How to switch car insurance in 5 easy steps

How to Switch Car Insurance Companies

car insurance Are you wondering how to switch car insurance companies or if it’s even a good idea? In some cases, changing car insurance can help you save money while ensuring your policy fits your needs. To transition to a new company, you’ll want to:
  • Compare car insurance coverages: Do research on what other companies offer. To find out prices, you can get different insurer quotes. Just remember that the cheapest car insurance company might not have the best customer service. You’ll want to read reviews from other customers on how their car insurance companies have treated them.
  • Contact your current insurance company: To cancel your policy, you’ll likely need to talk to a representative and send in written confirmation that you’d like to stop your coverage. Make sure you qualify for new insurance before canceling your existing policy.
  • Make sure your insurance protection doesn’t lapse: As you switch insurance companies, it’s important to make sure you never lose coverage.
  • Buy your new policy: Talk with your new insurance company to find out how much car insurance you need. Insurance companies offer many optional coverages that may be right for you. Also, be sure you are purchasing at least the minimum amount of coverage required in your state. To be sure you’re never without coverage, the start date of your new insurance should be on or before the end date of the policy you’re canceling.

1. Consider your coverage options

Too little auto insurance can leave you financially exposed, but too much coverage may mean you are overpaying. If you think you are overspending, you may want to consider switching car insurance.

Ultimately, the more coverage you add to your car insurance policy, the more it will cost. If you are wondering how to switch auto insurance, understanding the different types of car insurance coverage — and which ones you need — is an important first step.

Learn more: Common types of car insurance coverage

Video

6. Avoid a lapse in coverage

If you switch your car insurance before your existing policy expires, you could experience a lapse in coverage. A lapse in insurance coverage could lead to serious legal and financial challenges, especially if you are involved in an accident while uninsured. If you cause an accident and you do not have insurance coverage, you will be responsible for the damages, including any applicable medical bills, out of pocket. Even if you are not at fault, most states require insurance providers to file proof of insurance with the Department of Motor Vehicles after an accident if police are called. If you do not have car insurance, your driver’s license could be suspended.

Driving without insurance could cause insurance companies to charge you higher premiums in the future because they may consequently perceive you as a high-risk driver. Your new insurer should be able to time the activation of your new policy so that it begins exactly as your old coverage ends.

Learn more: Does a lapse in coverage affect your car insurance rates?

Step 7: Officially cancel your old car insurance policy

After starting your new insurance coverage, make moves to cancel your old car insurance policy. Again, make sure there is absolutely no lapse in coverage at all. 

Get it all in writing. Your car insurer may have its own process to cancel coverage, so follow their recommended steps. 

After canceling your old policy, keep the paperwork for your records. Also, make sure you have the new coverage in place and your car insurance cards are in your wallet so you’re prepared and covered while driving. 

Step 3: Consider pay-per-mile coverage if you don’t drive a lot

You might look into traditional auto insurance coverage, but you don’t want to miss out on pay-per-mile coverage if you don’t drive a lot. Many people have made the switch to working from home, slashing their commute time and related costs. 

If that’s you, consider pay-per-mile coverage if you drive fewer than 10,000 miles each year. Metromile offers this type of insurance which could save you up to $947* per year. Rates begin at $29 per month, plus a few cents for every mile you drive. 

Look at Your Current Coverage

We mean reallylook at it—not just the part that tells you how much to pay every month. (By the way, if you pay for several months at a time, you can actually get a discount and save some money. #budgetingwin.)

Double-checking your current policy now will help you know what to look for when you start shopping for a new one. After all, it’s kind of hard to shop for something when you don’t even know what you need.

So ask yourself questions. Are you just carrying the minimum liability insurance? (You need more.) Did you buy collision but not comprehensive? (You might need both.) Figure out if you have any gaps in coverage or other things you want to change, and make a shopping list.

Who Has the Best Car Insurance?

Big-name companies love to say theirs is the best. Want an honest answer? Ask an independent agent. Find Better Rates

When to switch auto insurance companies

You can switch car insurance companies at any time. This includes the day you start coverage and even when you have certain open claims. You also won’t be penalized for switching multiple times in one year.

We recommend shopping around for coverage at least once per policy term to make sure you have the best price. Beyond that, it’s a good idea to consider a switch if your life situation changes in one of the ways described above.

Shop for rates if you are thinking of changing your coverage amounts, as well. Some providers are cheaper for minimum liability car insurance, while others offer cheaper full coverage rates.

When not to switch car insurance providers

While you can switch car insurance at any time, that doesn’t mean every time is the best time. Be aware that some car insurance companies give discounts based on how long you’ve had a policy with your provider. So, if you switch companies after a month, you won’t be eligible for a loyalty discount.

Check with your car insurance company to see if it charges a cancellation fee within a certain timeframe. Most companies let you cancel without any fees, but this isn’t always the case. You might want to wait until your policy expires to avoid any fees.

Also, it’s best not to switch your car insurance company while you have an open at-fault claim. While you’re allowed to do this, your rates can increase to account for the cost of the claim once it’s settled or at your next policy term. If you have to switch during a claim, make sure you are completely honest about it with your new provider, as leaving anything out could result in even higher rates.

When to Switch Car Insurance

Consider switching car insurance if you:

Move to a new zip code, city or state

Car insurance is regulated differently in each state, which means you’ll have to get a new policy once you arrive. Keep your old policy active until you arrive at the new location, as it’s illegal to drive across state lines uninsured.

Get married

As a married couple, a new car insurance policy translates to lower rates. Couples can capitalize on these savings even more through loyalty discounts, multi-car discounts and bundles for renters and homeowners insurance.

Purchase a new vehicle or add an additional car to the policy

An additional car on your policy will most likely increase the insurance rates. New vehicles, in particular, will raise premiums, as their value will be higher than your previous car.

See a significant change in your credit score

Your credit score can have a direct impact on your car insurance rates. If your credit score has significantly increased since you first took out the policy, you could see a reduction in your premium with a new insurer.

See an increase in your car insurance premium

Your current insurer won’t increase rates during the policy term, but it might happen at renewal. Although the typical culprits are major life changes, sometimes car insurance rates increase due to factors out of your control, such as a surge in reckless driving.

Add a teenage driver to your policy

Insuring teenage drivers is expensive because they’re considered high-risk by auto insurance companies. Deals like “good student discounts” along with multi-vehicle, mileage and bundling discounts can help offset the cost.

Want to increase or decrease coverage

There are situations where the current policy’s coverage doesn’t fit your insurance needs anymore. For example, a lease buyout – dealerships generally require higher coverage when leasing a car, but the same policy may be too much for an auto loan.

Are near policy renewal

Auto insurance policy terms expire either every six months or once a year. To ensure it’s still adequate for your lifestyle and budget, it’s a good idea to go over the policy before you renew. Cancelling near renewal means you don’t have to deal with any penalties.

Frequently Asked Questions

How to switch car insurance to a new car?Insurance companies offer a grace period anywhere between 7 to 30 days, during which they’d cover your new vehicle while you make arrangements to update the current policy or purchase a new one entirely. You can transfer your current coverage to the new vehicle or purchase a new policy entirely. Regardless of what you choose to do, the car dealership will let you drive the vehicle off the lot as long as you provide proof of insurance. Can I switch car insurance anytime?Yes, you can switch car insurance anytime, near policy renewal or even mid-policy, and qualify for a refund on any premium payments made in advance. However, if you have an open claim, it might be better to wait until it’s settled since the previous provider will still manage the claim. If your current provider charges cancellation fees or refuses to refund unused premiums, we recommend that you calculate whether the savings of a new policy offset the cost of canceling prematurely. How do I cancel my car insurance? To cancel your car insurance coverage, get in touch with your insurance agent. You may be able to do it over the phone, but some providers require a mail-in or faxed cancellation document with your signature. We recommend you get the cancellation confirmed in writing and double-check that automatic payments are deactivated. How to switch car insurance to another stateSwitch to a new provider once you’re settled in your new state, as costs depend on the state, location and commuting distance. On the other hand, if you’re happy with your current provider, call your agent to learn how to transfer the policy. Remember to keep the current policy active until you reach your new home, as it’s illegal to drive across state lines without insurance.

Are there hidden fees/less coverage?

There are plenty of commercials promising you the lowest rates that try to entice you into switching policies. The cheapest option is always enticing, right? While this may be true that some auto insurance companies may offer significantly lower prices for the same coverage, but some insurers will offer you a cheaper rate, only to drastically reduce your coverage.

For example, if you currently have collision and comprehensive coverage in addition to liability, you’d only want to compare rates with a company offering the same full coverage with the same policy limits and deductibles. Rather than reduce the type of coverage you have, inquire about any discounts that may apply with the new insurer. Giving up valuable coverage to save money may not end well for you, especially if you give up the coverage types that would help the most, such as the above mentioned collision or comprehensive.

Additionally, sometimes an insurance company may avoid mentioning hidden fees and other charges to make their insurance rate seem much lower than what you are currently paying. While this can make the new policy appear cheaper than the policy with your current insurer, when it is all taken into account, the reality is that the prices from both auto insurers can be closer than they first seemed. If you have an insurance agent, it may be helpful to talk with them about your coverage options and needs to find out if you can modify your current policies to avoid changing auto insurance providers before your policies expire.

Can You Cancel Your Car Insurance Policy at Any Time?

Yes, but depending on your car’s policy, there may be early cancellation fees. These can range from around $20 to over $200. Sometimes when you switch insurers, you may also lose out on deals that can last throughout multiple policy terms. Companies typically offer these car insurance discounts because they’re trying to build a loyal customer base.So, if you see a company offering policies for less than what you currently pay, keep in mind that this lower rate may increase significantly the next year if you renew. You also may not have access to certain benefits you have with your current insurance company.

Our recommendations for car insurance

While it takes time to find the best rate and switch your car insurance company, it can be worth it in the long run. Enter your ZIP code below to quickly compare rates from multiple providers in your area.

Once you’ve switched…

Don’t cancel your current policy too soon

Before you cancel, ensure the new policy is fully in effect. It might cost you an extra month’s payment but it’s worth it to wait until you receive documentation that your policy is 100% active.

Also, be aware that the price an insurance agent quotes you might increase, especially in the case of life insurance. With life insurance, you might need to get a physical, and the outcome of your exam could increase your risk and your insurance premium costs.

Don’t forget to cancel your old policy

Once your new policy is in place, you will need to cancel your old one; you can’t just stop paying the premiums. It’s also best to get written confirmation that your policy has been canceled.

Carry your new insurance card

Don’t forget to swap out your old insurance card for the new card, especially if it is auto insurance. If you get stopped by the police and can’t produce a valid form of car insurance, you may be fined.

If you’re considering switching insurance companies, contact an agent to learn more about coverage from Nationwide.

4. Ask About Cancellation Fees and Refunds

Ask your insurance company upfront about any fees or possible refunds. Most major insurers allow you to cancel your auto policy for free at any time, but some charge a fee if you cancel in the middle of your policy term. 

“You want to find out if there’s going to be any cancellation fees. A lot of companies don’t charge one, but some companies will charge a $50 cancellation fee,” says Megan Shepherd, an insurance analyst at finder.com, a comparison website. “In other cases, it could be 10% of your remaining premiums.”

For example, Esurance says it may charge either 10% of your remaining premium balance or a flat fee between $30–$50 if you cancel before your policy expires.

Insurance companies typically refund any unused auto premium with no fuss before your policy runs out. Say you paid for an annual policy but decide to switch after six months — your insurer should reimburse you for the remaining six months of coverage (minus a possible cancellation fee).

Trending

1 XRP Is Hard to Buy In the U.S. Here’s What Investors Should Know About Ripple and Its Related CryptoRead More

2 From Bankrupt to Millionaire: This Sex Educator Says ‘Dating Your Money’ Is the Key To Building WealthRead More

3 How to Make Money on YouTube: What’s Working Now, According to 4 Experts Who Use It Every DayRead More

4 A High-Yield Savings Account Generates Free Cash. Here’s How to Find the Right One For YouRead More

5 Binance.US vs. Coinbase: Why Coinbase Is a Better Choice for Most Crypto InvestorsRead More

Tags