Let's be honest - nobody really purchases car insurance with the intent of switching car insurance companies. However, it does happen. Not only does it happen, but I actually recommend comparing rates at least once a year to make sure you aren't missing out on any discounts or savings.
Car insurance policies are usually purchased for a six or 12-month term. This allows you to start switching car insurance at least once every year if you wanted to. Still, though, some people never change insurance companies. Regardless of how much they can save. For shorter periods, temporary car insurance is available.
You have the right to cancel your policy and change insurance providers at any point during your policy period. Therefore you should know what to do when you decide to switch car insurance companies.
How to Switch Car Insurance Companies
Below, I'll show you the steps on how to begin switching your car insurance.
Step 1 - Look for Cancellation Fees and Penalties
Before you shop around for a new car insurance policy, it's wise to understand your current car insurance company's cancellation policy to make sure it will be worth it. For example, some car insurance companies may charge you a fee or a percentage of your remainder premium due when you cancel. The cancellation terms and conditions can typically be found in your car insurance policy.
Step 2 - Shop Around for Quotes
Once you've confirmed the cancellation guidelines, start shopping around for car insurance quotes. You want to compare at least three car insurance companies to ensure you're getting the best rate possible.
When you're shopping around, be sure to find out what coverages are included in the quote and what type of discounts or savings the company offers. For instance, some companies like State Farm, Progressive, and Geico offer car insurance discounts if you opt-in to their Safe Driver programs. Also, compare things like the premium and deductible you'll need to pay.
Step 3 - Compare Car Insurance Coverage With Your Current Policy
When shopping around for quotes, have your current policy information handy. You may get quotes that look like you'll be saving money by switching. However, you may be missing essential coverages or coverage amounts required by your state. If you want to add more coverage than your previous policy had, you'll need to make sure you're quoted correctly.
Step 4 - Perform Due Diligence Before Switching Car Insurance
If you've found an auto insurance company you're considering switching to, make sure you research the company thoroughly. Look for reviews on places like Trustpilot by previous or current customers and any information you can find on the company online (the BBB is a great resource, too).
Step 5 - Make Sure the Timing Is Right
Although you have the right to cancel your car insurance and switch to another company at any time, when you cancel is very important. Timing is everything if you want to avoid penalties and extra fees charged with some insurance companies. You should always try to start your new policy the day before or the day of the old policy's cancellation.
The best time to cancel and switch is right before your policy is set to expire. Just make sure that you confirm that the policy was canceled so that you are not paying two premiums.
Step 6 - Inform Your Current Carrier You Want to Switch
You'll need to inform your insurance company that you'll be canceling your policy with them and switching car insurance companies. When they find out you're thinking about canceling your policy, they may try to retain your business and offer you a lower rate for your policy.
In addition to telling the company you're canceling, find out if you're entitled to any refunds of your paid premiums. Some companies will tell you it depends on your payment cycle and whether it's monthly or in-full.
Step 7 - Cancel the Old Policy When a New One Is Issued
You need to receive confirmation that a new policy was issued from the new insurance company before you notify the old company that you are canceling. You don't want to cancel your insurance before receiving a new active policy because it may cause a lapse in coverage. This can cause your premiums to rise, and you risk legal ramifications if you were to get into a car accident.
Step 8 - Swap Out the Old Hard Copy of Your Insurance Card
Once your new policy is active, and the old one is canceled, swap out your insurance cards. Most carriers provide you with access to an app or a login for their website so that you have an electronic copy of your card. However, it is always good to have a hard copy of your insurance card as well.
Can I switch auto insurance at any time?
You can consider switching companies at any time. Whether or not you'll be subject to penalties and fees for switching depends on your current insurance carrier and other factors.
Is it bad to switch insurance companies?
It's not bad to change companies often because you are looking for a lower rate or changing your current circumstances.
How much is it to cancel car insurance?
The cost of canceling car insurance depends on several factors. This includes your location and your insurance company. Most companies do not charge a cancellation fee or penalize you for canceling unless they have stipulations regarding when you cancel.
For example, your insurance company may have a clause in your policy stating that canceling within the first month is subject to cancellation fees and penalties.
Do you get a refund if you cancel your auto insurance?
Refunds are possible if you cancel before your policy expiration date. Other factors determine if you are eligible to receive a discount, most importantly if you paid in full or if you are paying for your premiums.
If you paid in full, there is a chance that you'll receive a refund depending on when you canceled the policy and how much time you have left in your policy.
An example would be if you have two months left and paid in full, you could be refunded two months' worth of premiums. If you pay your premium monthly, you may receive a credit that will be deducted from your final bill, if any.
When can you change insurance companies?
Changing companies can be done at any time. However, there are certain circumstances when it is recommended that you change insurance companies. The reason for this is that you may receive a lower rate for insurance premiums.
Here is a list of when to change insurance companies:
- Marital status change.
- You get a new car.
- You need to add a new driver.
- You buy a home.
- Your credit is improved. Insurance companies pull your credit report to determine your quote.
- You get older, and/or you gain more driving experience. This can help lower your rates because your risk level is decreasing.
- Updates to your driving record. Get a copy of your driving record and look for old violations and see if you can get lower rates.
Can I switch car insurance while I have an open claim?
It's possible to switch insurance companies when you have an open claim. However, you'll need to know how switching companies with an open claim will affect you. Some people with open claims will move to a new insurer if their current company is trying to raise their rate.
Your current insurance provider will still be responsible for handling the claim. However, the new insurance provider can see your driving record and other information that can affect your auto insurance rates.
There is a possibility that when you are quoted insurance rates, it will be higher due to the open claim. You need to make sure that you are honest and open about the claim or any accident you may have been involved in.
All the information provided in this guide was designed to help you through the step-by-step process of how to switch car insurance. You learned how to cancel car insurance, change to new car insurance, and what to expect when you decide to switch auto insurance companies.