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Switch your car insurance in 8 easy steps
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If you own a vehicle, it’s likely that you have a car insurance policy. But what happens when you find another company that offers a lower rate, better service or any other perk that you’re currently missing? If you want to change car insurance companies, don’t worry. The process isn’t difficult and you can switch at any time during your policy term. Bankrate’s insurance editorial team, which includes three licensed agents who have helped thousands of drivers switch policies, walks you through the process of switching insurance companies.
- If you’ve had a major life change, such as getting married or buying a new vehicle, you may want to consider switching car insurance companies.
- To avoid coverage lapses or overlaps in coverage that could put you at financial risk, you should start your new coverage on the same day that your old coverage ends.
- If you have an open claim with your current insurer, you probably won’t be able to change companies until the claim is paid and closed.
When to switch auto insurance companies
You can change your auto insurance provider at any time. That said, certain events could warrant the switch sooner than later, or signal that it’s time to start searching for a new carrier and getting quotes.
These circumstances include:
- Moving to a new ZIP code, city or state: Your city, state and even your ZIP code may impact your car insurance premium. Relocating could mean you qualify for reduced premiums if rates are more competitive in that area.
- Adding a driver or car: If your teenager is about to get a license or you are adding a new car to your household, consider getting quotes from other insurance carriers. Every company has different car insurance rates, and many offer student-based discounts. So, you may find a company that offers a lower premium for your new driver or vehicle.
- Experiencing a life change: Life changes like getting married, divorced, buying a home or getting a new job can impact your auto insurance needs and premium. Updating your current policy or searching for a new one may be a good idea under these circumstances.
- Approaching your renewal date: You can change your car insurance at any time, but your renewal date offers a particularly convenient time to switch. If you cancel your old policy on its renewal date and start your new policy on the same date, you could avoid small bills, cancellation fees or refunds on the old policy. It’s vital to ensure there are no lapses in coverage because this can leave you financially vulnerable and may increase the cost of future premiums.
- Seeing an increase in premiums: This will generally happen at a renewal, or if you make a change to your policy. If your premium increases, it may be a good time to see if another carrier can offer you a cheaper car insurance rate.
- Reviewing your options: If you’re happy with your company and premium, there’s really no need to shop for new auto insurance. If you are curious though, there’s no harm in getting quotes from other providers. You may discover that another company offers much lower rates or offers policy features that your current carrier doesn’t. Simply getting quotes doesn’t have any adverse effects and doesn’t lock you into a new policy.
While switching carriers can have its advantages, there are also times when changing auto insurance providers may not be a good idea. If you recently filed a claim, for example, you likely will not be able to change carriers. If the claim has not been settled and paid, your new car insurance company may not have the opportunity to correctly rate your policy.
This could cause a large increase in your new policy’s premium at renewal. Or you could incur a retroactive charge to account for the increased risk that the new company was not aware of. In some instances, there may be a risk of policy cancellation for misrepresentation if you did not tell your new carrier about the outstanding claim.
8 easy steps for switching car insurance
If you are thinking of switching to a new provider, you may be wondering how to change car insurance companies. Here’s how to move forward:
1. Consider your coverage options
Carrying too little auto insurance can leave you financially exposed, but too much coverage may mean you are overpaying. For example, assume you own an old car that isn’t worth much that you’ve already paid off. It may not be in your best interest to carry an expensive full coverage policy. But if you deem full coverage worthwhile, consider shopping around if you believe you’re overpaying for coverage.
Ultimately, the more coverage you add to your auto insurance policy, the more it will generally cost. If you are wondering how to change car insurance, understanding the different types of car insurance coverage — and which ones you need — is an important first step.
Learn more: Common types of car insurance coverage
2. Check for potential penalties
If you decide that switching your car insurance is the right option, you may want to find out if there are any penalties. Some providers charge a cancellation fee for changing car insurance carriers before the end of the coverage period. Fortunately, auto insurance companies generally give you the right to cancel your policy at any time as long as you provide proper notice.
While most auto insurers will likely refund your unused premium, some may charge a fee if you choose to cancel in the middle of your policy term. Before canceling your policy, you may want to talk to your company’s customer service department or ask your agent if the company has any specific cancellation stipulations.
If you find out that you will be charged a penalty for canceling in the middle of your term, you may want to hold off on switching policies until your policy is up for renewal. But if you can find a new policy with a premium that makes up for any cancellation fees charged by your old carrier, it may still make financial sense to change companies.
3. Compare car insurance quotes from multiple carriers
If you have decided it’s a good time to change carriers, consider getting quotes from several different auto insurers. This will allow you to compare auto policy premiums, coverage options and discounts you may be eligible for. Just make sure you are getting quotes for the same coverage types and limits, so you are comparing premiums evenly. Whether you are getting quotes online, by phone or at an agency, you’ll likely need to be prepared with some basic information:
- Address where the car will be stored
- Vehicle year, make and model
- Vehicle identification number (VIN)
- Driver’s license numbers for all drivers you need listed on the policy (auto insurers will use this information to review your motor vehicle record and any other personal factors that might affect your premium, such as your credit-based insurance score in some states)
- Social Security numbers for the policy owners (not all companies require this, but it is a common practice to ensure that the credit-based insurance score is matching up with the correct named insured)
Be sure to inquire about discounts that may be available to you as you research providers. Doing so could help you save on coverage in one or more ways.
Learn more: Average cost of car insurance
4. Contact your current carrier
As you are getting quotes from other carriers, contacting your current provider could be beneficial. Although it is a car insurance myth that insurance rates are negotiable (meaning that your company won’t 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 missing. Your agent may have suggestions about how to lower your costs, like maintaining a clean driving record or even buying a less expensive vehicle.
This step is particularly important if your insurance is written through an independent agency. Independent insurance agents are able to represent numerous insurance providers, unlike captive agents who only sell insurance products from a single company. An independent insurance broker may be able to shop your policy with multiple carriers to find you a lower rate while still keeping your policy in the same agency.
Learn more: Best car insurance discounts
5. Research the new company
You may want to research an insurer thoroughly before purchasing a policy. Price isn’t the only factor to consider when shopping for car insurance. Reviewing other metrics can help ensure that you choose a carrier that fits all your needs, not just your budget. Some helpful resources include:
- Bankrate insurance company reviews: Bankrate’s editorial team analyzes average premiums, customer service scores, third-party financial strength ratings, available coverage options and discounts to determine which auto insurance companies to feature. In addition to our best overall company picks, we also looked at the best car insurance carriers in each state to help give you a better sense of what is available in your area and how much it might cost.
- The National Association of Insurance Commissioners (NAIC): This organization assigns a score to each company based on the average number of consumer complaints it receives. A score above 1.00 indicates an above-industry-average number of complaints, while below 1.00 indicates a below-industry-average number of complaints.
- J.D. Power: This company conducts studies from multiple angles, including overall customer satisfaction and claims satisfaction, and assigns a score to each car insurance company. Some of its rankings are also region-specific.
- AM Best: If you want to know more about a company’s financial strength, AM Best may be a good resource. AM Best rates companies with letter grades based on numerous financial measures, which can indicate a company’s historical ability to pay out claims. The higher a company’s AM Best rating, the more financially stable that company has historically been.
Although price is an important consideration, it is not the only factor you should consider when choosing an auto insurance company. Working with a licensed insurance professional may help you choose a carrier that fits your needs.
Learn more: How to choose the best car insurance company
6. Avoid a lapse in coverage
If you switch your car insurance after your existing policy expires, you could experience a lapse in coverage. A lapse in insurance coverage could lead to serious legal and financial challenges, especially if you are involved in an accident while uninsured. If you cause an accident and you do not have insurance coverage, you will be responsible for the damages, including any applicable medical bills, out of pocket. Even if you are not at fault, most states require insurance providers to file proof of insurance with the Department of Motor Vehicles after an accident if police are called. If you do not have car insurance, your driver’s license could be suspended.
Driving without insurance could cause insurance companies to charge you higher premiums in the future because they may consequently perceive you as a high-risk driver. Your new insurer should be able to time the activation of your new policy so that it begins exactly as your old coverage ends.
7. Make sure your old policy is canceled
If you are switching car insurance to a new insurer, do not assume that your existing policy is automatically canceled if you stop paying premiums. Most insurance experts recommend that you contact your current carrier to cancel your policy when you are switching to a new car insurance company.
Follow these few steps to terminate your prior policy:
- Contact your current insurance company and notify it that you are terminating your policy. This will prevent it from billing you for future coverage.
- If you signed up for automatic payments, you may need to log into an online account and cancel the auto-withdrawals. If you use your bank’s bill pay service to pay your premiums, be sure to stop the payments with your bank.
- Ask your carrier to confirm the termination in writing.
Each insurance company has its own process for canceling policies. You may need to sign a form authorizing a cancellation, or you may need to call and speak directly with a company customer service representative. Your insurance agent can help you through the process.
8. Print out your new car insurance ID cards
Once you have officially canceled your old policy and started your new one, you’ll likely want to switch out your old insurance ID card for an updated one to keep in your vehicle or wallet. If you get stopped by law enforcement or become involved in an accident, you will need proof of coverage under your new auto insurance provider.