If you happen to own a car, it’s likely that you have a car insurance policy. But what happens when you discover another company that offers a lower rate, better service, or any other perk that you’re currently missing?
If you desire to switch car insurance companies, don’t fret. The process isn’t hard and you can switch at any time during your policy term.
This is why we came up with a blog post that has helped thousands of drivers switch policies and has walked them through how to switch car insurance in 8 easy steps.
Overview of Switching Car Insurance
When you switch auto insurance, you exchange your current policy for a new one with a different insurance company. It might be done to obtain better protection, more affordable premiums, or better customer service.
When making the switch, compare prices from different insurers and take into account the deductibles, coverage, and discounts. In order to prevent a lapse in coverage, let your current insurer know you’re switching.
Once you’ve decided on a new policy, properly cancel the previous one and begin the new coverage. To ensure a smooth transition and prevent any coverage gaps, careful consideration and understanding of the terms are imperative.
How to Switch Car Insurance in 8 Easy Steps
It’s simple to switch auto insurance providers, and people do it frequently. However, it’s a good idea to inquire about any cancellation fees with your current insurer.
Your insurance agent might also offer to look for additional discounts or lower your rate if you let them know you want to cancel.
Here’s what to do when you’re prepared to begin looking for new insurance.
1. Consider Your Coverage Options
A lack of auto insurance can leave you vulnerable financially, but having too much coverage may result in you paying too much. Consider the scenario where you own a cheap, old car that you have already paid off.
Carrying an expensive full-coverage policy might not be in your best interests. If you think you’re paying too much for coverage, though, think about shopping around if you think full coverage is worthwhile.
In the end, your auto insurance policy will typically cost more the more coverage you add.
Understanding the various types of car insurance coverage and which ones you require is a crucial first step if you’re wondering how to switch your auto insurance.
2. Check for Potential Penalties
If you decide changing your auto insurance is the best course of action, you might want to learn if there are any consequences.
If you switch auto insurance providers before the duration of the policy has expired, some providers may charge you a cancellation fee.
Fortunately, as long as you give proper notice, auto insurance companies typically give you the freedom to revoke your policy whenever you want.
While the majority of auto insurers will probably refund any unused premium, some may impose a fee if you decide to end your policy term early.
Check with your company’s customer service department or your agent to see if there are any specific cancellation requirements before terminating your policy.
Hold off on switching policies until your policy is up for renewal if you learn that there will be a penalty for canceling in the middle of your term.
However, switching insurance providers might still be financially advantageous if you can find a new policy with a premium that more than offsets any cancellation fees levied by your current carrier.
3. Compare Car Insurance Quotes from Multiple Carriers
If you’ve decided it’s a good idea to switch insurance providers, think about requesting quotes from a number of different car insurance companies. You will be able to compare auto insurance rates, options for coverage, and any discounts you may be entitled to.
To compare premiums fairly, just make sure the quotes you receive are for the same coverage types and limits.
It is likely that you will need to be ready with some basic information whether you are getting quotes online, over the phone, or at an agency:
- Address where the car will be kept
- Vehicle year, type, and model
- Vehicle identification number (VIN)
- Driver’s license numbers for all drivers listed on the policy (auto insurers will use this information to review your driving history as well as any other personal factors that may affect your premium, such as your credit-based insurance score in some states).
- Social Security numbers (not all companies require this, but it is a common practice to ensure that the credit-based insurance score corresponds to the correct named insured)
As you research providers, be sure to inquire about any discounts that may be available to you. This could help you save money on insurance in one or more ways.
4. Contact Your Current Carrier
Contacting your current provider while getting quotes from other carriers may be beneficial.
Although it is a car insurance myth that insurance rates are negotiable (i.e., your company will not be able to lower your bill just to keep your business), you may be able to identify discounts and other savings opportunities that you are currently overlooking.
Your agent may have suggestions for ways to reduce your costs, such as keeping a clean driving record or purchasing a less expensive vehicle.
This is especially important if your insurance is written by an independent agency.
Unlike captive agents, who only sell insurance products from a single company, independent insurance agents can represent a variety of insurance providers.
An independent insurance broker may be able to shop your policy with multiple carriers in order to find you a lower rate while keeping your policy with the same agency.
5. Research the New Company
Before purchasing a policy, you should conduct extensive research on the insurer. When shopping for car insurance, price isn’t the only factor to consider.
Examining other metrics can help you choose a carrier that meets all of your needs, not just your budget. Some useful resources are:
- The National Association of Insurance Commissioners (NAIC): Each company is assigned a score based on the average number of consumer complaints received. A score greater than 1.00 indicates a higher-than-average number of complaints, while a score less than 1.00 indicates a lower-than-average number of complaints.
- J.D. Power: This company conducts research from various perspectives, such as overall customer satisfaction and claims satisfaction, and assigns a score to each car insurance company. Some of its rankings are also based on geography.
- AM Best: If you want to learn more about a company’s financial strength, AM Best is a good place to start. AM Best assigns letter grades to companies based on a variety of financial metrics, which can indicate a company’s historical ability to pay out claims. The higher an organization’s AM Best rating, the more financially stable it has historically been.
Although price is an important factor to consider, it is not the only factor to consider when selecting an auto insurance company.
Working with a licensed insurance professional may assist you in selecting the best carrier for your needs.
6. Avoid a Lapse in Coverage
If you switch car insurance policies after your current policy expires, you may experience a lapse in coverage.
A lapse in insurance coverage may result in serious legal and financial consequences, particularly if you are involved in an accident while uninsured.
If you cause an accident and do not have insurance, you will be personally liable for the damages, including any applicable medical bills.
Even if you are not at fault, most states require insurance companies to file proof of insurance with the Department of Motor Vehicles following an accident if the police are called. Your driver’s license may be suspended if you do not have car insurance.
Driving without insurance may result in insurance companies charging you higher premiums in the future because they will perceive you as a high-risk driver.
Your new insurer should be able to time the start of your new policy to coincide with the end of your old coverage.
7. Make Sure Your Old Policy is Canceled
If you are switching car insurance companies, don’t assume that your current policy will be automatically canceled if you stop paying your premiums.
When switching to a new car insurance company, most insurance experts recommend contacting your current carrier to cancel your policy.
To cancel your previous policy, take the following steps:
- Inform your current insurance company that you are canceling your policy. This will prevent future coverage from being billed to you.
- If you have set up automatic payments, you may need to log into an online account and cancel the automatic withdrawals. If you pay your premiums using your bank’s bill pay service, make sure to cancel the payments with your bank.
- Request that your carrier confirm the termination in writing.
Each insurance company has its own policy cancellation procedure. You may be required to sign a cancellation form, or you may be required to call and speak directly with a company customer service representative.
Your insurance agent can assist you through the process.
8. Print out Your New Car Insurance ID Cards
After you’ve officially canceled your old policy and begun your new one, you’ll probably want to replace your old insurance ID card with a new one to keep in your vehicle or wallet.
If you are pulled over by police or involved in an accident, you will need proof of coverage from your new auto insurance provider.
Why Switch Car Insurance Companies?
Changing car insurance providers can result in a lower monthly payment. You should shop around and switch if:
- You relocated and now pay a higher premium than before.
- You purchased a new car.
- Your child obtained their driver’s license.
- Someone who drives your vehicle in and out of your home.
- You got married or purchased a house.
- You drive fewer miles as a result of a new life circumstance, such as working from home or parenting.
- Your credit score increased or decreased significantly (credit has no effect on rates in California, Hawaii, or Massachusetts).
The common thread that connects all of these scenarios is that something in your driving profile has changed. Car insurance companies consider a number of factors, and even changing ZIP codes can affect your rates.
Each car insurance company has a formula for calculating rates that take into account many of these variables.
For example, while you may have a low-cost provider when you are the only one on the policy, other companies may offer better rates once you marry. The following is a list of the various factors that can influence your car insurance rates.
Aside from price, you might want to switch car insurance if you had a bad experience filing an insurance claim with your current provider.
Although almost every state requires drivers to have insurance, that doesn’t mean you have to accept subpar service. The best car insurance companies will offer both excellent service and reasonable prices.
When to Switch Car Insurance Companies
Normally, certain events should necessitate a switch or indicate that it is time to begin looking for a new carrier.
- Transferring to a new ZIP code, city, or state: Your car insurance premium may be affected by your city, state, and even ZIP code. If rates are more competitive in that area, relocating may qualify you for lower premiums.
- Adding a driver or a car: If your teen is about to get a driver’s license or you’re adding a new car to your household, get quotes from other insurance companies. Each company has its own car insurance rates, and many offer student discounts. As a result, you may be able to find a company that provides a lower premium for your new driver or vehicle.
- Life changes: Life changes, such as marriage, divorce, home ownership, or employment changes, can affect your auto insurance requirements and costs. It might be a good idea in this situation to update your current policy or look for a new one.
- Approaching your renewal date: When your renewal date is approaching, switching your auto insurance is especially convenient. You could avoid little bills, cancellation fees, or refunds on the old policy if you cancel your old policy on the date of renewal.
- Seeing a rise in premiums: When your policy is renewed or if you make a change to it, you may notice an increase in premiums. If your premium rises, it might be a good idea to shop around for a car insurance policy from a different provider.
- Reviewing your alternatives: There’s really no need to look for new auto insurance if you’re satisfied with your provider and premium. You might find that another company offers rates that are significantly less expensive or policy features that your current carrier does not.
When Not to Switch Car Insurance Providers
Even though you can change your auto insurance at any time, that doesn’t necessarily mean it’s a good idea to do so.
Be aware that some auto insurance providers offer discounts based on the length of time you’ve had a policy with them. Therefore, you won’t be qualified for a loyalty discount if you switch companies after a month.
Ask your auto insurance provider if there is a fee for canceling within a certain time period.
Most businesses allow free cancellations, but this isn’t always the case. To avoid any fees, you might want to wait until your policy expires.
Additionally, it’s best to avoid changing your auto insurance provider while you have an active at-fault claim. While this is permitted, once the claim has been resolved or at the end of your current policy term, your rates may go up to reflect the added expense.
If you have to change providers in the middle of a claim, be sure to tell your new provider everything, as keeping anything out could result in even higher rates.
The Bottom Line
If you are paying higher rates, try improving your credit scores. Better still, switch insurance clients. It may be advantageous for you to change your auto insurance coverage.
But if you are paying lower rates, try to protect your credit score to avoid incurring higher premiums.
But before choosing, we advise you to look around and weigh your options carefully. Finding the best price and changing your auto insurance provider may take some time, but the effort may be worthwhile in the long run.
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