Four Reasons It May Be Time to Shop for New Insurance

A woman looks at a car insurance shopping website on her laptop at her kitchen island.

(Image credit: Getty Images)

You may be wondering when it is appropriate to start shopping around for a new insurance policy. There is a right time — and, yup, there is an absolute wrong time. Let’s go over all of this so you can know when to take your policies to market, or not.

Here are four reasons it might be time to shop for a new policy.

1. Your premium increased significantly

I know that the first thing that goes through most folks’ minds is, when your insurance premium increases, it is time to shop for new insurance. While this can be true, everyone has to have a reasonable threshold before they start looking around for a new insurance company to partner with.

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When is it enough is a truly personal choice. If your premium goes up $1, would you stop for a cheaper policy? What about $100? $500? $1,000? Rather than looking at the dollar amount, or even a percentage increase, look at how it may or may impact your bottom line.

If the amount is money you could have missed, then leave it be and move on. If it’s an amount that will force you to have microwave noodles for dinner rather than a well-balanced meal, then maybe it is time to see what options are out there.

2. You’re getting poor customer service

Did you recently call your insurance company, agent or broker with a question and find yourself in an endless loop of menus and unanswered voice messages?

While the availability of insurance products varies from state to state, and some areas are pretty tough to get a policy altogether, that doesn’t mean that you can let people off the hook for poor service. Look around for alternatives, whether it be your personal representative or the insurer behind them.

3. The policy terms changed or no longer suit your situation

Insurance policies are contracts, and they renew. That means that the terms you have now may not be the same when the policy expires. If you find that the terms of your policy have materially changed enough that they no longer suit your needs, time to move on.

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Although many insurance policies have a similar foundation, the details can be quite different. Where coverage may exist under certain circumstances with one company, another may directly and specifically exclude a loss of that type.

The insurance policy may have been an ideal fit for you 10 years ago when you purchased it. However, upon reviewing it now, you may find it is far from what you need.

4. You encountered a difficult or unsatisfying claim process

It may turn out that you had a pretty lousy experience when filing a claim with your insurer. Maybe the claims adjuster was a jerk, or the time it took to get things done was longer than you feel it should have been, or even worse, the insurer did not cover something you felt was within the policy terms. This is a very common time for people to start shopping around.

Why this is the worst time to shop around

Unfortunately, as common as this scenario is, this is the absolute worst time to go looking for new insurance. Here’s why.

You may have had the same insurance policy for decades and never filed a claim until now. While the claim is in process, the insurance company is doing what they do — checking on the damage, figuring out what is covered and what is not.

While your claims adjuster is walking that fine line between meeting your expectations and following the policy you purchased, you may say, “Well, enough of this, I’m going elsewhere.”

Any insurance company will not see you as a person who had been claim-free for years. Instead, they will see someone who just had a claim and are now looking to jump ship during the process.

You are inadvertently showing off your worst self, and it’s a double whammy:

First, you are someone who has suffered a loss — certainly not the ideal client to an insurer.
Second, if you’re looking to switch insurance companies with an open claim, it draws into question if that claim is being covered, or if you plan to try to file it with a new insurer with the hopes of a different outcome.

No matter how you crack it, post- or mid-claim are the absolute worst times to shop.

So when is the best time?

You may be wondering, then, when is the best time to shop around? The answer may surprise you. Unless there has been an astronomical event, be it a claim failure, price increase or change in policy terms, the majority of the time it is better to just stay put.

Yes, you read that right — just don’t shop. Unless there is a compelling reason to switch insurers, you may find that the yourself out of the frying pan and into the fire. After people shop for insurance, they typically end up just as unhappy as before, or sometimes more unhappy since they had to go through the process.

If you’re determined to shop around, the best circumstances are:

When you haven’t had any claims
When your driving record is clean

This is when you would look to an insurer like a good risk to take.

Want to learn more about insurance? Visit KarlSusman.com.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Karl Susman is a veteran insurance agency principal, nationally engaged insurance expert witness and broadcast host who translates insurance from jargon to judgment. For more than three decades, he's helped consumers, courts and policymakers navigate coverage, claims and compliance. As Principal of Susman Insurance Agency, Karl works directly with households and businesses to compare options and make clear, defensible coverage decisions.