Switch your car insurance in 8 easy steps
You may want to switch your car insurance if you are moving to another state, purchasing a new vehicle, or simply looking for better auto insurance coverage. Even if you're just moving to a new ZIP code in the same city, switching your auto insurance could save you hundreds of dollars. And, if you've recently married or are about to put a teen behind the wheel, getting quotes from other carriers can help you ensure you have the best car insurance for your needs.
If you do decide to change your auto insurance, make sure you've covered all of your bases, such as cancelling your current policy. The StrongInsurance editorial team reviews how to switch your car insurance in eight simple steps in this article.
When to switch auto insurance companies
Although you can change your car insurance provider at any time, certain events may indicate that it's time to start looking for a new carrier, or at the very least, get quotes from other insurers to ensure you're getting the best deal and coverage to meet your needs.
- Transferring to a new ZIP code, city, or state: Your car insurance premium may be affected by your city, state, and even ZIP code. If you are relocating, now might be a good time to look into a new car insurance company to see if rates are more competitive in that area.
- Adding a driver or a car: If your teen is about to get a driver's license or you're adding a new car to your household, get quotes from other insurance companies. Every company has different rates, and many offer student discounts, so you might be able to find a company that offers a lower premium for your new driver or vehicle.
- Experiencing a life event: A life event, such as getting married, purchasing a home, or starting a new job, can have an impact on your auto insurance needs and premium. Under these conditions, updating your current policy or looking for a new one may be a good idea.
- Approaching your renewal date: You can change your car insurance policy at any time, but your renewal date provides an especially convenient opportunity to do so. If you cancel your old policy on its renewal date and begin your new policy on the same date, you may be less likely to face small bills, a cancellation fee, or refunds on the old policy. The most important thing is to avoid gaps in coverage, which can leave you financially vulnerable and increase the cost of future premiums.
While switching carriers can have benefits, there are times when switching auto insurance companies is not a good idea. If you have just filed a claim, for example, you will most likely be unable to switch carriers. If the claim is not settled and paid, your new car insurance company will not be able to properly rate your policy. This could result in a significant increase in your new policy premium at renewal, a retroactive charge to account for the increased risk that the new company was unaware of, or even a cancellation for misrepresentation if you did not notify your new carrier of the outstanding claim.
1. Consider your coverage options
You may be financially exposed if you have insufficient auto insurance, but having too much coverage may mean you are overpaying. If you believe you are overspending on car insurance, you should think about switching.
Finally, the more coverage you add to your auto insurance policy, the higher the premium. Understanding the various types of car insurance coverage — and which ones you require — is an important first step in determining how to switch auto insurance.
2. Check for potential penalties
If you decide that switching car insurance companies is the best option for you, you should find out if there are any penalties, such as a cancellation fee, for switching car insurance companies before the end of the coverage period. Fortunately, most auto insurance companies allow you to cancel your policy at any time as long as you give proper notice.
While most car insurance companies will refund any unused premiums, some may charge a fee if you cancel in the middle of your policy term. Before cancelling your policy, you should contact your company's customer service department or ask your agent if there are any cancellation restrictions.
If you discover that there will be a penalty for cancelling in the middle of your term, you may want to postpone switching policies. However, if you can find a new policy with a premium that covers any cancellation fees charged by your old carrier, switching companies may still make financial sense.
3. Compare car insurance quotes from multiple carriers
If you've decided it's time to switch carriers, the first thing you should do is get quotes from several different auto insurers. When shopping for insurance, the Insurance Information Institute (Triple-I) recommends getting at least three quotes. You will be able to compare auto insurance premiums, coverage options, and discounts as a result of this. Just make sure you get quotes for the same coverage so you can compare premiums apples to apples. Whether you get quotes online, over the phone, or at an agency, you should have the following information ready:
- Address where the car will be stored
- Year, make, and model of the vehicle
- Vehicle Identification Number (VIN)
- Driver’s license or Social Security number (auto insurers will use this information to review your motor vehicle record and any other personal factors that might affect your premium, such as your credit-based insurance score in some states)
While researching companies, you can also look into available discounts. Asking companies to include all of the discounts you are eligible for on a quote could help you find less expensive coverage.
4. Contact your current carrier
While you are obtaining quotes from other carriers, you may find it useful to contact your current car insurance provider. Although your company will not be able to offer you a lower rate (auto insurance rates are not negotiable), you may be able to identify discounts and other savings opportunities that you are currently overlooking. Your agent may have suggestions for ways to reduce your costs, such as keeping a clean driving record or purchasing a less expensive vehicle.
This is especially important if your insurance is written by an independent agency. Unlike captive agents, who only sell insurance products from a single company, independent agents can represent a variety of insurance companies. An independent agent may be able to shop your policy with multiple carriers in order to find you a lower rate while keeping your policy with the same agency.
5. Research the new company
Before purchasing a policy, you should conduct extensive research on the insurer. Some useful resources are as follows:
- StrongInsurance company reviews: To determine the best auto insurance companies, StrongInsurance editorial team examines average premiums, customer service scores, third-party financial strength ratings, available coverage options, and discounts. In addition to our top overall company picks, we looked at the best car insurance companies in each state to help you understand what's available in your area and how much it might cost.
- The NAIC (National Association of Insurance Commissioners): This organization gives each company a score based on the average number of consumer complaints it receives. A score greater than 1.00 indicates a higher-than-average number of complaints, while a score less than 1.00 indicates a lower-than-average number of complaints.
- J.D. Power: This company conducts research from a variety of perspectives, including overall customer satisfaction and claims satisfaction, and assigns a score to each car insurance company. Some of its rankings are also based on geography.
- AM Best: If you want to learn more about a company's financial strength, AM Best is a good place to start. AM Best assigns letter grades to companies based on a variety of financial metrics, which can indicate a company's ability to pay out claims in a timely manner. Generally, you should seek insurance from a company with an AM Best financial strength rating no lower than an A- (Excellent).
Although price is an important factor to consider, it is not the only factor to consider when selecting an auto insurance company. Working with a licensed insurance professional may assist you in selecting a carrier that best meets your needs.
6. Avoid a lapse in coverage
If you change your car insurance policy before your current policy expires, you may experience a lapse in coverage. A lapse in insurance coverage may result in serious legal and financial consequences, particularly if you are involved in an accident while uninsured. If you cause an accident and do not have insurance, you will be personally liable for the damages, including any applicable medical bills. Even if you are not at fault, most states require insurance companies to file proof of insurance with the Department of Motor Vehicles following an accident if the police are called. Your driver's license may be suspended if you do not have car insurance.
Driving without insurance may result in insurance companies charging you higher premiums in the future because they will perceive you as a high-risk driver. Your new insurer should be able to time the start of your new policy to coincide with the end of your old coverage.
7. Make sure your old policy is canceled
If you are switching car insurance companies, don't assume that your current policy will be automatically cancelled if you stop paying your premiums. If you signed up for auto-renewal, your current auto insurer may report you to credit bureaus for nonpayment if you do not pay. When switching to a new car insurance company, most insurance experts recommend contacting your current carrier to cancel your policy.
To cancel your previous policy, take the following steps:
- Inform your current insurance company that you are terminating your policy. This will prevent them from billing you for additional coverage in the future.
- If you signed up for automatic payments, you may need to log into your online account and cancel the automatic withdrawals. If you pay your premiums using your bank's bill pay service, make sure to cancel the payments with your bank.
- Request that your carrier confirm the termination in writing.
Each insurance company has its own policy cancellation procedure. You may be required to sign a cancellation form, or you may be required to call and speak directly with a company customer service representative. Some companies may allow you to cancel online, but you may prefer to put it in writing or speak with someone to confirm the cancellation. Your insurance agent can assist you with the process.
8. Print out your new car insurance ID cards
After you've officially cancelled your old policy and begun your new one, you'll probably want to replace your old insurance ID card with a new one to keep in your vehicle or wallet. If you are pulled over by the police or are involved in an accident, you will need proof of coverage from your new auto insurance provider.
Frequently asked questions
How often should I shop for a new car insurance policy?
"When should I switch car insurance companies?" Many people wonder. The answer is different for everyone, but if your financial or life situation has changed since you purchased your car insurance policy, it may be time to shop for a new one. You can also contact your current carrier to see if they can update your current policy to reflect your changing needs. Remember that just because you're looking for a new policy doesn't mean you have to switch carriers. If you stick with the same company on a regular basis, you may be able to earn loyalty discounts.
Can I switch car insurance while I have an open claim?
While you may be able to switch auto insurers while you have an open insurance claim, most carriers advise against it. Your current insurer will handle the current claim and any necessary payouts.
However, if the claim is still open when you switch to a new policy, your new carrier will not have the payout information to determine your risk level correctly. This can result in a significant premium increase at renewal or a retroactive amount to compensate for the time period when your claim could not be properly rated on your policy. Every auto insurer has its own underwriting guidelines and may refuse new customers with outstanding claims.
Do car insurance companies refund premiums I already paid?
Your auto insurance company is required to refund any unearned premium; however, it may charge a cancellation fee to cover administrative costs, especially if you cancel in the middle of your policy term. You should contact your company or insurance agent to ensure that you understand their insurance cancellation policy. You will most likely not be eligible for a refund if you cancel your insurance policy on the renewal date and have not yet paid the renewal premium.
Does switching car insurance affect credit?
Changing car insurance companies usually has no effect on your credit score. When you get a quote from an auto insurance company, they usually check your credit-based insurance score (except in California, Hawaii, Maryland, Michigan, and Washington, where this rating factor is prohibited), but these credit inquiries aren't visible to lenders and thus don't affect your credit score.