Switching car insurance carriers might seem arduous, but in reality, it’s easy to do and could save you money. Whether you’re looking for a better rate, moving to a new state or changing for any other reason, here are the most important things to know about switching your car insurance company.
In this article:
How to switch car insurance
The most important thing to know about switching car insurance companies is that you need to keep your existing coverage in place until your new policy begins. Here are five simple steps to follow when it’s time to change:
Step 1. Dust off your declaration page
Get started by finding a print or digital version of your declaration page. This handy document contains the coverage and rate information you’ll need to compare your current policy to quotes from other insurance companies.You can even speed up the quoting process by sharing your dec page with agents from other companies.
Step 2. Compare quotes
As you compare rates, make sure the coverages, policy limits and deductibles shown in your quotes match those in your existing policy.
If you’re also insuring a home, motorcycle, boat or other possessions, ask for quotes showing the potential advantages of bundling your policies with a single carrier.
You can even share the best quote with your current agent to see if they can match or beat it. An insurance agent can’t knock $100 off an estimate to close a sale. But they can see if there are new discounts available to you, or if enough time has passed to remove a prior accident or violation from your records.
Step 3. Consider adjusting your coverage
Shopping for a new insurance company provides a natural opportunity to make sure the coverage you have still meets your needs.
For example, if your net worth has grown since you established your current policy, it might be time to increase your liability limits or purchase an umbrella policy. On the flip side, if your car’s value is considerably lower than it was when you first insured it, it might be time to take collision coverage off the vehicle.
Step 4. Lock in your new policy
You’ll want to lock in your new policy before you cancel the old one because the rates shown in a quote usually aren’t guaranteed. The quoted rate could change for a number of reasons until you “bind” the policy. For example, if the insurance company discovers a violation that you previously forgot to mention, your rate will likely be higher than shown in the quote.
However, if the rate and coverage remain as promised when it’s time to bind, you can lock them in by setting your policy’s start date and making your initial payment.
Most companies let you activate your policy immediately, but some offer an early shopper discount if the policy begins a week or so after the initial quote. And if you start your new policy on your current policy’s expiration date, you’ll avoid the administrative fee most carriers charge for cancellations.
Step 5. Cancel your existing policy
You can usually cancel your existing policy by phone or through your insurance carrier’s website, but make sure to get written confirmation.
You’ll want to schedule your existing policy to end on the start date of the new policy in order to avoid an overlap or lapse.
If you prepaid for your current policy, many insurance companies will return premiums for coverage beyond the expiration date, minus an administrative fee. This fee can range from a few bucks to 10% of premiums left on the policy, depending on the carrier and your state’s regulations.
When can I change my car insurance company?
You can change your car insurance at any time. The best times to consider doing so include:
- When you’re shopping for a better rate.
- When you move to another state.
- When you experience certain life changes, such as a new home, a new driver in your household or a change in marital status.
Here are the most important things to keep in mind for these occasions.
Insurance companies continuously fine-tune their formulas for setting rates, and your own rate qualifications can also change over time.
For example, you might qualify for a better rate with a certain company today than you did five years ago because an accident no longer shows up on your driving record. Or your credit rating might be stronger today than it was five years ago.
Find out if you can get a better rate with another company
Moving to a new state
Car insurance requirements and regulations vary by state. Even if you stick with the same insurance provider after you move to a new state, you’ll still need a new policy. Just make sure to keep your existing policy in force until the new one starts.
A new home, a new driver in your household and marriage are among the life changes that can trigger a need to shop around.
- You could save by bundling your car and home or renters policies with the same carrier. As you shop, you might discover that a different company offers a better multipolicy deal than your current carrier.
- Adding a new teen driver to your policy will likely increase your rates. This makes it a good time to look for a company that offers the most favorable rates, discounts and coverage to households with young drivers.
- Married couples tend to qualify for better rates than single people. This is one of many reasons why you and your new spouse should consolidate your insurance coverage after you tie the knot. Even if you’re just living together, you’ll often get better rates and coverage if you’re on the same policy.
Is it bad to switch insurance companies?
There is no direct penalty for changing insurance companies, other than the fee your insurance company might charge for canceling. But if you switch too often, you could see higher rates on future quotes. This is because some insurance companies include your tenure, which is the amount of time you’ve been with your current carrier, among the factors they consider in setting your rate.
Some insurance companies even extend loyalty discounts to new customers who have been with another carrier for more than a certain number of years.
Also, if you switch car insurance companies too frequently, you might miss out on loyalty discounts and benefits that your current carrier might offer, such as a diminishing deductible or accident forgiveness.
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