How to Lower Your Home and Car Insurance Rates

Your home and car insurance policies aren’t set in stone. You can potentially reduce your insurance costs by repricing your coverage and considering a new policy.

Both homeowners insurance and car insurance policies offer the flexibility to cancel your current policy and switch to another provider. It’s important to be aware of any early cancellation fees that your insurer might impose, so be sure to carefully read the terms and conditions in your policy before you proceed.

When to Consider Repricing Your Car Insurance

Given the recent increases in auto insurance premiums, it’s a prudent idea to explore new policy options. Repricing your car insurance is a straightforward process that involves obtaining quotes, and you can do this at any time—many insurers do not require you to wait until your current policy’s coverage period ends.

Here are several situations in which seeking a new insurance policy could be advantageous:

1. If you haven’t compared insurance quotes recently. Regularly shopping for car insurance every six months to a year can help ensure that you’re consistently getting the best available rates.

2. If you have an older accident on your driving record. Many car insurance companies only consider the last three to five years of your driving and accident history. An accident from several years ago may no longer impact your rates.

3. If you’re relatively young or have a new driver in your household. Individuals under 25 can benefit from frequently shopping around as they age, as premiums generally decrease over time.

4. If you’ve experienced a major life event. Changes such as getting married, graduating from college, or purchasing a home can potentially lead to more affordable insurance rates.

5. If you’ve paid off your car. While paying off your car loan won’t directly lower your premiums, you may be able to eliminate certain coverage types that are no longer necessary.

6. If you’ve relocated. Whether you’ve moved nearby or to a different region, your car insurance rates may change. Additionally, having a garage at your new residence could make you eligible for further discounts.

7. If you’ve improved your credit score. In some states, insurers take credit scores into account when determining rates, with higher scores often resulting in lower premiums.

8. If you’re driving less. If you’ve switched to a closer job, started using public transportation, or retired, you might qualify for a reduced insurance premium.

Steps to Reprice Your Car Insurance

To effectively lower your car insurance premiums, follow these steps:

1. Obtain a copy of your current coverage details. Review your existing policy to understand your current costs and coverage types. If you wish to maintain the same coverage, ensure that your new policy offers comparable limits for each type of coverage.

Additionally, consider areas where you can cut back on unnecessary coverage. For instance, if you have roadside assistance through AAA or a credit card, you might not need to pay extra for it in your insurance policy. Similarly, older vehicles might not require comprehensive coverage if you can afford to replace the car yourself.

2. Request quotes from multiple insurers. Gather the required information, such as your driver’s license details and your car’s VIN number (located at the bottom of the driver’s side windshield). Explore various insurance providers operating in your region. CNBC Select’s recommendations for top car insurance options include Geico for its competitive rates and Nationwide for its affordable full-coverage premiums and free annual insurance evaluations.

3. Purchase any new coverage you’re considering and cancel your previous policy. If you find a policy with lower rates than your current one, make sure to secure the new policy before canceling the old one. It’s crucial to avoid any gaps in coverage, even brief ones, as they could lead to higher future insurance costs.

Subsequently, initiate the cancellation of your old insurance policy either through a phone call or online. If you’ve prepaid your premium and cancel before the policy term ends, you might receive a refund. If your car is financed, make sure to provide proof of insurance to the relevant loan institution.

Determining the Right Time to Reprice Homeowners Insurance

If your home insurance premiums seem excessive, it may be worth reassessing your policy to explore more cost-effective options.

Several scenarios where repricing your homeowners insurance can be beneficial include:

1. If you haven’t recently shopped around for coverage. Taking the time to obtain quotes from various insurance companies can potentially lead to more affordable rates.

2. If you’ve made home improvements that could qualify you for discounts. Installing features like an alarm system, smart home technology, or storm-resistant upgrades might make you eligible for reduced premiums.

3. If you’ve increased your credit score. Similar to car insurance, some states allow insurers to use credit scores to determine rates, with higher scores often correlating with lower premiums.

Steps to Reprice Your Homeowners Insurance

To effectively lower your homeowners insurance costs, follow these steps:

1. Review your current policy and gather necessary information. Examine your current homeowners insurance policy’s declarations page to identify details such as premium amounts, coverage types, limits, endorsements, and deductibles.

2. Request quotes from multiple insurers. Using the same coverage limits as your existing policy, obtain quotes from various insurance companies in your state.

3. Purchase a new policy and cancel the old one. If you find a policy with a lower premium while maintaining the same coverage, consider switching to the new policy. Ensure that the new policy is effective before canceling the old one to prevent any gaps in coverage. Pay close attention to the effective date and ensure that the cancellation date aligns with or occurs after the start date of the new policy.

4. Inform your lender about the change in insurance companies. If your home is mortgaged, it’s important to inform your lender about the switch in homeowners insurance companies. This step is particularly crucial if you have an escrow account that manages tax and insurance premium payments. Provide your lender with the declarations page and the cancellation notice from your former policy to keep them informed.

By following these steps and considering the recommended scenarios, you can potentially lower your home and car insurance rates while ensuring that you maintain adequate coverage.