5 Questions to Ask Yourself Before Switching Car Insurance

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Auto insurance costs are up roughly 20% from last year, according to the Bureau of Labor Statistics. This is difficult news for drivers, many of whom were already paying thousands of dollars per year for coverage.

Shopping around for new car insurance is one of the best ways to keep costs affordable. But there are five key questions drivers should ask themselves before making the switch.

1. When does my current policy renew?

Drivers don't have to wait until their current car insurance policy is expired or about to expire to purchase a new one. In fact, it's best not to do this. Gaps in insurance coverage raise red flags with insurers and may cause new companies to charge drivers higher rates.

On the other hand, it's possible to snag discounts with some insurers for shopping for coverage well in advance of the policy renewal date. Drivers can find their last day of coverage on their auto insurance cards or their policy documents.

If they decide to switch companies, they can call their old insurance company and cancel the policy. Drivers who paid for their coverage in advance will receive a prorated refund.

2. Do I have enough coverage?

Since drivers are already shopping for new quotes, now is a good time to review existing coverage to make sure it's sufficient. Motorists must maintain at least enough coverage to meet their states' minimum car insurance requirements. They may also need collision and comprehensive coverage if they have a lease or loan on their vehicle.

Other coverage may not be required, but it can be desirable. For example, those who own a new car may want to purchase new car replacement coverage, rather than settling for the car's depreciated value if it's totaled.

Once a driver has outlined the specific coverage and limits they want, they'll be better positioned to shop around for car insurance elsewhere.

3. Am I comfortable with my deductible?

Deductibles are the out-of-pocket costs a driver faces when they file a claim. They have a strong effect on monthly premiums. A higher deductible reduces premiums while a lower deductible increases them.

Drivers should check their current policy to see what their deductible is right now. They can then decide whether they want to keep it where it's at or opt for a higher or lower deductible.

4. How is the new company's claims handling?

An insurer that's good at claims handling will get drivers the money they need promptly and without putting up too much of a fight. The insurer will also be clear about where drivers are in the claims process, so they know what to expect. Unfortunately, not all insurers are great claims handlers, and this can lead to serious headaches in an accident.

Drivers can learn more about their chosen company's claims handling by checking out customer reviews and looking at J.D. Power U.S. Auto Claims Satisfaction Study results for their region. When possible, it's usually worth paying a little more for a company that has high claims satisfaction ratings over one with poor claims satisfaction.

5. How much will it actually save me?

Switching is worth it if it leads to significantly cheaper car insurance . But if the savings only amounts to a few dollars, drivers might consider keeping their old insurance. That's especially true when considering a move to a company known for great claims handling to one with poor claims handling.

Each driver has to decide for themselves what's worth the switch. However, those who have recently gone through a major life event that could lower rates, like getting married or turning 25, may be able to save just by contacting their current insurer and letting them know of the change. This could be worth a try before jumping ship to another insurer.

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