Switch your car insurance in 8 easy steps

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Auto insurance needs often change with time. Young adults may be primarily concerned with finding a low cost policy, for example, while older drivers may be more concerned with finding the best car insurance company to protect their financial assets. If the circumstances of your life have changed since you purchased your auto insurance policy, you may have a desire to consider switching car insurance companies.

Generally, insurance professionals recommend against changing companies too often. However, looking for a new company may help you to find a policy that better fits your needs. You could discover a lower premium, more coverage options, additional discounts that you qualify for or features like a mobile app that you did not have access to previously. Learning how to switch your car insurance to a new company could benefit you in numerous ways.

When to switch auto insurance companies

Although you can change car insurance companies at any time, there are often situations that lend themselves well to looking for a new company. These circumstances may include:

  • Moving to a new ZIP code, city or state: Your city, state and even your ZIP code, will all 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, 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 having a child can impact your 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 or refunds on the old policy.

While switching carriers can have its advantages, there are also times when changing 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 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 claim.

1. Consider your coverage options

Too little insurance can leave you financially exposed, but too much coverage may mean you are paying too much. If you think you are overspending, consider switching car insurance.

“Ask yourself: do I drive an older vehicle? If you do, you may not need collision and comprehensive insurance, or you may decide to choose a higher deductible to save money,” says insurance expert Michelle Demora.

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 car insurance is the right option, find out if there are any penalties for changing 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 give proper notice.

While most insurance companies will likely refund your unused premium, some may charge a fee if you choose to cancel in the middle of your policy term. Before cancelling 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 reconsider switching policies. 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 sense to change companies.

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3. Compare car insurance quotes from multiple carriers

If you have decided that it is a good time to change carriers, you will need to know how to change your auto insurance company. You may first want to obtain quotes from several different companies. This will allow you to compare the premiums that various companies can offer you, as well as what coverages are available and what discounts you apply for. Just make sure you are getting quotes for the same coverages, as much as is possible. This way, you are comparing apples-to-apples premiums.

“Family members and friends are valuable resources when it comes to shopping around for new products and services,” says Demora. “A lot of times, they’ve already done the legwork to provide helpful advice and narrow down your search — and finding the right auto insurance provider is no exception.”

Whether you are getting quotes online, by phone or at an agency, you should be prepared with some basic information. You will likely need to provide the name, date of birth and driver’s license number for all the drivers in your household, as well as your address. You will also need the year, make, model and vehicle identification number (VIN) of all your vehicles. If you have a copy of your current policy’s declarations page, this information should be listed, along with your current coverages. You should also be prepared to provide the date and details of any tickets or accidents that you have had in the last three to five years. You may have an option to skip this information to get a quote, but providing it will likely make your quote much more accurate.

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, it could be beneficial to contact your current car insurance company. Although your company will not be able to provide you with a lower rate 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 with 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 their 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:

  • The National Association of Insurance Commissioners (NAIC): This organization assigns a score to each company based on the average number of complaints it receives. A score above 1.00 indicates an above-industry-average number of complaints, while a score 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 out of 1,000.
  • AM Best: If you are wanting to know more about a company’s financial strength, AM Best may be a good resource to use. AM Best assigns companies a letter grade financial strength score, which can indicate how able a company is likely to be to pay out claims.
  • Bankrate insurance company reviews: Our editorial team analyzes average premiums, customer service scores, financial strength ratings, available coverages and discount offerings to determine the best auto insurance companies. We have national reviews as well as reviews specific to each state.

Although price is an important consideration, it is not the only thing you should consider when choosing a car insurance company. Working with a licensed insurance professional may help you to choose a company that fits your needs.

6. Avoid a lapse in coverage

“When changing insurance, it’s best to plan on doing so just before your current policy expires,” says Demora. “Switching early prevents you from having a gap in your 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 DMV after an accident if police are called. If you do not have insurance, your 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 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, there are a few things you need to do to confirm that your current policy is terminated. Do not assume that if you stop paying premiums, your policy is automatically canceled. If you signed up for auto-renewal, your current provider could report you to credit bureaus for non-payment. It is safer to formally terminate your old auto insurance policy, rather than letting it cancel for nonpayment.

You can take the following 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.
  • You may want to ask your carrier to confirm the termination in writing. This gives you proof that you canceled the policy if you continue to receive bills or see a negative remark on your credit report. You can dispute the charges or credit report entry.

Every insurance company is going to have its own process for cancelling policies. You may need to sign a form authorizing a cancellation, or a simple phone call may suffice. If your company offers an online portal or mobile app, you may be able to request cancellation there.

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8. Print out your new car insurance ID cards

Once you have officially canceled your old policy and started your new one, switch out your old insurance ID card for an updated one in your vehicle or wallet. If you get stopped by the police or become involved in an accident, you will need proof of coverage under your new provider.

“Most insurers allow you to access your ID card online through your smartphone, but it’s best to have a hard copy in case you’re stopped in an area without cell service,” explains Demora.

Frequently asked questions

How often should I shop for a new car insurance policy?

If your financial or life situation has changed since you purchased your car insurance policy, it may be time to shop for a new one. You can also contact your current provider to keep it updated with your needs; your carrier may be able to adjust your policy accordingly. However, just because you shop for a new policy does not mean you have to switch your coverage. Staying with one company for a length of time you could earn loyalty discounts.

Can I switch car insurance while I have an open claim?

Switching car insurance companies may be possible while you have an open insurance claim, but most insurance providers 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 an 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 company has its own underwriting guidelines and may not accept new business with open claims.

Do car insurance companies refund premiums I already paid?

Your 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. Call your company to understand its insurance cancellation policy. If you cancel your insurance policy on its renewal date and you have not yet paid the renewal premium, you likely will not be eligible for a refund.