You may be ready to say goodbye to your car insurance company to find a new insurer that offers better rates or customer support, but you might be wondering how to switch car insurance.
Switching insurance carriers isn’t difficult, but it takes some planning. Considerations such as coverage, claims experience, discounts and price play a crucial role in finding an insurer that can protect your car. Learn how to tell if you need to switch insurance companies and what to expect if you decide to make the change.
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Reasons to switch car insurance companies
Switching car insurance companies isn’t something you should do on a whim. Although it’s best to stay with a carrier that provides good coverage and service, sometimes it’s in your best interest to get coverage with another company.
Common reasons auto owners switch insurers include:
- Adding a teen driver: When teenagers get their driver’s licenses, parents often add them to their current auto policies. But insurance rates for teen drivers can vary widely. When adding a teen driver to your policy, shop the market for the best premium available.
- Bad service: If you’re not satisfied with the way your current provider handled a claim, have trouble reaching your insurance agent or have had numerous billing problems, you might consider shopping around for a new insurer.
- Better rates: Car owners sometimes choose an insurance company on the recommendation of a friend or family member without shopping the market for the best rate. If you’re paying a high premium and find a better rate with another provider, it might be time to switch.
- Car in storage: If you put your car in storage to go on an extended vacation or for a military deployment, some insurance companies will allow you to pause your car coverage. If your carrier doesn’t offer the option, you may want to switch to another insurer.
- Move to another state: Large carriers such as Allstate, State Farm and Geico write car insurance policies in all states, making it easy if you need to move. If your current provider doesn’t offer coverage in the state you’re moving to, it’s time to switch.
- Need additional policies: Many insurance companies offer discounts for bundling your auto insurance with a business, home or renters policy. However, if your current insurer doesn’t offer the additional coverages you need, shop the market for a company with a broader portfolio of insurance products. Purchasing all your policies from one company offers convenience and oftentimes great savings on premiums.
- Rate increase: Filing claims, having traffic accidents or receiving traffic violations can lead to a rate increase. However, it’s not uncommon for a policyholder to receive a rate increase for no discernable reason. If your rate increases, ask your insurance agent for an explanation and consider switching to another carrier.
- Selling a vehicle: If you’re planning on selling your current vehicle, you might save money on insurance if you shop around before buying another car.
When should I switch policies?
The best time to switch to a new insurance carrier is at the end of your current policy’s term. So, if your policy ends on June 15, arrange for the new policy to begin the same day. Switching at the end of the policy term can help you avoid early cancellation fees from your current carrier and provides an easier transition. Never let your auto coverage lapse, even for one day.
Steps to switch your car insurance policy
Switching insurance carriers isn’t difficult, but you need to plan. Follow these simple on how to change car insurance.
1.Determine when and how to switch
Check your current policy to determine the date it ends. Look at the fine print of your current policy to determine if you need to cancel by a certain date. For example, the contract may stipulate that you must notify the company 30 days prior to the cancellation date.
2.Purchase a new policy
Start shopping for a new carrier a month or so before you plan to start a new policy. Once you find a new provider, purchase a new policy and set its start date according to the last date of your current policy.
3.Cancel your current policy
Contact your current insurer to cancel your current policy. Providers’ cancellation policies vary. Some allow you to cancel over the phone or via email to an agent, while others require you to send a letter through snail mail. Request cancellation confirmation in writing.
4.Follow up on new coverage
On the day your old coverage is set to end and your new policy to begin, check to make sure the new policy is in force. Because most large insurers offer online account access, you can typically sign in online to see if your policy is active.
Canceling a car insurance policy
When you change car insurance, you must cancel coverage with your current provider and purchase a new policy with another. The cancellation process varies by company. For instance, Allstate requires policyholders to call a local agent to cancel a policy, while Geico allows customers to cancel by calling a toll-free phone number.
Some companies charge a cancellation fee if you terminate coverage before the end of the policy term. State insurance codes vary, so cancellation fees, if any, can differ. Many large companies don’t charge a fee if you cancel at the end of a policy term. However, some carriers may charge a short-rate cancellation fee, charging you a percentage of the unearned premium, often 10 percent. For instance, if your rate is $100 per month and you cancel two months before the end of the policy term, the carrier may charge you a $20 short-rate cancellation fee.
To find out if your insurance company charges a cancellation fee, review your policy’s declarations section or speak with your agent. Most companies don’t publish their fees, and fees vary from state to state.
Mistakes when switching car insurance companies
Unfortunately, some folks switch insurance companies when they don’t need to or make mistakes that can lead to financial losses.
- Don’t cancel your insurance coverage until the new owner takes possession when you sell a car.
- Don’t assume you need to switch carriers if you move to another state. Before purchasing a policy with a new carrier, find out if your insurer writes policies in the new state. Often, a national provider can transfer your policy to another agent.
- Ask your agent about adding your new spouse to your current policy if you get married and like your current plan.
- Consider dropping coverages instead of switching carriers. If you own your automobile outright, you can save money by dropping collision and comprehensive coverages, a much easier alternative to switching carriers.
- Ask your current insurance agent about discounts. If the cost of insurance prompts you to change carriers, you may be able to reduce your rate by applying for discounts. Although you might not qualify for any discounts when you first purchase a policy, that may change over time. For instance, some insurers offer discounts when you buy a home, retire or turn 55.
- Never let your coverage lapse, even for a day. A lapse in coverage can lead to a higher premium, even if you switch carriers.
Saving money on your new car insurance policy
To save money on your new car insurance, shop for insurers that offer the best combination of low rates and discounts. Look for discount programs that fit your automobile. For example, Allstate offers discounts for current model cars and vehicles equipped with antilock brakes and anti-theft devices.
Bundling an auto and home or renters policy is one of the best and most common ways to save money. For instance, Amica offers up to a 30 percent discount when you purchase a car and condo, home or renters policy.
If you’re a good driver who never gets speeding tickets or has accidents, consider insurers that offer usage-based car insurance rates. For example, Progressive’s Snapshot program monitors your driving habits using a mobile app you install on your smartphone. If you continuously follow the rules of the road and avoid accidents, the program rewards you with lower rates.
Switching car insurance isn’t hard, but it’s important to follow the right steps so you don’t pay more money that you have to. Use this guide next time you need to change your provider.