Car Insurance Rates Are Rising. Should You Switch Providers?

Car insurance rates are on the rise. If you have auto insurance, you’ve probably considered changing companies at some point. When is it a good idea, and when should you stay put?

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Car Insurance

(Image credit: Getty Images) published 30 July 2024

U.S. auto insurance rates rose an average of 11.2% during the past year, according to the latest J.D. Power 2024 U.S. Auto Insurance Study. Given that fact, many drivers are approaching car insurance differently than in the past when they stayed with a company for years and years.

Instead, customers are actively looking for a car insurance policy that offers everything they need, within their budget. But even in the face of skyrocketing premiums, trust also seems to play a big part in whether or not a driver will stay with a company.

"What’s interesting in J.D. Power data is that even though high premiums negatively affect customer satisfaction, those negative influences can be offset by high levels of trust that insurers will come through when they are needed," said Breanne Armstrong, director of global insurance intelligence at J.D. Power.

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Key findings in car insurance rates

Data from Insurify shows that the average driver now pays $2,160 a year for a full-coverage auto insurance policy. That’s up from $2,019 in 2023. So, it’s not surprising that drivers are considering switching insurers for better rates and lower premiums.

Why are auto insurance rates rising?

With rates skyrocketing nationally, many people are questioning why.

Why switch auto insurance providers?

In the first quarter of 2023, Allstate increased rates by an average of 8.4% in 28 locations. From 2018 to 2023, Farmers Insurance cumulatively increased by 54.8%, followed by American Family Insurance at 50.3% and Liberty Mutual at 47.1%, according to a carinsurance.com report.

If you're thinking about switching car insurance companies to save money on your premiums, you are not obligated to stay with your current insurer, even if your policy isn’t set to expire yet or you recently renewed your policy. You may have had the cheapest rate when you signed up, but over time, rates have jumped sharply, leaving you with the question of whether you should stay with your current provider or switch.

When it makes sense to switch car insurance providers

Beyond getting better rates, there are several other reasons to switch car insurance carriers.

When it makes more sense to stay with your car insurance provider

There are several good reasons to switch car insurance companies, but there are also drawbacks.

How do you cancel a car insurance policy?

It’s relatively easy to cancel an insurance policy. Some companies let you cancel by simply calling, while other insurers require you to provide notification in writing. You will likely receive a notification that your coverage is terminated a short time after you submit your cancellation request.

How do you save on car insurance without switching providers?

The biggest reason most people change car insurance carriers is to save money, but sometimes there are ways to save with your current insurer.

Bottom line

Many times you can save money by switching car insurance companies, but there are also times when it's not a good idea. Insurance companies vie for your business and offer an assortment of policy options, which can make it difficult to figure out the best company to meet your personal needs. Word of advice, do your homework prior to switching and don't let your current policy lapse.

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Contributor

For the past 18+ years, Kathryn has highlighted the humanity in personal finance by shaping stories that identify the opportunities and obstacles in managing a person's finances. All the same, she’ll jump on other equally important topics if needed. Kathryn graduated with a degree in Journalism and lives in Duluth, Minnesota. She joined Kiplinger in 2023 as a contributor.

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