Why Everyone Is Shopping Around for Cheaper Car Insurance

High numbers of drivers are shopping for different car insurance, for good reason: Many insurers have aggressively raised prices, so there may be better deals out there.

Car insurance premiums are soaring due to the rise in vehicle prices and repair costs, alongside an increase in severe claims, often caused by dangerous driving behavior.

Executives at Allstate, for example, said in a recent earnings call that the brand increased rates by 16.4% in 2023 following a 16.9% increase in 2022. In 2024, they’re hoping to secure additional rate increases in 10 states where the company says its prices aren’t adequate.

As car insurance prices rose in 2023, a new report from LexisNexis found there was a surge in shopping activity. "Overall, shopping and new business volumes exploded in the first months of the year," and activity increased again significantly in the fourth quarter, the report stated. It's evidence that drivers are “not resigned to higher rates” and will search for cheaper options, according to the report.

From October to December, there was a 4.7% increase in car insurance shopping compared to the last quarter of the previous year.

In addition to the rise in shopping for new policies, the report also documents an even larger increase in the number of people actually switching car insurance. In the fourth quarter, year-over-year growth for new policies was 7%.

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Why more drivers are shopping for car insurance

When drivers get hit with large premium increases at renewal, it can be motivation to look into other companies’ rates. Browsing for a new policy is a classic strategy people use to try to lower their car insurance premiums.

That’s a key factor behind the increase in shopping, but it’s not the only reason. According to LexisNexis, insurance companies are increasing their marketing efforts, which is also contributing to the trend of more shopping.

After obtaining approval from state regulators in recent months to increase rates, some insurance companies are now intensifying their efforts to attract new business.

“Insurers walked back new customer acquisition efforts during the summer, resulting in a short-lived dip in shopping in Q3,” the report said. “In Q4, activity bounced back, brought on by elevated rates and increased market efforts, creating prime conditions for a hot market.”

Last year, 41% of households with car insurance shopped for coverage at least once, which is high, according to the report.

In general, experts say that everyone should shop around for car insurance every six months to a year. It’s best to get quotes from at least three companies to make sure you’re paying a reasonable price.

According to an August report from AAA, the average annual cost of full-coverage car insurance is $1,765. That’s up from an average of $1,194 in 2019.

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