6 Reasons Why You Should Review Your Personal Auto Policy Every 6 Months
Dan Levenson March 14, 2019
If you have auto insurance, maybe you’ve never considered why it’s important to review your policy every six months. Reviewing an auto insurance policy is even more critical when things have changed in your life, such as getting married or moving to a new location. Here are six reasons why you should review your personal auto insurance policy every six months, along with a few considerations and warnings.
1. Vehicle Depreciation
Since auto insurance rates are mainly determined by the value of a vehicle, you need to be sure your insurance carrier has adjusted your premiums that are based on your vehicle’s annual depreciation. In fact, vehicle depreciation is the main reason for convincing insurance carriers to reexamine and reduce a client’s insurance rates. Consider that a new vehicle depreciates in value from 15 to 20 percent during its first year.
2. Old Traffic Violations That Need to Be Removed from Your Record
In most cases, traffic violations can mean increased insurance rates for the next three years, starting from the date that the violation was filed on a police report. Unfortunately, traffic violations can remain stamped forever on your MVR (Motor Vehicle Record) unless you notify your new carrier.
Thus, you need to be sure that when you switch insurance carriers, the new company doesn’t look at an old violation and increase your rate. In other words, make sure your carrier reassesses your rate for any violations that are outdated or almost up.
3. Relocating to a New Area
If you’ve moved within the last six months, you need to review your policy and contact your insurance agent. Keep in mind how many carriers evaluate geographic regions by their overall risks.
For example, areas prone to more vehicle theft and bad weather typically charge higher rates because drivers living in these areas usually file more claims. Also, areas that are highly congested generally have higher rates. Therefore, if you bought your policy in an area considered risky but move to a community where there is less risk, then you need to notify your carrier as you’ll probably get a cheaper rate.
4. Changes in Your Driving Frequency
If you don’t drive as much as you did six months ago, your insurance company may be able to give you a low-mileage discount as many carriers do offer these discounts for people who don’t long distances. In fact, there are some carriers that offer what’s known as “pay-as-you-go” auto insurance that offers even more of a reduction in rates.
5. Changes in Marital Status
Have you tied the knot in the past six months? If so, as a married couple, you and your spouse can receive discounts on your auto insurance. Therefore, you need to notify our insurance carrier. It’s also a good idea to ask other married couples about marriage discounts they’ve received from their insurance companies.
6. Rate Fluctuations
Consider that part of the purchase price of your insurance policy goes for covering an insurance company’s expenses, such as employee compensation, marketing, and other costs. In other words, an insurance rate is calculated by other factors other than a client’s vehicle and driving record.
Because costs can fluctuate, companies compensate by varying insurance rates, which explains why rates can vary significantly between different carriers. Often, companies who pull back from marketing offer even cheaper rates, so it pays to shop around.
Other Considerations and Warnings
- It’s not unusual for new insurance firms to appear that generally offer attractive rates for luring customers from older and more established companies. That’s why it may be beneficial to shop around when you have less than two months before your existing policy expires.
- As most auto policies are up for renewal every six months, take advantage of this chance to ensure you’re still getting the best coverage for the lowest rates.
- If you’ve graduated from college within the last six months, you may be able to get a cheaper auto rate if you live in a state that offers discounts for earning a college degree.
- You may be able to get a reduction if your insurance rate if you have a new job that involves less commuting time.
- Consider opting for a 6-month auto policy rather than a standard 12-month one because this can let you know if you like the terms of the company before having to make a long-term commitment.
- By assessing your policy every 6 to 12 months, you may be able to get possible discounts as well as coverage options, such as collision and comprehensive, that match your vehicle’s depreciation.
The Bottom Line
- By having your insurance carrier reassess your rate, you can probably save a considerable amount of money.
- Some of the main factors for adjusting the rate on an insurance policy include changes in vehicle depreciation, driving record, marital status, and driving frequency.
Questions? Please contact the New Jersey commercial insurance specialists at InsureYourCompany.com.