Switching car insurance companies can seem like a daunting task, but it’s relatively easy to do and may save you money. Whether you are looking for a cheaper rate, moving to a new state or changing car insurance companies for any other reason, here’s what you need to know to get your switch right.
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How to switch car insurance in four easy steps
The most important thing to remember when you switch car insurance companies is that you need to keep your existing car insurance in place until you’ve locked in a rate and start date with your new company.
Here is a four-step guide on how to change car insurance companies.
Decide when you want your new policy to begin
Insurance companies typically give you the option to initiate an auto policy immediately or up to six weeks in advance. This gives you some flexibility for choosing a start date.
Here are the most important things to consider as you decide when to have your new policy begin:
- Auto insurance coverage typically begins at 12:01 a.m. on the first day of your policy period and ends at the same time on the last day of your policy period or cancellation date.
- Most companies charge a small fee for canceling your policy before the end of your policy term. It’s best to find out how much you may have to pay if you change companies too early.
- You can avoid your current company’s cancellation fees by scheduling your new policy to begin on your current policy’s end date.
- Some companies offer an early-shopper discount to those who request a quote at least seven or 10 days before a new policy’s start date.
If you’re not sure if or when you want to switch, an approximate start date for your new policy will suffice for getting car insurance quotes.
Compare car insurance quotes
Quotes are free, and most insurance companies only need you to provide a few basic details about yourself, your vehicles and other drivers in your household to provide one for you.
It’s best to have your driver’s license and a copy of your vehicle’s registration certificate handy when you contact insurance companies for quotes. Having a copy of your existing policy’s declaration page also helps.
Whether you contact insurance agents by phone, email or in person, be prepared to answer a few questions about yourself and your driving history.
Insurance agents need to know about your driving history to provide an accurate quote, but they also ask about things such as your occupation, military service and marital status to see if you qualify for any discounts they may offer.
As you review your quotes, make sure to account for any differences in coverage as you compare the prices shown in each proposal.
You also need to make sure that the information shown in the quote about you, other drivers in your home and your vehicles is accurate.
Lock in your policy
Once you have settled on a quote you like, it’s time to lock in your rates by confirming your start date and making an initial payment.
The rate shown in your quote is only an estimate.
Most insurance companies check your motor vehicle records after you agree to purchase a policy. If these records reveal a ticket or accident that you have not previously mentioned, your actual insurance rate may be higher than the one shown in your quote.
If the final rate the insurance company offers is too high, you can decline the proposal and keep on shopping.
However, if the rate is acceptable, you typically have to make a downpayment to have the policy take effect on the start date you have chosen.
Cancel your existing policy
Once you’ve locked in your rate and start date, it’s time to cancel your existing policy. You can generally cancel a car insurance policy at any time, either immediately or on a future date.
If you plan to switch when your existing policy term expires, let your insurance company know you won’t be renewing to avoid potential billing mix-ups.
You can usually just call your insurance company and let them know the date you want your policy to end. Depending on your insurance company’s policy, you may be asked to follow up with a written request by fax or email.
Your insurance company is required to refund any amounts you’ve prepaid for coverage beyond your cancellation date. Most companies deduct their cancellation fee from this refund.
On the other hand, if you’re behind on your payments, you’re still responsible for any amounts you owe for coverage up to your cancellation date.
You should receive written confirmation of your policy’s cancellation within a few days of your request. Make sure to document your communications with the insurance company, in case a dispute arises over your cancellation.
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When should I change auto insurance companies?
It’s generally best to compare car insurance quotes from multiple companies every few years to make sure you are getting the best rate and switch companies if you find a better deal. Here are common occasions when it may also make sense to consider changing auto insurance companies.
Your teen gets a driver’s license
Most parents see their insurance rates spike when they add their newly licensed teen driver to their policy. That said, some companies have more favorable rates for families with teen drivers than others, and some may offer more discounts.
You don’t have to add your teen to your car insurance until they get their license. However, you can start comparing auto insurance quotes before then.
You buy a house
Homeowners typically get better rates on car insurance than renters. Also, when you buy a home, you may qualify for additional savings if you bundle your home and auto insurance with the same company.
Comparing quotes before your close date is a great way to find out if a different company has a better combined rate for home and auto insurance than your current provider.
You get married
Marriage is another life event that can impact your insurance rates for the better. Married drivers typically pay less for car insurance than unmarried individuals.
Since some companies offer a steeper discount for married drivers than others, it’s best to shop around to see which company has the best rates for you and your betrothed.
You move to a new state
Auto insurance is issued and regulated at the state level, which means that you have to get new auto insurance when you move to a new state, even if you plan to stick with the same company.
The good news is that your existing car insurance provides temporary coverage when you move to a new state.
However, you usually have to register your car within 30 days of arriving in your new state, and most states require an in-state insurance policy to register your car.
Your existing car insurance company can help you set up a new policy for your move, but insurance company rates can vary widely by state. It’s usually best to shop around to find the best deal in your new state, even if that means switching to a new company.
You don’t have to switch insurance for an in-state move, but you do have to let your insurance company know your new address. Since car insurance rates also vary by ZIP code, you may find a better deal from a different company in your new location.
When should I avoid changing car insurance companies?
Just because you can change your car insurance company at any time does not mean you should change your car insurance company at any time.
Here are some common reasons when it may be best to stick with your current auto insurance company, or at least think twice about switching.
Your current insurance company provides loyalty benefits
Although auto insurance loyalty benefits such as diminishing deductibles and accident forgiveness won’t lower your rate, they may save you money down the road.
Diminishing deductibles typically reduce your policy’s deductible by $100 at no extra cost after each year you avoid having an insurance claim. Accident forgiveness protects you from a future rate increase in the event you cause an accident.
Both can reduce your out-of-pocket costs after an accident or if your car is stolen or damaged by other causes.
If the rates other companies quote are only nominally lower than what your current company charges, loyalty benefits such as these may make your current insurer a better deal.
You’ve just had a ticket or accident
Although a ticket or accident is bound to result in a future increase in your car insurance rate, you won’t know how big of a hit you’re going to take until it’s time to renew your policy. Until then, you keep paying your current rate.
It’s generally best to wait until you see the rates in your renewal notice before you start shopping around to change insurance companies.
You owe your current insurance company money
Insurance debts won’t go away just because you change companies.
Making timely insurance payments on a consistent basis typically helps you qualify for better rates than those with a history of late payments. Having a policy canceled for non-payment can even make it harder to get car insurance in the future.
It’s generally best to settle all debts with your existing car insurance company, regardless of when you plan to switch.
Is it bad to change car insurance companies too often?
There’s no legal penalty for switching car insurance companies too often, as long as you avoid coverage gaps, but you may miss out on some cost benefits if you change too often.
Most insurance companies review your insurance history when you request a quote. If you have a history of frequently switching companies, you may not qualify for the best rates.
Some companies also offer a “tenure” discount to new customers who have been with their current company for more than three or four years. You won’t qualify for this discount if you switch companies every two years.
If you leave your current company after two years or less, you may also miss out on any loyalty benefits it offers. For example, some companies require you to be insured with them for at least three years, with no claims, to qualify for accident forgiveness.
Frequently asked questions
Switching car insurance is relatively easy. It’s best to line up your new policy before you cancel your existing one. You want to schedule your current policy to end on the same day your new policy begins to avoid both a gap and an overlap in coverage.
You can generally switch car insurance at any time, but you may have to pay a cancellation fee to terminate your existing car insurance before your current policy term ends. These early termination fees vary by company, but they tend to be small.
It’s generally best to lock in a rate and start date for your new policy before you cancel your existing car insurance to switch companies. Most companies require a downpayment to lock in your rate.
You have to switch to a new policy when you move to another state, even if you plan to stick with the same company. You can ask your existing insurance company for a new policy in your new state, but comparing quotes from multiple companies may help you find a better deal.
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