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How & When To Switch Auto Insurance in 3 Steps

How & When To Switch Auto Insurance in 3 Steps

Car insurance rates have been on the rise lately. If you are thinking of switching car insurance, here are the top 3 steps on how to switch your auto insurance and when is the best time to switch.

Last Updated Feb 07, 2024
5 min read
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How to switch car insurance companies in 3 Easy Steps:

  1. Compare insurance coverage and discounts from various providers.
  2. Select and purchase your new insurance policy.
  3. Cancel your previous insurance policy.

Step 1: Shop Around

The first step in switching car insurance policies is to get quotes from other car insurance providers. The easiest way to do this is to utilize a quote comparison website or work with an independent insurance agent who can quote you with a few different auto insurance companies.

Whichever option you choose, you will want to have a copy of your most current insurance policy on hand to ensure you’re quoting the same coverage options and getting the best rates. Be sure to research which companies offer the best car insurance coverages and discounts for your insurance needs. For example, if you finance or lease your car, you may want to consider a car insurance company that offers full coverage and gap coverage. Or if you don’t drive frequently and looking for additional ways to save, you may want to consider a usage-based policy. For example, if you're a safe driver, you may consider a behavior-based policy.

Step 2: Purchase New Policy

When you have narrowed down your search and selected your new provider, you will often need to make a payment to start your new insurance policy. Before you do this, it’s important to confirm that the effective date on your new policy is the same as the cancellation date on your current policy. This is because any lapses in insurance coverage can result in rate increases with future companies.

If you’re canceling your current policy before its expiration date, you should also confirm there are no cancellation fees for canceling early. Some insurers charge a penalty if you switch before the term has ended.

Next, add your lender to your new policy if you lease or finance your car. Your prior carrier will notify them when you cancel, so you want to make sure they are notified about the new policy as well. Lenders can and will purchase insurance on the car for you if they can’t confirm insurance coverage. This means that you may have double coverage at a price that is often much higher than what you can purchase on the standard market. As such, it’s imperative your lenders are kept in the loop. Adding them to the policy ensures that your insurance company will send them the proper proof of insurance needed.

Step 3: Cancel Old Policy

Once the new policy has been purchased and you have received confirmation of coverage, you can call your previous insurer to cancel your old one. Some companies will require you to provide proof of insurance to cancel, while others can do it over the phone. They will all, however, ask you for the date you are looking to cancel. Remember to cancel effective the same day your new policy started to avoid any lapses.

It is important to note that you should not let your policy cancel for non-payment. This can lead to your balance being sent to collections, which can negatively affect your credit score. In addition, many insurers will look at prior company-initiated cancellations as a mark against you. Insurers can either charge higher rates or refuse to accept you as a customer if you decide to get quotes for a new auto insurance policy in the future.

Some other considerations when canceling your old policy are regarding claims. If you have any outstanding insurance claims with the prior insurance company, those will not be affected. Any losses that occur after the new policy's effective date will be handled by the new company.

Lastly, print out your new car insurance ID cards to replace the old ones and keep them in your vehicle.

When Is The Best Time To Switch Car Insurance Providers

While you can switch car insurance providers at any time, the best time to switch is when your current policy is up for renewal. Auto insurance is typically written on a six to twelve-month policy term, which means that it renews every six to twelve months. You will be able to better price shop when you get your current policy renewal, which is usually about 30 days prior to the renewal date. In addition, some auto insurance companies charge cancellation fees for canceling your policy before the expiration date. By waiting until renewal, you eliminate any potential fees from your current insurer.

When Not To Switch Car Insurance Providers

There are no rules on when you can switch car insurance providers. However, some times are better than others. For example, if you have recently gotten into an accident and are still in the process of settling the claim, it may be better to stay put with your current insurance company. The reason for this is to streamline the claims process and avoid any delays in processing. This is especially true if the claim is an at-fault accident as these types of losses have the potential to increase the price of your policy. You may not end up saving as much money as you think with the new company once that claim is considered.

It also makes sense to stay with your current carrier if you are getting coverage or discounts that you aren’t getting with the new company. For example, some companies offer accident forgiveness while others do not. If this coverage is important to you, it may be worth staying with your current provider. 

Lastly, if you bundled multiple insurance policies with one company and are getting a discount, you may want to reconsider switching, unless you plan on moving all policies as well.

What are the pros and cons of changing car insurance?

Pros

Cons

  • Will lose loyalty discount
  • Must switch home/renters policy as well to keep a bundle discount

Can you switch car insurance at any time?

There are no restrictions on when you can switch car insurance companies. However, depending on the carrier and the state you reside, some insurers may charge a cancellation fee. These fees are imposed when the policy is canceled prior to its expiration date. To determine if your current provider charges fees for canceling, you can review the cancellation section in your auto policy or reach out to their customer service.

What should I watch out for when switching car insurance?

When switching to a new car insurance company, there are a few things you should keep in mind. 

Confirm Coverage

First, you should confirm the new policy includes your current coverage. This includes deductibles. You may accidentally quote higher or lower deductibles than what you currently carry, which can make it appear as if you’re being quoted better rates. You don’t want to sacrifice coverage when you switch companies so be sure to pay close attention.

RELATED: How Increasing Your Deductible Can Save You Money on Car Insurance

Research

Next, do your research and look into the best car insurance companies in your area. You should research a potential insurer’s financial stability, customer service, and claims rating before switching. This is to ensure the company will have the money to pay out on any claims and is available when you need them.

Be Honest

Car insurance providers typically have 60 days after you purchase a new policy to review your information and confirm you are eligible. So it’s imperative to be upfront about things like your driving record when getting auto insurance quotes. If your new insurer finds that you misrepresented information, they can cancel your policy or increase your car insurance cost. This can also make it difficult for you to obtain car insurance coverage in the future.

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Should you switch car insurance companies every year?

Seeking quotes every year for new car insurance can offer you a window into whether you are getting the best rates. If you are happy with your current carrier and they are meeting your insurance needs, there is no reason to switch.

Something you should consider is that some car insurance companies will set your price based on how long you have had insurance with your prior carrier. The longer you have consecutive insurance with one carrier, the lower your future rates can potentially be with other insurance companies.

How do I find the right car insurance company for me?

Finding the right car insurance goes beyond selecting a company with lower rates. While price is undoubtedly an important consideration, it shouldn’t be your only one. 

What is Important to You

You should first take your current situation into account to determine what is most important for you. For example, if you have a teen driver, you may want to consider a company that will offer car insurance discounts for that demographic, including safe driver or defensive driving course discounts. Or if you don’t drive frequently, looking into a company that offers a pay-per-mile option may be best.

Type of Relationship With Carrier

You should also consider what type of relationship you would like with your carrier. Are you tech-savvy and would like to have minimal interaction with your new insurance company? If so, a newer, digital company may be for you. But if you’re reluctant to interact digitally, working with an independent agent or an older insurance company with stellar customer service may be better.

Consumer Ratings

To determine how your potential new provider stacks up against other insurance companies, you can utilize sources, such as J.D Power or the Better Business Bureau to get customer satisfaction ratings. These sites will give you an idea of what other consumers are saying about a potential company’s customer service and claims handling, which can also aid in your decision-making.

Tips for Switching Car Insurance

First, you should recognize that any refund you may be entitled to from canceling your old policy won’t be generated until that policy is canceled. And most often, insurance companies will require you to make a down payment to start a new policy. This means there is a gap between getting your refund and making a payment to start a replacement policy. To avoid a lapse in coverage, you should strive to have the funds in place to purchase a new policy before you receive your cancellation refund.

You also may not need to switch companies to lower your insurance rates. Before pulling the plug on your current provider, it’s worth calling to advise them that you are getting cheaper quotes elsewhere. They might be able to review your policy for additional discounts or new coverage to ensure you are getting the best rates.

How to Compare Car Insurance Rates

The best way to compare car insurance rates is through an online quote comparison website or an independent insurance agent. Either of these resources is helpful in allowing you to compare multiple car insurance premiums side by side. Not only will you be able to compare prices, but you will be able to confirm that the coverage you are quoting matches what is on your current policy.

FAQ for Switching Car Insurance

How often do I need to review my policy?

You should review your car insurance policy at least once a year to ensure your coverage aligns with any life changes you may have had in the prior year. Your annual renewal is also a good time to get quotes from other carriers to compare prices.

Do I need to cancel my old car insurance before getting a new policy?

You don’t need to cancel your old car insurance before getting a new policy. In fact, you will want to complete the cancellation of your current policy only after you have obtained a new one. This is because you want to avoid having lapses in coverage, which can affect your price and eligibility in the future.

Will changing car insurance hurt credit?

No, changing car insurance companies will not hurt your credit. However, if you do not cancel your old policy and let it expire for non-payment, the amount you owe can be sent to collections and this can affect your credit score.

Is it bad to switch insurance companies?

Switching insurance companies is very typical and most insurance companies know this is a possibility. Many insurers will offer loyalty discounts or accident forgiveness to incentivize customers to stay with their company. But customers can often save more money by shopping around.

Can you change car insurance mid-policy?

Yes, you can cancel your car insurance at any time. However, some states and insurance companies will charge cancellation fees for canceling mid-term. To confirm whether this is the case for you, consult your policy documents.

Can I cancel my car insurance with an open claim?

You can cancel your car insurance even with an open claim. But depending on the circumstances, it may be best to stay put until after the claim is closed. If you have concerns, chat with your current company or claims adjuster.

If I switch car insurance, will I get a refund?

In most cases, you will get a refund for canceling your old policy. However, this is dependent on how much you have paid into the policy and when you are canceling. Some carriers also charge a cancellation fee for canceling mid-term. Your current provider will be able to tell you if you are eligible for a refund upon cancellation.

Disclaimer:

SteadyDrive is not an insurer or an insurance agent or broker. SteadyDrive does not provide you with an insurance policy, so make sure that you have insurance coverage while you drive. Please contact your insurer or an insurance agent or broker (if applicable) directly regarding questions you may have pertaining to auto insurance coverage. For more details, see SteadyDrive’s Terms of Service.

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Discovering how to save money on car insurance can be a game-changer for your finances. In this comprehensive guide, we’ll cover various tips and strategies to lower your car insurance rates and provide helpful information to help you make informed decisions. You can secure the best deals and discounts from insurance companies with the right approach.
Whether you’re looking to purchase car insurance for yourself or your child, you may have already found that insurance premiums can be surprisingly expensive. But you may not have realized there’s a whole world of discounts that might be available to you. Here’s a guide to possible savings on car insurance rates.

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