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Significant life changes like getting married, buying a new car, or even moving to a new state affect the premium rates of your car insurance policy.
If your car insurance needs have changed, you may want to start shopping for a new policy to save money. In this article, we’ll cover how to switch car insurance in five easy steps and help you identify when it’s best to make the switch.
For provider recommendations, we invite you to take a look at our reviews for the best car insurance.
Switching car insurance isn’t that different from changing other insurance policies. You must shop around, evaluate coverage benefits, purchase the best policy and cancel your previous insurance. Remember to call your company and speak to an agent to find out if they have any cancellation fees.
From full coverage — liability, comprehensive and collision — to medical payments and gap insurance, understanding the different types of car insurance coverage is an essential first step. If you need a refresher on what type of coverage to prioritize our guide on how to buy car insurance has everything you need to know.
When you are ready to switch to a new policy, here’s what to do:
The first step when switching car insurance companies is to shop around. Get car insurance quotes from at least three companies and compare coverage options, deductibles and premiums.
Drivers that need an affordable policy may get better rates with the companies featured in Money’s best cheap car insurance article. You can also take into consideration providers that have car insurance discounts that apply to you and the vehicle you drive. For example, Farmers Insurance offers discounts for essential workers and veterans and Nationwide has discounts for cars with anti-theft devices.
Similarly, car owners with poor credit can look into telematics insurance companies, which offer car insurance for bad credit by prioritizing a safe driving record over creditworthiness.
The next step is to find out more about the companies. Read customer reviews and ask friends and family about their experience with their current car insurance provider. You want new insurance coverage that makes it easy to manage your policy, file claims, track repairs and get reimbursed.
If you want to go the extra mile, check out the company’s financial rating with agencies such as A.M Best – this’ll give you a good idea of the provider’s financial capability to pay for future claims.
Bonus services include car insurance apps, insurance discounts, multiple payment options and around-the-clock insurance claims assistance.
Now that you have a list of companies and are ready to purchase the new plan, there is one thing left to do before switching insurers: protect yourself against a lapse in coverage. A lack of continuous coverage not only leaves you unprotected but may also prompt insurers to increase future rates as some insurance companies consider you an uninsured driver for that time.
You can avoid this by making sure the activation date of your new policy coincides with the last active date of your current car insurance. If you are switching companies in the middle of the policy period, you can avoid the gap in coverage by scheduling when you want the coverage to begin.
Once you know which company and coverage is best for you, it’s time to purchase a new plan.
Gather the following information to apply for a new policy:
You may need to speak with an agent or submit a written, formal request to cancel your old policy. We recommend that you call your current insurance company so that an agent can walk you through the cancellation process. If you’ve paid any premiums in advance, remember to ask about insurance refunds and any cancellation fees or penalties.
Once the cancellation is finalized, you should receive a written confirmation from the insurance provider. As a final step, double check that any autopay or bill pay service is also cancelled.
Consider switching car insurance if you:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Switch 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.
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