When Is The Best Time To Renew Car Insurance?

Do you leave your car insurance renewal for the last minute?

You’re not alone.

Whether it’s assignments, health checkups, or chores, we have a habit of leaving things to the last minute and it rarely works out for the best. It creates a mad rush and leads to stress and panic. 

In the case of car insurance, it could mean you end up paying much more than you need to.

When Should You Renew Your Car Insurance?

Your car insurance should renew automatically, typically every 6 months. You will receive a notice about a month before it’s due for renewal and if you don’t want to make any changes, you don’t need to do anything.

However, more often than not, acting before this time could lead to sizable savings. The best time to renew is whenever you can make big savings, and that applies to many life events and personal changes, including:

Your Age

Young drivers are in one of the highest risk categories. They are more likely to speed and to drive recklessly. They also lack the experience of older drivers, so they could be charged more than $2,000 just for the state minimum coverage.

Simply by having a birthday, you could get cheaper car insurance quotes. As you can see from the following minimum average coverage amounts, the differences can be substantial:

  • Aged 16: State Minimum Average = $2,600
  • Aged 17: State Minimum Average = $2,200
  • Aged 18: State Minimum Average = $1,900
  • Aged 19: State Minimum Average = $1,350
  • Aged 20: State Minimum Average = $1,200
  • Aged 21: State Minimum Average = $900
  • Aged 22: State Minimum Average = $850
  • Aged 23: State Minimum Average = $800
  • Aged 24: State Minimum Average = $750
  • Aged 25: State Minimum Average = $650

Your Driving History

Most car insurance companies use your driving history to determine your rates, accounting for everything from speeding tickets to accidents and other claims. However, these things won’t affect your insurance quotes forever and typically last for between 3 and 5 years.

If an at-fault accident is 2.5 years old when you first sign your policy, it will likely increase your rates. When it comes time to renew, it may have disappeared from your record.

Your Credit Score

Your credit score has a massive impact on your car insurance rates. In fact, the difference between a “very poor” score and an “excellent” score could be as much as 150%. Of course, these are the two extremes and it’s an average across the United States. Even moving from “good” to “very good” could net you savings of up to 10%.

Other Factors to Consider

In many ways, insurance companies work like casinos. They consider a wealth of data to determine the risk vs reward. If they payout $100, it’s only because they’re getting at least $101 in return. In fact, the comparisons don’t end there, as insurance companies use the profits generated by premiums to invest similarly to the way that banks do.

That’s a story for another day, though.

If you are deemed to be in a higher risk group, regardless of the apparent injustice of that decision, you will pay more for car insurance.

The reason a younger driver pays more than an older driver is not because the insurer doesn’t like their credentials or the car they drive, but because younger drivers make more claims.

For similar reasons, single applicants are quoted higher rates than married ones and renters pay more than homeowners. If you get married or buy a home, you should consider renewing your car insurance.

If you’re a student and have attained good grades, or you buy a new car with lots of safety features and anti-theft features, it could also be time to renew.