me stay, when I said match Geicos price, they said they couldn't.

Anyway, I honestly think that for the time it took me to save that money, doing a quick rate check yearly is in line. It took about 30 minutes to get $780 savings is a good return on my time!

[MikeS]

You may or may not save any money depending on the company. I've seen companies offer a discount if the effective date of the policy is 30 days or more in the future, but not all companies are the same.

[Jason]

I just completed the process of shopping for new home and auto insurance after receiving a rate increase from Allied. A lot of the quotes were coming in 15-20% lower than what I was paying now, but quickly found out that it was because I was getting a 10-20% discount as a new customer, which would go away after 6 or 12 months depending on the company and then the rate would once again be the same. I decided to stay with my current company.

[FMF]

Just so everyone is clear, I'm not asking whether shopping around for car insurance is a good idea -- I know it is. I'm wondering specifically about the 30-day rule and if it's valid or not.

[JimL]

When we were approaching the addition of a teen driver to our insurance, I began to shop again. Quotes given at about 60 days were not different when we went back again with 2 weeks left.

[FMF]

Just got this in an email from a PR contact:

Sam Belden of Insurance.com says:

“It’s a good idea to start shopping 3 to 4 weeks before your policy expires. But, switching 7 days in advance is the magic number! Half of the companies we quote at Insurance.com offer an early shopping discount if you buy a new policy at least one week before your current policy expires. Other companies aren’t concerned with when you shop – as long as you have a current policy when you switch. It’s actually a lapse in coverage that signals 'irresponsibility' and higher rates.”

[Gregory]

I didn't think it mattered when you shop around at all, or at least that there's no reason to stress right before your policy renews. Don't you get a prorated refund if you cancel mid-policy term with your current carrier? I just switched my wife over to State Farm from GEICO and I'll be quite peeved if she doesn't get a prorated refund of the ridiculous premium they were charging her!

[john]

You are right that you get a pro-rated cancellation, but some companies do a "short rate" cancellation (essentially a penalty for early cancellation to recoup the cost of acquiring the policy). Being in the insurance industry, I would advise shopping every 2-3 years, but be very careful not to shop exclusively on price. I assure you each company has different forms and exclusions (that they may or may not openly disclose). Additionally, each company interprets the same clauses, back their agents, and treats their customers differently.

If your auto policy is $1500/year, is it worth paying the extra 10% (about $13 a month) knowing your with a good company and have a knowledgable agent representing you in the event of a claim?

I know people who have worked at discount carriers who said they "wouldn't place their insurance with them if it was free".

Sorry to be wordy, I'm a bit of an insurance geek!

[Gregory]

Thanks, John. And I completely agree about not switching around just to save a few bucks. I've shopped around a couple times over the last couple years but have stuck with State Farm (I've now been with them for about 24 years) even if others were slightly cheaper, just because I've been treated well by them on the rare occasion that I've needed them, and it's worth the slightly higher premium to have that peace of mind. I know there are people who think SF is the devil, so I guess YMMV! Plus no one has never knocked it out of the park by being a significantly cheaper than SF. They all seem to hover in the same general range...except my wife's bizarre GEICO premium!

[texashaze]

I was loyal to an insurance company which had my auto and home for 9 years. When I shopped for a new company last year all competition prices were significantly less. After changing I saved about $1100 a year.

It was amazing. Looking back it seemed clear what happened. Each year the company raised my rates a little bit. After 9 years those increases ended up being huge compared to the competition.

Looking back I will always shop around every few years.