If you recently bought or moved, switching to car insurance could be a wise decision. People don’t realize that auto insurance premiums can be affected by major life events. You can often save money simply by switching providers. Each insurance company calculates car insurance premiums differently. If you move to a new ZIP code, for example, a new provider could be hundreds of dollars cheaper.
You may not be trying to save money. It could be that you are looking for better or different coverage. You should shop around for the best car insurance, regardless of whether you are getting married or about to have children.
How to switch auto insurance companies
You can always change your car insurance company at any time. However, there are certain situations that make it worthwhile to look for a new company. These situations could include:
- Moving to a different ZIP code, state, or city can have an impact on your car insurance premium. If you are moving, it may be a good time to consider a new car insurance company to at least see if rates are more competitive in that area.
- You are considering getting insurance quotes from other companies if you’re adding a driver to your family or a car to your teenage driver. Each company offers different rates and some offer discounts for students. You may be able to find a company with a lower premium for your new vehicle or driver.
- Experience a life event: Insurance premiums and needs can be affected by events such as marriage, purchasing a house or having children. These circumstances may make it worthwhile to update your policy or search for a new one.
- Your renewal date is approaching: Although you can always change your car insurance anytime, your renewal date provides a convenient opportunity to do so. You may not have to pay small bills or get refunds if you cancel your policy before its renewal date. It is important to make sure there are no coverage lapses. This can make you financially vulnerable and could increase your future premiums.
Although switching insurance companies can be beneficial, there are times when it may not make sense. You will likely not be allowed to switch carriers if you have just filed an insurance claim. Your new car insurance company won’t be able to accurately rate your policy if the claim hasn’t been settled and paid. If the claim is not settled and paid, this could result in a significant increase in your policy’s renewal cost. It may also cause a retroactive charge to reflect the higher risk or a cancellation due to misrepresentation.
Take into account your options for coverage
You could be financially exposed if you have too little insurance. However, too much coverage can mean that you are paying too much. Consider switching to car insurance if you feel you are spending too much.
Ask yourself, “Do I drive an older car?” Michelle Demora, an insurance expert, says that if you do, then you might not need collision or comprehensive insurance. Or, you could choose to have a lower deductible to save money.
The more you add to your auto insurance policy, the higher the 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.
Examine for possible penalties
You should find out whether there are penalties for changing your car insurance before the coverage ends. Auto insurance companies usually allow you to cancel your policy at anytime, provided you provide proper notice.
Most insurance companies will refund any unused premium. However, some insurance companies may charge fees if you cancel during the policy term. You should talk to your insurance company’s customer service team or ask your agent about cancellation policies.
You may consider switching policies if you discover that cancellations made during the term are subject to a penalty. It may be worthwhile to switch companies if you can find a policy that covers cancellation fees from your old carrier.
Compare auto insurance quotes from multiple companies
You might consider getting quotes from multiple auto insurance companies if you decide it’s a good idea to switch carriers. This will allow you to compare auto policy premiums, coverage options and discounts. Make sure that you get quotes for the exact coverages you need so you can compare apples-to-apples premiums.
Demora says that family members and friends can be valuable resources in the search for new products or services. “Many times they have already done the legwork to give helpful advice and narrow down your search – and finding the right auto insurer is no exception.”
You should have some basic information ready, whether you’re getting quotes online, over the phone, or in person at an agency. These are the essential details to get a precise quote:
- Identify where the car will be kept
- Year, make and model of your car
- Driver’s license/social security number: Car insurance providers will use this information for your driving record and other factors that could affect your premium.
You can also look into discounts available while you’re researching companies. You might be able to get lower coverage by asking companies for all discounts they offer.
Get in touch with your carrier
While you may be getting quotes from different carriers, it might be beneficial to call your current car insurance provider. Although your company will not be able to provide you with a lower rate just to keep your business, you may be able to identify discounts and other savings opportunities that you are currently missing. You may be able to save money by keeping your driving record clean or buying a cheaper vehicle.
This is especially important if you have independent insurance. Independent agents can represent multiple insurance companies. Captive agents, on the other hand, are limited to selling insurance products from one company. Independent agents may be able shop for you with different carriers and find you a lower rate, while keeping your policy within the same agency.
Find out more about the company.
Before you buy a policy, it is advisable to thoroughly research the insurer. These are some helpful resources:
- The National Association of Insurance Commissioners (NAIC): This organization assigns a score to each company based on the average number of complaints it receives. A score above 1.00 indicates an above-industry-average number of complaints, while a score below 1.00 indicates a below-industry-average number of complaints.
- J.D. J.D.
- AM Best: If you are wanting to know more about a company’s financial strength, AM Best may be a good resource to use. AM Best assigns companies a letter-grade financial strength score. This can be used to indicate the company’s ability to pay claims.
- Review of Bankrate Insurance Company: We analyze average premiums, customer service scores and financial strength ratings to find the best auto insurance companies. We offer both national and state-specific reviews.
While price is important, it isn’t the only factor you should consider when selecting a car insurance provider. A licensed insurance professional can help you choose the right company for your needs.
Do not allow coverage to lapse
Demora says that it is best to change insurance as soon as your current policy expires. Switching early will prevent you from having gaps in your coverage.
A lapse in insurance coverage could lead to serious legal and financial challenges, especially if you are involved in an accident while uninsured. You will be held responsible for any damages and medical expenses incurred if you are not covered by insurance. Even if you’re not at fault, many states require that insurance companies file proof of insurance with DMV after an accident. Your license may be suspended if you don’t have insurance.
Insurance companies may charge higher premiums if you drive without insurance. This is because they might consider you a high-risk driver and therefore increase your premiums. The new insurer should be capable of timing the new policy to begin exactly at the same time as your existing coverage.
Check that your policy has been canceled
Do not assume that your policy will be canceled if you stop paying premiums if you switch car insurance. Your current provider may report you to credit bureaus if you have signed up for auto renewal. Insurance experts recommend that you call your current provider of auto-renewal to cancel your policy before you switch to a new company.
You can take the following steps to terminate your prior policy:
- Notify your insurance company that you are ending your policy. This will stop them from billing you for future coverage.
- You may be required to log in to an online account to cancel auto-payments if you have signed up for automatic payments. You should stop using your bank’s bill payment service to pay your premiums.
- Ask your carrier for written confirmation of termination.
Each insurance company has its own cancellation process. A cancellation form may be required to authorize you to cancel. Or, you might need to contact an agent to discuss the matter. While some companies allow you to cancel online, it is better to write it down or speak with someone in person.
Print your new car insurance ID card
After you have canceled your policy and begun your new one, swap out your old ID card for a current one. You will need to show proof of your coverage if you are stopped by police or involved in an accident.
Demora explains that while most insurers will allow you to access your ID card online via your smartphone, it is best to keep a printed copy in case you are stopped in an area with no cell phone service.
Questions frequently asked
How often should I look for new car insurance?
Many people ask “When is it time to switch car insurance companies?”. However, if your financial and/or life situation has changed since your last car insurance policy was purchased, it might be time to look for a new policy.
Your current provider can be reached to update your policy with your requirements. In some cases, your carrier might be able adjust your policy to meet your needs. You don’t have to change your coverage just because you are shopping for a new insurance policy. You could get loyalty discounts by staying with the same company for a long time.
What if I have an open claim and want to switch my car insurance?
Although it is possible to switch car insurance companies while you have an open claim, most insurance providers recommend against it. Your current insurer will handle the claim and pay any required payouts.
If the claim is open at the time you change to a policy, the new carrier won’t have the information necessary to determine your risk level. This could lead to a rise in your renewal price or a retroactive amount to make up the period that your claim was not properly rated on your policy. Each company has its own underwriting guidelines. Some companies may not accept business from open claims.
Are premiums already paid by car insurance companies refundable?
The insurance company will have to reimburse any premium unearned. However, the cancellation fee may be charged to cover administrative costs for cancelling the policy. This is especially true if the policy term is in its middle. To learn more about your insurance cancellation policy, call your company. You will likely not be eligible to receive a refund if you cancel your insurance policy before the renewal date.