To save money on car insurance, it helps to be disloyal.
It’s not intuitive but it drives the U.S. auto insurance industry’s pricing strategies, experts say. Those who stay with the same auto insurer year after year are losing money by not shopping around, said Joshua Morrison, owner of California-based Morrison Insurance Service.
“Car insurance is one of the few consumer products that tends to undermine loyalty,” he said.
If drivers use this strategy to their advantage, they can save $500 to $1,000 annually, he said.
Less loyalty, more savings
Car insurers tend to work on a discount system that rewards new customers, not long-time existing customers, said Maya Afilalo, an insurance analyst at AutoInsurance.com.
“Insurers will often include a new customer discount, which is why rates might be lower for new customers than for existing customers,” Afilalo told The Independent in an email. “That discount will drop at the six-month renewal, which can be an unpleasant surprise.”
Loyal policyholders tend to get higher premiums because of a practice known as “price optimization,” according to a 2025 report from Kiplinger. Through this practice, auto insurers calculate how high they can raise a customer’s rates before they leave for a different company.
“A customer who switches every six months is less valuable to these companies than one who stays for at least three years,” Afilalo said.
In other words, insurers may be more comfortable offering new customer discounts if they know they can raise rates on existing customers.
Shop often
In general, experts say drivers should shop auto insurance rates at least twice a year.
“A good rule of thumb is to shop for car insurance every six months, especially around your renewal period,” Meyer said. “If that feels unrealistic, once a year is still a smart habit ... With rates changing so frequently, taking a few minutes to compare quotes can be well worth it.”
Her advice is especially pertinent for policyholders who autopay their premiums.
The “set-it-and-forget-it” approach, while helpful for paying premiums on time, can lull drivers into comparison-shopping inaction.
“Many people stay with the same insurer out of convenience, especially once automatic payments are set up, but if you’re not comparing rates at least once a year, you could be missing out on meaningful savings,” Meyer said.
Not all insurers are identical
Auto insurers tend to have their own formulas for assessing risk and calculating rates.
One company might raise rates for a new customer because of a past accident while another may only make minor rate changes, Morrison said.
“The differences in rates between insurers come down to the way they assess risk factors,” he said. “And so you have different quotes even though the risk to the driver is unchanged. So shopping around becomes a question of which insurer’s algorithm works in your favor.”
Some of those factors include where you live, your driving record and your credit history, Afilalo explained.
“They place different weights on factors like your driving history, age, zip code, vehicle, and even your credit history,” she said. “That’s why it’s worth shopping around with a few different providers, as one may quote you a lower rate than another.”
Generally speaking, insurers won’t penalize you for switching insurers every six months to a year, said Susan Meyer, an insurance analyst at insurance marketplace The Zebra.
“When you switch insurance companies through normal shopping behavior, there is no penalty,” Meyer said. “Insurers expect this and don’t raise rates because of it.”
However, if you often switch in the middle of a coverage period - say, three months into a six-month policy - insurers may charge you more because from the company’s perspective, frequent switching could be a sign of financial instability, she said.
An insurer’s business model can impact your rates, too, Meyer said. Online-only insurers might be able to offer lower rates since they spend less money on their daily operations.
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