Whether you’re moving to another state, buying a new vehicle or simply looking for better auto insurance coverage, you may want to switch your car insurance. Even if you are just moving to a new ZIP code in the same city, for example, switching your auto insurance could be hundreds of dollars cheaper. And if you recently got married or are about to have a teenager behind the wheel, getting quotes from other carriers can help you make sure you have the best car insurance for your needs.
If you do decide to switch your auto insurance, you’ll want to make sure you’ve covered your bases – such as canceling your current policy. In this article, Bankrate’s insurance editorial team reviews how to switch your car insurance in eight simple steps.
- 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.
- When you switch auto insurance companies, you’ll likely want to double check that your old policy has been canceled.
- To avoid coverage lapses that could put you at financial risk, you should line up your new coverage to start on the same day that your old coverage ends.
- If you just filed an auto insurance claim, you likely won’t be able to switch carriers—and most insurance experts say it’s not a good idea to try to switch until your claim has been settled.
When to switch auto insurance companies
Although you can change your auto insurance company at any time, certain events might mean it’s time to start looking for a new carrier, or at least to get quotes from other insurers to ensure you are getting the best deal and best coverage to meet your needs.
- Moving to a new ZIP code, city or state: Your city, state and even your ZIP code may impact 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.
- 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 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 event: Life events like getting married, 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 may be less likely to have to deal with small bills, a cancellation fee or refunds on the old policy. The important thing is to ensure there are no lapses in coverage because this can leave you financially vulnerable and may increase the cost of future premiums.
While switching carriers can have its advantages, there are also times when changing auto insurance companies may not be a good idea. If you have just 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 will not have the opportunity to correctly rate your policy. This could cause a large increase in your new policy premium at renewal, a retroactive charge to account for the increased risk that the new company did not know about or even a cancellation for misrepresentation if you did not tell your new carrier about the outstanding claim.
1. Consider your coverage options
Too little auto insurance can leave you financially exposed, but too much coverage may mean you are overpaying. If you think you are overspending, you may want to consider switching car insurance.
Ultimately, the more coverage you add to your car insurance policy, the more it will 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.
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, like a cancellation fee, for changing car insurance companies 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. 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, the first thing you might want to consider doing is getting quotes from several different auto insurers. The Insurance Information Institute (Triple-I) recommends you get a minimum of three quotes when shopping for your coverage. This will allow you to compare auto policy premiums, coverage options and discounts. Just make sure you are getting quotes for the same coverage, so you are comparing apples-to-apples premiums. 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 or Social Security number (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)
As you are researching companies, you can also review available discounts. Asking companies to include all the discounts you qualify for on a quote could help you to find cheaper coverage.
4. Contact your current carrier
As you are getting quotes from other carriers, contacting your current car insurance provider could be beneficial. Although your company will not be able to provide you with a lower rate (auto insurance rates are not negotiable) 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 agents are able to represent numerous insurance companies, unlike captive agents who only sell insurance products from a single company. An independent agent 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.
5. Research the new company
You may want to research an insurer thoroughly before purchasing a policy. 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 the best auto insurance companies. In addition to our best overall company picks, we also looked at the best car insurance companies 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 ability to pay out claims in a timely fashion. Typically, you should strive to be insured by a company that has an AM Best financial strength rating no lower than an A- (Excellent).
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.
6. Avoid a lapse in coverage
If you switch your car insurance before 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 companies 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. If you signed up for auto-renewal, your current auto insurer could report you to credit bureaus for non-payment. 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 them that you are terminating your policy. This will prevent them from billing you for future coverage.
- If you signed up for auto-payment, 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. Some companies might let you do it online, but you may feel more comfortable putting it in writing or speaking with someone to confirm that cancelation. 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.
Frequently asked questions
How often should I shop for a new car insurance policy?
Many people often ask, “When should I switch car insurance companies?” The answer is different for everyone, but it may be time to shop for a new one if your financial or life situation has changed since you purchased your car insurance policy. You can also contact your current carrier to ask whether they can update your existing policy based on your changing needs. Remember, just because you shop for a new policy does not mean you have to actually switch carriers. If you stay with one company consistently, you could earn loyalty discounts.
Can I switch car insurance while I have an open claim?
Switching auto insurers may be possible while you have an open insurance claim, but most carriers advise against it. Your current insurer will resolve the existing claim along with any necessary payouts.
However, if the claim is still open when you move to a new policy, your new carrier will not have the payout information to correctly determine your risk level. This can result in a significant premium increase at your renewal or a retroactive amount due to make up for the time period when your claim was not able to be rated correctly on your policy. Every auto insurer has its own underwriting guidelines and may not accept new customers who have open claims.
Do car insurance companies refund premiums I already paid?
Your auto insurance company will be required to refund any unearned premium; however, it may charge a cancellation fee to cover administrative costs of canceling the policy, especially if you are canceling in the middle of your policy term. You may want to call your company or insurance agent to make sure you understand its insurance cancellation policy. If you cancel your insurance policy on its renewal date and have not yet paid the renewal premium, you likely will not be eligible for a refund.
Does switching car insurance affect credit?
Switching your car insurance company typically won’t affect your credit score. Auto insurance companies typically check your credit-based insurance score (except in California, Hawaii, Maryland, Michigan and Washington where this rating factor is prohibited) when they give you a quote, but these credit inquiries aren’t visible to lenders and thus do not affect your credit score.