The Pros And Cons Of Getting Multiple Car Insurance Quotes

Shopping around for auto insurance probably sounds like as much fun as cleaning tile grout. With car insurance, it's much easier just to renew your old policy instead of comparing rates. At least with grout cleaning you'll have a clean bathroom afterward. But there are definite advantages to getting multiple car insurance quotes once a year or so.

For one thing, statistics show there is a very real possibility you will save money if you compare rates from multiple companies, though you could be among the fortunate few who already have the lowest rate on the market. No doubt, that's a big part of the reason more customers are switching away from some of the biggest insurers than are switching to them. Shopping around also makes it easy to find coverage more suited for your current circumstances. You may also find that your current carrier has been regularly raising your rates a little whenever renewal time comes around just because it can. Researching other carriers can also help if you're not satisfied with the customer service or claims handling of your current insurer.

Now, there can be cons to getting multiple insurance quotes, believe it or not. Contrary to popular belief, though, your credit taking a hit is not one of those cons. That's a myth. However, entering your contact information into several websites will get you a ton of spam calls and email. Shopping around can be time-consuming. And you may accidentally cause your insurance to lapse if you're not careful.

Let's be honest; money is the reason most of those who think about shopping around for car insurance would switch. And it's why so many drivers are reducing or dropping their insurance. This isn't that surprising in a time when we're paying over $4 a gallon for both gas and milk. According to a Consumer Reports survey, 58% of respondents who left their past provider said they did it because another company had better rates, while 41% switched because their old provider raised rates.

And the savings are real. Among those who switched, the median price decrease was $461 annually. In fact, 41% said they paid at least $500 less, and 13% said their cost dropped at least $1,000.

Consumer Reports recommends shopping around for better rates every year or two, and we would have to agree. Comparison is the only way to know if you're getting the best rates and might even help keep insurers stay competitive in their pricing. You could also find out about discounts you've haven't taken advantage of. Comparing rates is so important that the California Insurance Code requires the state to publish a comparison of insurance rates report every year. The California Department of Insurance says that "it is important to remember to shop for insurance in the same way that you shop for any other consumer product."

So you're on a comparison website searching for comprehensive insurance, and the page returns five insurance company names, each with its monthly or annual premium next to its name. Just choose the lowest one, right? Or maybe you call up one of your current insurer's competitors and they tell you they'll give you comprehensive coverage for $20 a month less than what you're paying now. Pretty cut- and-dried, right?

Not so fast. In cases like that, it's not just the premiums you should be looking at. For example, what are the deductibles? A deductible is the amount you have to pay first before an insurance company pays on a claim. Deductibles can range anywhere from $100 to $2,000. So, for instance, say you file a claim for $2,500 in damage, but your deductible is $2,000. You'll have to pay $2,000 toward fixing your car while the insurance company only pays $500. The bottom line: If a policy with a slightly lower premium has a much higher deductible, it may not be worth it to switch. 

You'll also want to compare the limits on what each company will pay out. We mentioned liability insurance earlier. Having just the state's required minimum coverage may not cover you completely if you hit a new sports car. Sometimes, it just makes sense to switch to a more expensive policy.

Money is an important factor, but it's not the only one. Does your insurance cover your current needs? It might be time to get out your policy and look at the fine print. For example, do you have to rent a car a few times a year? Does your policy cover rental cars? At the very least, you likely have the minimum liability coverage your state requires. But does that cover damage caused to a high-end vehicle? Don't just assume you have the coverage you need. Browsing through your policy just might uncover some surprises. On the other hand, you might find you have some coverage you don't need. Either way, it's time to make a few changes.

What if you find you don't have coverage you really need? Does that mean you're going to have to start spending even more money on insurance? Not necessarily. Sometimes two different insurers will offer very different ranges in coverage for comparable monthly premium. You could find that you could get that extra rental insurance or additional liability coverage with a different insurance company for the same monthly payment you're making now.

This can be one advantage of talking to an agent or broker instead of just looking at rates online. An agent or broker can listen to you explain your situation, then put together a plan that's customized just for you, without forcing you to waste money on coverage you don't need.

This applies mostly to those lead-generation websites that promise a quick quote. You know the ones. Instead of just giving you a price on the spot, it makes you fill out an online form with your contact info and maybe some other data, with a promise to email you a quote. And just like that, you get 20 spam calls the next day and every day after that until the end of time. Those types of sites are just data farms that harvest your contact information to sell to marketers and spammers. It's a common practice in a lot of industries, and the auto insurance industry is no exception.

Even comparison sites that will actually show you quotes online, like Compare, Experian, and Insurify, may sell your data. Experian's disclosure, which is buried way down in its website, says that the company does sell customer data. What's more, these sites may only compare insurers they have relationships with, and the quotes you do get may not be the lowest rates they offer.

It's probably best to make some phone calls. We know, many of us don't really use our phones for making calls anymore, but talking to a human being directly on the phone can have its uses. To cut down on your time on the phone, you might consider calling a broker who can compare multiple companies for you.

Has your current insurer made it hard to find an actual customer service rep on the phone? What's it like when you do get a rep? Are they friendly? Helpful? Knowledgeable? Life is too short to waste on bad customer service if you can avoid it. This is not nearly as common a reason for switching as economics, but if you've had some bad experiences with your current insurer, you might consider looking for a place where you'll be treated with respect. There are plenty of websites, like TrustPilot, that host customer reviews of major insurance companies. So do your research and see what other customers have to say.

Another thing to consider is how your insurer handles claims. Some insurance companies may happily take your premiums for years only to give you major resistance when it comes time to pay out for a claim. Your rates may even raise through the roof after filing just one claim. Other insurers offer accident forgiveness or won't raise rates after just one accident. But this is something you'll only find out when you shop around.

One place you might check is the National Association of Insurance Commissioners, which has a tool that enables you to look up consumer complaints about specific insurance companies. And your state's insurance department might have a similar resource. The State of Washington comparison tool is one example.

We're all busy, so the last way we want to spend an afternoon is to shop around for car insurance. But that's what we're in for if we want the best rates. As we stated, comparing policies on the web will often not get us rates as low as the ones the companies offer directly over the phone. However, there are things we can do to streamline the process. 

For example, it would be good to have your policy in front of you before you make the first call. You'll also want to have other information handy, like your driver's license number and your vehicle identification number. And know ahead of time what questions to ask, beyond, "What's your best rate?" Ask questions like, "What are the limits on that policy?" "How much is the deductible?" "What if someone else is driving my car?" You'll cover more ground calling a broker who represents multiple companies.

Another thing you'll want to be careful is inadvertently letting your insurance lapse. Sometimes a new insurance policy doesn't activate as soon as you hang up the phone with an agent. You'll want to verify that your new policy has started before you call and cancel your old one. Some recommend waiting until you get confirmation in writing. In our experience, some insurers can email you your new card with the effective date as soon as your policy starts.

You know how you sign up for a free trial of something, totally committed to canceling before that trial ends, only to find a charge on your card the next month because you forgot to cancel? The auto insurance companies know that a lot of us have the tendency to let those kinds of things slip. Not only that — they're counting on it, especially around renewal time. That's why many insurers increase your premium just a little bit every year. It's too small an amount to worry about, so you don't. But gradually it adds up, until you're paying significantly more than when you started. It's called price optimization by the insurance companies. Others refer to it as a "loyalty penalty."

That's why it's important to shop around, especially when it's getting close to renewal time. Otherwise, you might assume that your price increases are just normal inflation. But don't be fooled. If you call your insurer's competitor, you might find out they can offer the same or similar coverage you're getting now, but for a lower rate.

Of course, this renewal creep isn't always out of greed or malice. Inflation is a real thing, as are climate change and increases in accidents, all of which contribute to higher rates. And, since each company calculates pricing differently, your insurer may actually be giving you the lowest rate it can. That doesn't mean someone else can't do it more cheaply.

So is it worth it to you to shop around? Let us know in the comments.