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Three reasons to review your auto insurance coverage right now

OK, be honest with yourself. When was the last time you looked carefully at your auto insurance policy – your coverage, your deductible, your premiums? It's probably been a long time, hasn't it?

Chances are, it's been too long -- so long, in fact, that you've likely missed out on some significant cost savings. Sticking with your tried-and-true auto insurance provider could be sticking you with some unnecessarily high premiums.

According to J.D. Power and Associates, three-fourths of people surveyed say they haven’t changed auto insurance providers in 10 years, says Jeremy Bowler, senior director of the insurance practice at the market research company.

If you're one of those millions of motorists, it's time for you to review -- and potentially change -- your auto insurance coverage. Here are three reasons why.

auto insurance review

1. Things change.

It’s easy to let your policy with your current insurance company renew automatically, says Doug Heller, executive director of Consumer Watchdog. Sometimes, the lure of discounts for staying with an insurer make looking at other companies seem like more time and trouble than you want to spend. But our lives change, Heller says -- including our financial circumstances and driving habits.

“If you buy a policy at 25, it probably has basic liability,” he says. “If you’re 35 now and you haven’t changed your policy, you probably don’t have enough coverage to protect your assets.”

On the flip side, you may have too much coverage because you're telecommuting more and driving less.

“Most people just tell the insurer they drive 12,000 miles per year,” Heller says. If you drive less than that, you may be able to reduce your premium.

2. Insurance companies change.

Even without changes to your driving record or coverage, premiums frequently change anyway. Heller says it can be easy to just stay with your longtime insurer and ignore the addition of a few dollars in your premium each year. But over time, that adds up.

Another factor: The quality of customer service by an auto insurer can evolve or devolve. That may not matter until it comes time to make a claim.

Reputation matters, says Melvin “Butch” Hollowell, the insurance consumer advocate for the State of Michigan.

“If you have a good price, you need to know whether they play hardball with customers and try not to pay," Hollowell says. That game of "hardball" may be the reason for the cheaper auto insurance rates -- at the expense of top-notch customer service.

Heller suggests checking the website of your state insurance regulator and researching complaints or actions against auto insurers.

“It’s not just about certification that you are driving legally,” Heller says. “It’s about ensuring your claim is covered if there is an accident.”

Heller also recommends a web search of the company's name and the word "complaints" as well as the word "sucks," which can turn up some of the harshest criticism of an auto insurance company.

“Every insurance company will have some complaints, but you can tell what trends there are," Heller says.

3. You’re probably paying too much.

Most policyholders surveyed by J.D. Power are surprised to learn just how much pricing for auto insurance varies, Bowler says. It’s critical to make sure you know what’s being covered in a particular insurance quote.

Car Key and Dollars isolated on white.

“Take the cover sheet of your existing policy and black out the prices that are alongside the coverage descriptions,” Bowler says. “Send that to the companies you are checking out and ask what they would charge for that exact coverage.”

Hallowell says that simply showing a competitor's quote to your current auto insurance company can get you a lower rate. This tactic recently saved him 15 percent on his auto insurance.

“There are hundreds of companies out there, and you can almost always find something cheaper, even when you factor in discounts," Heller says. "If you are paying $1,500 a year and they offer you a 10 percent price break to stay with them, that’s not as good as shopping around for an hour and finding a policy for $1,200.”

Hollowell suggests consumers obtain at least three auto insurance quotes each year. “It’s a competitive industry. Use that," he says. An aggressive shopper can save as much as 50 percent on auto insurance, Hollowell says.

If you know you're a safe driver – you don’t encounter too many “wow that was close” moments on the road – consider boosting your deductible to $1,000. “That can save you as much as 25 percent on premiums, and more than the deductible over time,” Hallowell says.

If you decide that switching auto insurance companies is worth it, follow these steps before signing on the dotted line:

Do your homework.

J.D. Howard, executive director of the Insurance Consumer Advocate Network, recommends visiting the J.D. Power and Associates website to check an auto insurance company's consumer ratings. Howard's organization offers some online tips as well. You also can check out the video primer on the website of Hollowell's agency in Michigan.

Know the score.

Find out whether any of the companies you're considering use your credit score in calculating auto insurance premiums. The practice is illegal in some states, including California and Massachusetts. Contact your state insurance regulator for more information.

Mind the gap.

Make sure there won't be a gap between when your old policy expires and your new one kicks in. Don’t assume that your insurer will prevent this from happening, Heller says. Get the starting and ending dates in writing.

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