How to switch car insurance companies in five easy steps
Switching car insurance policies is straightforward, but you do need to follow a few steps. The big one, of course, is finding a new policy; our car insurance comparison tool can help. Once you've chosen the new policy, you can follow the steps below to switch.
1. Ask if there is a cancellation penalty
Most insurance companies allow you to cancel auto insurance without penalties. Some companies, however, may charge an early cancellation fee or even refuse to refund the unused portion of your prepaid car insurance.
You can call your insurance company or review your policy's terms and conditions to determine if you'll be charged a cancellation penalty. Knowing in advance will help you decide whether to switch right away -- or wait to cancel until it's time for your policy to renew.
If there is a cancellation penalty, look into new-customer or insurance transfer discounts from your new insurance company. It may offset your existing insurance company's cancellation fee.
2. Have a new policy in place
Before you cancel your existing policy, make sure you have a new policy lined up, or your car insurance could lapse. A gap in coverage could negatively impact your future car insurance rates.
Pay for your new policy and identify an effective date, which would be the date your car insurance starts.
Check that your new insurer emails you proof of insurance and a declarations page, which is a document showing you're insured as of a specific date. You may need it later if you decide to cancel.
3. Print out your new auto insurance card
If your new car insurance company doesn't mail insurance cards and documentation, you'll need to print out a copy for your records. Be sure to print insurance cards for all your insured vehicles and keep one in each car's glove compartment.
4. Cancel your old insurance policy
Once you're insured with the new company, you'll need to cancel your old policy. Canceling your old policy involves simply contacting your previous insurer. You may need to put the cancellation in writing and provide proof of new insurance.
5. Request a refund of unused and prepaid premiums
Lastly, if you prepaid your old policy and canceled before the coverage is up, ask your insurer to refund your unused premiums. They'll likely do this without you asking, but it's always a good idea to ask about the process and what you should expect.
What are the pros and cons of switching insurance companies?
There are both pros and cons of changing to a new insurance company. Here's a look at some common benefits and potential disadvantages.
Pros:
- Switching to a new car insurance company is an easy way to save money
- Insurers often offer discounts to new policyholders
- You may earn a discount on your home insurance if you are switching to bundle your home and auto
Cons:
- If your move breaks up your bundle, you will lose discounts
- There may be cancellation fees if you cancel your old policy early
- New policyholder discounts don't last past your first renewal, so you may find yourself shopping again
When can you switch car insurance?
You can switch car insurance providers at any time. However, if you cancel your current policy early in the term, you may not get a full refund. Ask about any cancellation fees or penalties.
Switching at renewal is common since it's when people see rate increases, but you have the right to cancel whenever you want to.
Is it worth switching auto insurance companies?
Exploring changes often involves tradeoffs. For example, switching policies will take some legwork but could save you hundreds of dollars a year. Here are some things to consider when weighing your options that may indicate it is worth making the change.
- After getting a few comparable quotes, you've found a significantly cheaper policy.
- You are relocating to an area where your current car insurance provider doesn't operate.
- You no longer qualify for auto insurance discounts.
- You're unhappy with the level of service.
- You'd like to bundle all your insurance with one company.
Frequently asked questions about switching auto insurance
Can I switch car insurance companies in the middle of a policy?
Yes. You can switch your car insurance to a new company at any time.
Can I switch car insurance while I have an open claim?
Yes. As long as your insurance was in force at the time of the claim, your previous insurer has to pay the claim, even if you cancel the policy and move to a new insurer.
When does it make sense to stay with the same insurer?
Sometimes loyalty to your current car insurance provider should be strongly considered. For example, customers who bundle home or renter's insurance, among other types of coverage, with one provider can be rewarded with significant discounts. Also, they may provide additional valuable perks such as accident forgiveness in exchange for your brand loyalty.
Do I need to let my lender know about switching auto insurers?
Your lender must stay informed on the insurance coverage of your vehicle. They may stipulate that you have certain levels of coverage to ensure that their loan is protected. Work with your new insurance provider to coordinate sending a copy of your new policy to your lender.
How do I switch companies without a lapse in coverage?
Always try to set your effective cancellation date for your old policy to the same day your new policy begins to avoid a lapse. And make sure you get this in writing. Also, confirm in writing with your new carrier that they received payment for your new policy, and it is set to be enforced on time.
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