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- You can switch car insurance providers anytime, though you should be aware of any fees or penalties.
- Car owners may switch providers if they’re moving, buying a new car, or want to pay less for their policy.
- When switching car insurance, cancel your old policy on the day your new policy starts to avoid a coverage gap.
You don’t have to stick with the same car insurance company forever – you can switch to a new provider at any time. However, there are a few things you need to be aware of before making the transition.
Here’s everything you need to know about switching car insurance companies, including the common mistakes to avoid.
Why You Might Want to Switch Car Insurance
Car owners switch their auto insurance for various reasons, but generally, it comes down to one main issue: their current insurer no longer meets their needs.
Common Reasons for Switching Providers
Here are a few common reasons that might merit a switch to a new car insurance company:
- You’re overpaying for your current insurance policy.
- You’re moving.
- You’re buying a new car.
- You want to add a spouse or child to the policy.
- You’re unhappy with your current insurer’s service.
- Your coverage needs have changed.
- You bought a house and want to bundle your home and auto insurance.
Benefits of Finding a New Insurance Policy
The benefits of finding a new auto insurance policy can include lower premiums, more comprehensive coverage options, or better customer service. A brand-new policy could also give you access to discounts or perks that your previous insurer didn’t offer.
When Is the Best Time to Switch?
You can switch car insurance providers at any time, but usually, the best time to do so is when your current policy is up for renewal. This way, you’ll avoid any cancellation fees or coverage gaps. Switching insurers can also make sense after you’ve experienced major life changes, like moving to a new state, buying a new car, or getting married.
Steps to Switch Your Car Insurance
If your car insurance needs have changed, or you simply want to work with another insurer, here’s a step-by-step guide on how to switch your car insurance.
Step 1: Review Your Current Policy and Coverage
First, review your current policy to understand what your car insurance covers, your limits, and your deductibles. Doing so helps ensure that you get the amount of car insurance you need, so you won’t be over or underinsured once you cancel the old policy.
Step 2: Compare Quotes from Different Insurance Providers
Don’t just settle with the first car insurance provider you come across. Get quotes from at least three companies and compare coverage options, limits, and deductibles. Most companies offer tools on their website that automatically generate auto insurance quotes once you plug in the required information, such as your age, driving habits, and model of your vehicle.
You can find our guide to the best car insurance companies here.
Step 3: Check for Any Cancellation Fees or Penalties
Before you cancel your old auto insurance policy, check with your insurer to see if there are any cancellation fees or penalties. Some companies may charge you if you cancel before the policy period ends.
Step 4: Purchase Your New Policy and Set an Effective Date
Once you’ve found a new policy that meets your needs, go ahead and purchase it. Many companies let you buy auto insurance directly online and print out your proof of insurance in minutes. Set the effective date for the new policy to start right before your old one ends so you don’t experience any coverage gaps.
Step 5: Cancel Your Old Policy and Confirm the Cancellation
Don’t assume your previous policy is automatically canceled once you stop paying premiums. Contact your insurance company to confirm the cancellation so that you don’t end up paying for two insurance policies simultaneously.
Things to Consider Before Switching
Though switching car insurance policies can lead to better rates and customer experience, make sure you’ve considered the following things before saying goodbye to your old insurer.
Coverage Gaps and Overlaps
A coverage gap can happen when you cancel your old policy before your new one goes into effect, leaving you uninsured and financially vulnerable if an accident occurs. A coverage overlap, on the other hand, is when you have two policies providing the same coverage at the same time, which means you’re paying for unnecessary coverage. This can happen when you fail to cancel your old policy when your new one starts. To avoid coverage gaps and overlaps, coordinate your new policy’s start date with your old policy’s end date.
Understanding Your State’s Insurance Requirements
Each state has its own rules about minimum car insurance coverage. For example, California requires you to carry both bodily injury liability and property damage liability insurance on your vehicle, while New Hampshire doesn’t mandate car insurance and only requires proof of financial responsibility. Make sure your new policy meets those requirements.
Evaluating Customer Service and Claim Handling
Besides coverage options and price, evaluate how your new insurance company handles claims and how responsive they are. Check their Trustpilot and Better Business Bureau profiles to see if there have been any recent customer complaints that might raise red flags. If you notice customers complaining about recurring issues like slow claims processing or unfriendly customer service, you may want to work with other insurers instead.
Discounts and Savings Opportunities with the New Provider
Many car insurance companies offer discounts that can often save you up to 20% on your monthly premiums. For example, Farmers Insurance offers up to 23 discounts for auto insurance customers, including a safe driver discount, a good student discount, and a multi-line discount.
Avoiding Common Mistakes When Switching
Before switching car insurance companies, make sure you’re aware of these common mistakes so you don’t run into problems with your policy later on.
Double-Check Your New Policy’s Start Date
A common mistake car owners make when switching insurance companies is not double-checking their new policy’s start date. This mistake can be costly because if you cancel your old policy before the new one begins, you’ll end up with a coverage lapse. A lapse of even a single day can be risky since driving without coverage is illegal and can leave you financially vulnerable if you get into an accident.
Don’t Cancel Your Old Policy Too Soon
As mentioned earlier, canceling your old policy before the new one goes into effect can result in a coverage lapse, so avoid canceling your old coverage too soon. Ideally, you’ll want to terminate your old policy on the day your new policy starts. You could also double-check with your new insurer to confirm that the policy is indeed in effect before finalizing the cancellation of your previous coverage.
Keep Proof of Insurance Ready During the Transition
Proof of insurance is a document that verifies you have an active and valid car insurance policy. While transitioning between your old car insurance coverage and the new one, keep your proof of insurance close at hand in case you’re pulled over or get into an accident.
Watch Out for Higher Premiums or Reduced Coverage
Another mistake many car owners make is not keeping an eye on their insurance rates and policy details. Unfortunately, auto insurance rates can increase due to general rate increases even if you haven’t made a claim or gotten a ticket. According to the most recent Consumer Price Index, auto insurance has gone up 19.5% between June 2023 and 2024. Insurers can also adjust their coverage options and reduce benefits, though they’ll let you know about the change beforehand.
What to Do After Switching Car Insurance
Complete the following steps after switching your car insurance to avoid any issues down the line.
Notify Your Lender or Leasing Company (If Applicable)
If you have an auto loan or lease, contact your lender or leasing company to let them know you’ve made the switch. Also, remember that most lenders and leasing companies require you to carry collision and comprehensive insurance, so make sure your new policy meets this requirement.
Update Your Payment Information and Account Settings
Next, double-check to see if your payment information is up to date with your new insurance company to avoid any missed payments. Don’t forget to also review your account settings, such as billing preferences and contact information, to ensure they’re set up correctly.
Monitor Your New Policy and Make Adjustments as Needed
Review your new car insurance coverage regularly, especially if your circumstances change, like getting married, buying a new car, or moving to a new location. These life changes can affect your car insurance needs, so you may need to contact your insurer to adjust your policy.
Common Questions About Switching Car Insurance
Switching car insurance companies is pretty straightforward, but you may still have some questions about the process. Here are some of the most common concerns car owners face when it comes time to switch car insurance.
Can I switch car insurance at any time?
Yes. You can change your car insurance company at any time. However, some insurers may impose a cancellation fee for dropping a policy, so check with them beforehand. You’ll also want to have a new policy lined up before canceling to avoid a lapse in coverage.
Will switching car insurance affect my credit score?
Switching car insurance companies does not directly impact your credit score since insurers do not report your policy changes to the three major credit bureaus.
How often should I compare car insurance rates?
Ideally, you’ll want to compare car insurance rates at least once a year to ensure you’re still getting the best rate for your coverage.
Switching Car Insurance Companies FAQ
Whether or not you’ll pay a fee for switching car insurance companies will depend on your insurance provider. Some charge a cancellation fee for dropping a policy, while others don’t. Contact your insurer’s customer service department for more details.
Most car insurance companies will refund the unused part of your premium, though some may still deduct a small cancellation fee or penalty from that amount.
Yes, you can switch car insurance companies even when you have an open claim, but you’ll need to stay in contact with your previous insurer since you’ll need to work with them to settle it.
The best way to know if you’re getting a good deal on your new policy is by comparison shopping. Get quotes from at least three insurance companies and compare the premiums, coverage limits, deductibles, and any additional benefits. Remember to also check for discounts you may qualify for, such as good driver or multi-policy discounts. You can find Business Insider’s guide to the best cheap car insurance here.
To switch car insurance, you’ll need to provide your personal information, such as your name, address, and age. They’ll also need your driver’s license number, driving history, vehicle identification number, and the mileage and ownership status of the car.
