How To Switch Car Insurance Providers: A Step By Step Guide

I have encountered many who stick with only one auto insurance company when there are scores of better companies with broader coverages and more competitive rates. 

And when I ask what their reason for this is, they say that is too much of a hassle. When, in fact, it is far from the truth. 

Changing car insurance providers is, for the most part, pretty easy and hassle-free. In addition to this, the benefits of cheaper rates, better service, and broader coverage are waiting. 

It is a good idea to check your current policy and determine if it is time to switch to a new company. 

Why Make The Switch? 

All things change, and that includes your financial situation and capabilities. Your car insurance coverage needs change, your money is not enough to pay the premiums, or you realize that you are not deriving the value that you expect and need. 

Car insurance coverages are diverse and can vary between companies. Comparing the rates and coverages between insurers, and weighing them against your own needs, ensures you have the best car coverage for your requirements. 

Changing car insurance providers can reap you the benefits of: 

  1. Lower premiums. 
  2. Better deals at reasonably lower costs.
  3. Wider insurance coverage.
  4. Choosing the coverage with add-ons you need and exclusions of those you don’t. 
  5. Better customer service experience, if you have experienced unsatisfactory ones in the past.

The main advantage of changing providers is to save money on your premiums. Even if you are enrolled in the insurance policy with the cheapest rate, the formulas insurers use change frequently. 

The company with the lowest premium two, three years ago, may turn out to be a worse option now. But of course, a low premium is not the only consideration. 

If you are interested in a particular benefit a different insurance policy offers, or you experienced less than stellar customer service with your current provider, then maybe it’s time to make a change. 

Also read: How to find the super affordable car insurance rates

When Should You Make The Switch? 

There are very few downsides to looking around for a better car insurance deal, so check for better rates as often as you want. Most car insurance experts recommend changing car insurance every six months. 

The policy is paid every six months, and the rate is a mirror of your capabilities as well as your surroundings. These change over time, so it can be a good idea to shop around every six months, just before renewal, to make sure you are paying for the proper coverages. 

You are likely to find differences in rates upon experiencing an event that affects how companies calculate their pricing. For instance, your current policy might offer higher premiums to single drivers, but substantially less for a married one. 

In this case, it can be wise to look around for new insurers after marriage. 

Generally, here are the times where looking for a new company is a great decision. 

  1. When you either add or remove a new driver, plus points if it is a teenager. 
  2. When you move to a new state 
  3. Before the renewal of your current policy
  4. Before purchasing a new car 

Now, this is not a particular point in time, but you can also shop around for insurance years after an accident where you are at fault, or a traffic violation. These situations generally mean that your rates go up. 

Checking periodically to see if your rate will go down can be worth it, because your rates may already decrease the years after the happening of the event. Individual companies weigh these events differently, so inquire about many companies to get the cheapest premiums. 

Also, take note of these things. 

Switching Is Not Affected By Any Open Claim 

An open insurance claim will not impact if you want to change insurers or not. The claim would still be paid out as stipulated, and there would be no corresponding penalties.  

However, dealing with two companies could be quite a hassle. If you want to change insurers but would like to transact with only one company for the moment, then wait until the full claim has been paid out. 

Think Twice When Changing Insurers After An Accident

You are much less likely to save money if you have been in an accident or a driving violation since your last renewal. 

Insurance companies raise your rates because of these events, but they only recalculate at renewal date, that is, every six months. 

That means that if you are in an accident the day after you just renewed your policy, then you have a six-month period where you will pay the pre-accident rate. If you choose to change providers immediately following the accident, however, then the prices will instantly adjust to include the incident. 

Now, I want to underscore that before you decide to switch, think if it is right for you. Maybe the current insurance policy you hold is a genuinely good product, and you’ll find it hard to replace. 

Or maybe you thought you chose a product that is good when in reality, it is not up to snuff. 

Do a bit of research before you settle on a decision. Determine the coverages and extras you need and not just what you want. 

Also, check your current contract, specifically the disclosure statements, to know if there are any stipulations or requirements on the cancellation of your policy. 

How To Switch Car Insurance 

The median cost of a car insurance package is around $200 per month or $2,390 per year. Now that varies by state, and within a state, can vary by zip code. 

There are lots of car insurance providers out there, so be careful when deciding to change. Here are some steps you can follow in your search for a new provider. 

Also read: What are Umbrella policies and how do they protect you?

Take A Look At Your Needs

Before you go around shopping for potential replacements, take a look at your current coverage and see if your needs have changed. Perhaps the value of your car has gone down, or the passengers you need to protect have changed. 

Too little insurance leaves you exposed, but too much will leave you paying more than required. Mind your deductible as well; will you increase it to reduce the premium, or keep it as money on hand for emergencies? 

Check For Penalties

Find out if there are penalties in your current policy for changing providers. Car insurance companies generally do not hand down any penalties and allow change as long as you give notice. 

Most will also decide to give you back your unused premium, but some may charge you with a fee if you cancel in the middle of the term. If you will be charged a fee when changing providers before the end of the term, then do the math and find out whether you’ll be better off waiting or not.  

Cancel The Current Policy

Once you have decided to change insurers, then it’s time to cancel your current coverage. This may be best done at the end of a payment cycle so that you are still covered until renewal. 

Call your insurer 14 days before the payment date of your current policy, since renewal letters are generally sent two weeks before the renewal date. During your conversation, clearly state your intention to cancel, and when you want to. 

Find The New Policy

Now here is the more tedious part: finding your new car insurance provider. Getting quotes, comparing those quotes, making computations, and overall deciding which is better based on additional non-quantitative factors is hard. 

To begin with, make sure you get quotes from a wide variety of sources. Each company offers different terms and forms of coverage, and the more choices, the better. 

A lot of factors can influence your rates, such as your address, the vehicle make, model, and year, the drivers to be insured, and the driver’s driving history. The best auto insurance companies provide excellent service with discounts loyal, and responsible drivers enjoy. 

It may require a tad bit more work, but proper research will give you the most opportunities in finding the quote that will meet your needs. 

Once you have accumulated many quotes, then it is time to compare them. Here, you must take into consideration not only the price but also non-quantitative factors, such as the flexibility of the policy, add-ons and extras, and more.

Now, you have a shortlist of insurers, but do not commit to any of them just yet. Do further research, primarily regarding the customer experience. 

Read about online reviews on various platforms, specifically about their claims processing and reputation as a business. 

Expect to find some negative reviews. There is no perfect company, and a flawless reputation raises some red flags about the company. 

Of course, avoid companies that receive consistently bad feedback from its users. If you find a company that is positively reviewed, exudes professionalism and has prompt claims processing, then they are good choices. 

It also pays to ask other family members or close friends for their input, as they are likely to give you honest feedback. 

Choose The Policy

With the proper research and impressions gathering, you now have a concrete idea of the insurer you want, one that gives an appropriate mix of competitive rates and service. 

Sign Up For The New Policy

And all that is left is signing up for the new policy. Once you have determined the company you want to sign up for, then contact them for a quote.

Review the contract, especially the fine print, before you sign the papers. 

And there you go. Following these steps will make sure that you get the insurance coverage you need for the maximum bang for your buck. 

What To Do After The Switch

After a successful change, there may be some things you need to take care of. 

Print Your New Insurance ID Cards

Once you have successfully switched insurance companies, then you also need to change your old ID cards for new ones. You will need proof of coverage on the event that you get involved in an accident, or are stopped by the police. 

Most insurers give copies of your cards digitally on a smartphone, but it is best to have a hard copy in cases where you cannot use your phone. 

Notify Your Lease Provider

If your car has a lease or loan attached, then ensure you notify the lease provider immediately. Most car loans and leases require the carrying of insurance, and a provider that sees you cancelling insurance may repossess the automobile, or buy a separate policy for you. 

Be Very Careful On Getting Into Accidents

Your insurer may drop you as their client during the first 60 days of the new insurance policy. During this time, be extra cautious in getting involved in accidents or committing violations, as they may drop you from their customer roll. 

Avoid These Mistakes 

Here are some things to avoid to ensure the transition is smooth. 

Failing To Cancel The Old Policy 

Proactively cancelling the old policy will let you encounter fewer problems down the line. Not cancelling means that your former insurer will still bill you, you will, of course, fail to pay, and you will suffer a dent in your credit score. 

Missing Out On Refunds

Some companies give refunds for the premiums that you won’t use. If you are entitled to one, then don’t hesitate to get it, as they usually pay it out without any fuss. 

Forgetting The ID Cards

In your hurry to switch providers, you may forget to swap your old insurance cards for new ones. Digital ID cards are convenient but are not useful in cases where phone use is restricted. 

If you are pulled over and don’t have proof of coverage, then you have to pay the fine. 

Leaving a Gap 

Ideally, you should set a new policy to start the moment you officially cancel the old one. Otherwise, you would have no coverage in case an accident happens. 

Final Words

As you can see, switching car insurance companies is not as hard as you think. Knowing that you need a new policy is half the battle, and the rest follows. 

Just remember the steps and tips below to ensure that you will not encounter difficulties of any kind during your switch. 

Have you ever tried changing your auto insurance company? Do you have any questions regarding switching? 

Drop a comment below and let me know! 

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