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If your car insurance renewal notice made you wince, you’re not alone.
The car insurance index in the government’s Consumer Price Index rose 0.7 percent in October, the Bureau of Labor Statistics reported Nov. 10 (1). That’s one month. The October report also showed overall consumer prices up 0.4%, seasonally adjusted (1).
I’m a CPA, and I’ve been writing about money for more than 35 years. Here’s what I’ve learned about insurance bills: the price on the renewal notice is a starting point, not a final answer.
The insurance industry’s own research group agrees. “Prices vary from company to company, so it pays to shop around,” says the Insurance Information Institute, which also lists several ways to lower what you pay (2).
Some of those savings are surprisingly big. According to the institute, raising a $200 deductible to $1,000 “can save you 40 percent or more” on collision and comprehensive coverage (2).
But when it comes to insurance, nobody’s going to hand you savings. You have to ask. Here are the six questions I’d ask before paying the bill.
1. “What would other companies charge me for the same coverage?”
This is the most important question, and your own insurer can’t answer it. Only comparing quotes can. The Insurance Information Institute’s advice: “Get at least three price quotes.” (2)
Insurify, an insurance comparison site, puts it this way:
Every year you let your policy auto-renew, your insurer quietly pockets the difference. No phone call. No warning. Just a slow bleed that costs drivers like you up to $1,100 annually — for the exact same coverage.
Want to compare your policies? Companies like Insurify can make it happen in minutes. Their platform gets top-rated carriers competing for your business in real time, showing you side-by-side quotes with no hidden “teaser rates” — just your actual lowest price, right now.
More than 10 million drivers already use it. It’s 4.7 stars on Trustpilot. It won’t sell your info to telemarketers. And it costs you absolutely nothing to check.
Stop the Bleed — See My Real Rate Free
Just make sure you’re comparing apples to apples. I walk through exactly how to line up your coverage, policy line by policy line, in “How to Get the Best Possible Deal on Car Insurance.”
2. “What would I save with a higher deductible?”
“Deductibles are what you pay before your insurance policy kicks in,” the Insurance Information Institute explains. Raising a deductible from $200 to $500 could reduce your collision and comprehensive costs by 15% to 30%, and going to $1,000 can save 40% or more (2).
The catch: “Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.” (2)
If $1,000 would wreck your budget, don’t sign up to owe it. But if you wouldn’t submit a claim for $500 because you’re rightfully afraid of higher rates, why do you have a $500 deductible?
If you have an emergency fund, a higher deductible can be a smart trade.
3. “What would I pay if you insured my home, too?”
“Many insurers will give you a break if you buy two or more types of insurance,” the Insurance Information Institute says. “You may also get a reduction if you have more than one vehicle insured with the same company.” (2)
But the institute adds a caution: “You may save money buying from different insurance companies, compared with a multipolicy discount.” (2) A package deal is only a deal if the total is lower.
A comparison site like Insurify Home Insurance lets you see quotes from multiple home insurers side by side, so you know what your house would cost to insure elsewhere before you decide. Compare home insurance quotes
Quick gut-check — if your money advice is coming from random online influencers, you’re playing a dangerous game. I’ve been a CPA since 1981 and writing about money since before the internet existed. Sign up for the free Money Talks Newsletter and get expert advice that’s been tested by time.
4. “Is collision coverage still worth it on this car?”
You always need liability coverage. That’s what pays for injuries and damage you cause to other people and their property (3).
Collision and comprehensive are different: they cover your own car. Collision pays for damage to your car when you hit something. Comprehensive covers things like theft, fire, vandalism, fallen trees and hitting an animal (4).
Both are optional, although a lender may require them if you’re still making payments on the car (4).
When the car isn’t worth much, the math can flip. “If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective,” the Insurance Information Institute says (2).
Before you drop it, make sure you could replace the car if it were totaled.
5. “I drive less now. Do you offer a low-mileage discount?”
If you’ve retired, or start working at home, you may no longer have a daily commute. Tell your insurer.
“Some companies offer discounts to motorists who drive a lower than average number of miles per year,” according to the Insurance Information Institute (2). Not every company does, which is one more reason to compare.
6. “Do you give a discount for a driver-safety course?”
“You may also get a discount if you take a defensive driving course,” the Insurance Information Institute says (2).
New York puts a real number on it. Its Point & Insurance Reduction Program “provides a 10% reduction for three years, from the base rate of your current liability, no-fault and collision premiums” for the principal operator who completes an approved course (5).
Rules vary by state, so ask your insurer what counts where you live.
My take
Insurance is one of those bills many people pay without reading. They open the envelope, sigh and pay.
Don’t. The renewal notice is an offer, and you’re allowed to make a counteroffer. Spend an hour asking these six questions, get a couple of outside quotes, and you’ll either save money or have good reason to believe you’re getting a fair price.
Either way, you’ll sleep better. And on a fixed income, peace of mind is worth more than ever.
Sources: 1. Bureau of Labor Statistics; 2. Insurance Information Institute; 3. Insurance Information Institute; 4. Insurance Information Institute; 5. New York DMV
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