Do auto insurance costs fluctuate throughout the year?
We do not live in an atemporal economy. Many goods fluctuate in price throughout the year—seasonal produce, winter apparel, and bicycles all immediately come to mind—and incentivize buyers to cash in at a certain time.
Is auto insurance a part of that group?
Sort of. While a policy's monthly pricing for the term will be set in stone once it's agreed upon, there's definitely evidence out there to support the idea that some points on the calendar are better or worse than others for buying auto insurance at. However, whether or not it's actually good idea to do so will depend on your current situation and short/long-term outlook.
The best time to buy?
Though there are some glaring differences, things are pretty similar between Canada and the United States from an individual consumer standpoint. We buy more or less the same types of products and respond comparably to seasonal fluctuations; which is why, when a comprehensive study was done south of the border on the best time to buy auto insurance, it was reasonable to assume that it would hold true in Canada as well.
Published by Insurance Quotes, the study found that in 22 of the 50 American states, December was the cheapest month to buy auto insurance—and in Hawaii, Wyoming, the District of Columbia, Maryland, Pennsylvania, and Virginia, there was greater than a 30 per cent price difference between December and the most expensive month. It also found that for 16 of them, March was the most expensive month. In fact, "the national median cost of a new full-coverage auto policy for a 35-year-old single male driver with a $500 deductible and a clean driving record was 8 per cent cheaper in December than March."
This clear trend was most strongly attributed to inflation. Because inflation on the price of new policies will often come into effect in January when a new year begins, that can make early-month buys (like March) more expensive, and late-month buys (like December) a bit cheaper.
Can't make assumptions
Just because many states have shown a tendency to favour December buyers, it is no certainty that December will always prove to be the most beneficial month. In that same study, December actually ranked as the most expensive month in 11 states.
Other factors could potentially come into play as well that would make insurers raise new policy rates at some point on the calendar. They could be related to market circumstances, or even just those of the business itself (times get tough sometimes!).
This means that it's never a bad time to shop for auto insurance quotes. There's always a chance you could get lucky and cash in.
Keep term length in mind
Even though we'd all like to jump ship and sign on to a better policy when one becomes available—or perhaps when a conviction expires, or we move out of a rough demographic—that's not always possible. The only time that you can expect to switch without consequences is when they policy is up for renewal. Otherwise, you may have to pay some sort early termination fee, which could end up cancelling out the value of switching in the first place.
Auto insurance policies generally have term lengths of either six months or a year. If you anticipate you will want to shop around for policies again fairly soon, then it's probably best to go for the six-month option so your renewal period can come around a bit earlier. Another option for eager shoppers is to pay for the policy on a monthly basis, rather than an annual one, which could make it easier to cancel should that opportunity arise.