How to Switch Car Insurance Companies

Switching car insurance companies? Our guide has you covered! Discover how to save money, avoid coverage gaps, and transition smoothly.

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Car insurance is a necessary expense for anyone who drives a vehicle. And you might find yourself wondering if you’re paying too much. Luckily, you’re not stuck with your current insurer. At any point, you can switch companies if a better deal comes along.

In this article:

  • When you should switch
  • How to switch companies
  • When you shouldn’t change insurers
  • Frequently asked questions

When You Should Switch

It may be tempting to stick with your current company for many years. However, the last thing you want is to be paying more than you would somewhere else, especially if there are better options out there. There are a few specific situations when you should consider switching auto insurance carriers. Here’s a breakdown of each:

  • Your rates went up. After a premium increase, either randomly or due to an accident, you might want to seek a better deal.
  • Moving to a new city or state. If you change ZIP codes, your auto rates are sure to change. Plus, your insurer may not even operate in your state, depending on who you have. This is a good time to think about switching.
  • Adding a driver to your policy. Whenever you add someone to your policy, your rates could go up or down. It’s smart to consider other insurers if you experience an increase.
  • An unpleasant customer service or claims experience. Nobody wants a company that treats its customers poorly. If you had a bad experience, you should try to find a provider that exceeds your expectations when it matters most.
  • A significant life change occurred (married, divorced, a change in mileage). Life is fluid and things often change. If you recently had a major life event happen, it might be smart to think about switching auto carriers.
  • You bought a classic or exotic car. When you buy a classic or exotic car, you’ll want to insure it. However, some providers charge high prices for coverage, while some won’t even cover these vehicles at all. In this case, you may want to seek a company that either has better prices or the coverage you need.

How to Switch Companies

Once you’re ready to change car insurance providers, you’ll want to do it the right way. There are many steps you should follow for a smooth transition to your new company. Here’s how you should handle switching to a new company:

1. Compare Companies

Of course, the first step to changing providers is to find one that suits your needs. You’ll want to do some research to identify the best company on the market. The best insurance providers often have these characteristics:

  • Competitive rates
  • Excellent customer satisfaction
  • Several discounts
  • Plenty of coverages
  • An extensive agent network

To kick off your research, be sure to check out our article which ranks the best car insurers in the country. We assess and rank each insurance company based on the criteria above.

However, keep in mind that rates are unique for every driver. Once you have a short list of companies, it’s a smart idea to compare quotes. This will help you narrow down which carriers have the best rates.

It might also be a good idea to speak with an independent insurance agent as you compare providers. These agents don’t work for a specific company, so they’ll be able to help you find one that is best for you. They may also be able to help you determine whether switching is the best idea.

2. Consider Any Penalties or Refunds

Before you decide to cancel your policy, you should consider the possibility of a penalty for dropping it too soon. Depending on your insurer, you may incur a fee if you cancel before the term expires. It’s best to keep in contact with your provider and make sure no surprises loom ahead.

You should also determine whether you can receive a refund. In some cases, you might be able to get your money back if you’ve paid for the next policy term before it’s started. It’s always worth checking with your agent or a company representative to be sure.

3. Cancel Your Current Policy

The next step is to cancel your current policy. As soon as you purchase coverage from your new company, be sure to cut ties with your former carrier. To do this, you’ll need to inform them and say you would like to end your policy. Then, provided you’re not breaking any of their rules, they should be able to accommodate you.

You must wait until your new policy is in effect before you decide to cancel. Not waiting might result in a lapse in coverage, causing fines and a blemish on your insurance record. Having a lapse on your record results in higher rates.

4. Obtain New Proof of Insurance

It’s important to make sure you have proof of coverage from your new insurance provider. This is most often a physical ID card. But your insurer may also offer proof through its mobile app, if any. Either way, you’ll need valid proof in your car to avoid any issues with the law if you get into an accident or are pulled over.

5. Tell Your Lender About the Change

If you’re financing your vehicle, you need to tell your lender about a change in providers. Once you cancel your policy, they will get a notice. Without any info on the change, your lender could repossess your car because they believe you’re not maintaining coverage. So, it’s better to get ahead of it to avoid any unnecessary headaches.

When You Shouldn’t Change Insurers

Changing auto insurance carriers may not always be worth it. It might seem like a good idea to leave your current insurer, but you could be saving money as it is now. Here are several scenarios where changing providers isn’t ideal:

  • You won’t get a better rate anywhere else. This seems like an obvious reason, but it might be best to stick with your current situation if you can’t get a better deal with another company.
  • You just had an at-fault accident. After you cause an accident, your rates are sure to skyrocket. This is a good time to wait and see what will happen to your premium. Once your costs increase, it’ll be time to reassess switching.
  • You recently had a ticket or other violation. Having a moving violation on your record could raise your rates. In this case, you should wait for your premium to settle, then see about switching.
  • The only quote you received was online. Often, online quotes don’t display a fully accurate rate. After getting an online price, you should wait until an agent or company representative finalizes it before switching.
  • You just switched providers. If you’ve just changed to another carrier, it may not be the best idea to jump ship just yet. Companies will see you as a flaky customer and might raise your rates because of it.
  • There are discounts you aren’t taking advantage of. Occasionally there are discounts you didn’t know you can qualify for with your current insurer. It’s always a good idea to talk to your agent before switching providers to ensure you can’t already get a better rate.

Frequently Asked Questions

Do you have to cancel your policy when you switch?

Yes, you will need to cancel your current car insurance company when you switch. If you don’t, you’ll end up paying for both, which, as you could imagine, wouldn’t be so much fun. Your new provider also won’t cancel your old policy for you, so you’ll have to take that initiative on your own.

Luckily, making the switch is an easy task. You should tell your current provider about your plan to switch, then they should be able to help you through the process. Watch out for any penalties or refund opportunities!

When is the best time to switch insurers?

The best time to change insurance companies truly depends on your current situation. Of course, you’re free to switch at any time. However, you should consider whether switching is worth the time and effort. If you’ll save money by doing so, then you should go for it. But if you won’t save money or your rates are in flux because of an at-fault accident or tickets, you should probably hold off and see what happens to your premium.

Will I lose my coverage if I switch companies?

As long as you cancel your policy after you’ve purchased a new one, you won’t lose your coverage. But you should make sure you’re getting all of the coverage types you need with your new provider. Some companies offer types of insurance that others don’t. Be sure to speak with your agent or closely review your policy to ensure there are no unwanted coverage gaps.

Can I switch providers at any time?

Yes, you’re able to swap companies at any point during your policy period. However, some insurers may penalize you or not offer refunds past a certain point in the term. It’s always a good idea to speak with your current provider to make sure there are no unwanted surprises during the process.