Why You Should Reshop Your Auto Insurance

A new study finds that drivers could save a lot by comparing rates from several insurers.

There’s a good chance you’re paying too much for auto insurance. A new study by NerdWallet found that American drivers are overpaying an average of $368 a year to insure their vehicles because they don’t shop around for the lowest rates.

Only 12% of drivers surveyed by NerdWallet -- a site with price-comparison tools for dozens of financial products -- said they find car insurance shopping easy. Because most people find the process to be time-consuming and difficult , they go with the first or second rate quote they get, says Maxime Rieman, product manager for the NerdWallet insurance team. By taking the time to comparison shop, though, drivers are more likely to find substantial savings.

NerdWallet analyzed auto insurance quotes for 1,000 zip codes across the U.S. and found that rates for comparable drivers varied by 154%, on average, within any given zip code. For example, rates for a 40-year-old married male with a clean driving record ranged from $993 to $2,338 in New York. In Texas, rates ranged from $1,067 to $3,133. In California, they ranged from $753 to $1,534.

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Rieman recommends reshopping your auto insurance once a year to get a sense of rates and to find out if you can get a better deal from another insurer. NerdWallet has an auto insurance comparison tool (opens in new tab) that approximates rates from several insurers based on key factors, such as your gender, where you live and what type of car you drive. It’s a quick way to get quote estimates without entering a lot of personal information.

For more accurate quotes, you can use insurance comparison sites such as InsWeb (opens in new tab) and Insurance.com (opens in new tab), but you’ll have to provide more detailed information (see How to Get Accurate Car Insurance Quotes). You also can use TrustedChoice.com (opens in new tab) to find a local independent agent who can shop for you.

You also should reshop your auto insurance for any of these reasons:

You have a minor traffic violation. Speeding tickets and accidents can impact insurance premiums. So if your insurer hikes your rate after you get in a fender bender, Rieman recommends shopping around. You might find a lower rate from another insurance that doesn’t place much of an emphasis on minor traffic violations.

Your zip code changes. If you move -- even to a neighboring city -- you might find rates are lower in your new zip code, Rieman says. See Car Insurance Rates: Location, Location, Location.

Your teenager starts driving. Your auto premiums likely will rise when your teen starts driving. But it is generally cheaper to add your teenagers to your auto policy than for them to purchase their own coverage, according to the Insurance Information Institute. You might find, though, that another insurer offers a better deal for families with teenage drivers than your current insurer does. (Learn more about cutting costs for teenage drivers.)

Cameron Huddleston
Former Online Editor, Kiplinger.com

Award-winning journalist, speaker, family finance expert, and author of Mom and Dad, We Need to Talk.

Cameron Huddleston wrote the daily "Kip Tips" column for Kiplinger.com. She joined Kiplinger in 2001 after graduating from American University with an MA in economic journalism.