Switching Auto Insurance: How Often Is Too Often?

You can switch auto insurance providers as often as you like, but there are some factors to consider before doing so. Firstly, switching auto insurance providers can be beneficial if you are paying high rates, have a better credit score, or if you or a covered family member moves. Additionally, certain life events, such as getting married, buying a new vehicle, or adding a new driver, can warrant a switch to a different provider. It is also important to compare the coverage, limits, and deductibles of your new policy to ensure they reflect what you had with your previous insurer. Moreover, it is crucial to avoid a lapse in coverage by starting your new policy before ending the old one and cancelling your previous policy. While switching auto insurance providers can be advantageous, it is recommended to review your coverage at least once per policy term to ensure you are getting the best price.

Switching auto insurance companies: a step-by-step guide

Switching car insurance companies is easy, and it's something people do all the time. You can change your car insurance at any time, whether you've had your current policy for a few weeks or a few years. However, it's a good idea to talk with your current insurer to see if there are any cancellation fees. If you let your insurance agent know you want to cancel, they may also offer to search for extra discounts or give you a lower rate.

Shop around

The first step to switching car insurance companies is to shop around to find a better rate. It is recommended to compare rates from at least three providers. You can use a quote comparison tool to do this, which means you only have to enter your information once to see many options.

When shopping around, consider providers that have car insurance discounts applicable to you. For example, some companies offer a student discount. Also, consider usage-based insurance or pay-per-mile programs if you want to save money according to your current driving habits.

Find the best policy for you

When switching car insurance, this is a good time to reassess the coverage you’ve already had. Opting for less car insurance will always mean lower premiums, but it also means you’ll pay more out of pocket if you ever get into a car accident or become the victim of auto theft, car vandalism, or a hit-and-run.

Full-coverage car insurance costs more than minimum, but it will better protect you from any unwanted medical bills or car repair costs after an auto-related incident. Full coverage includes at least liability insurance, collision coverage, and comprehensive insurance. Many drivers also get uninsured motorist coverage (UM), and either personal injury protection (PIP) or medical payments coverage (MedPay). Depending on the state you live in, UM, PIP, or MedPay may already be required.

Purchase your new policy

The next step is to purchase your new policy. If your current auto insurance policy is going to expire soon, schedule the new policy to begin at at least one day before your current coverage expires. This will avoid a lapse in coverage, which could increase your car insurance rates in the future, as insurance companies will consider you an uninsured driver during any period without coverage.

Cancel your previous insurance

Once you have your new insurance coverage in place, it’s time to start the cancellation process for your old policy. If you have any open claims, be aware that your old company will still be responsible for investigating and closing out those claims.

Call your car insurance company and speak to an agent to cancel your coverage at least one day after your new policy begins. You can also schedule an effective cancellation date in advance so you don’t have to remember to call on that specific day. However, don’t just stop paying for your old car insurance policy without officially canceling it.

If you paid for your policy in full at the start of a period, you should get a refund for the unused portion. You might also get a small refund if you pay monthly.

Get your proof of insurance

The next step is to get proof of your new insurance, which means printing out your insurance ID card or downloading an app to access it. Most states allow you to show a digital ID card if you get pulled over. However, make sure to save it locally for offline access so you can get to it whether or not you have cellular service.

Let your lender know

Lastly, if you have a car loan or lease, you’ll need to inform the lender right away of your new insurance coverage. Your lender would have been listed on your old car insurance, which means your old company notifies your lender of the cancellation. You should have listed your lender on the new car insurance policy as well, but it’s also a good idea to call the lender to make sure it has all the details of your new coverage.

Pros and cons of frequently changing auto insurance

While switching auto insurance providers frequently is not necessarily bad, there are some pros and cons to doing so.

Pros of frequently changing auto insurance:

• You can take advantage of lower rates, either by adjusting your current coverage or switching to another insurer.
• You can ensure your insurance policy is up-to-date and reflects any significant life changes, such as marriage, relocation, a change in employment status, or adding a teenage driver.
• You can benefit from better customer service and claims handling, as these are important factors when considering a switch.
• You can explore different insurance companies and their offerings, such as accident forgiveness, varying deductibles or policy terms, and savings opportunities for bundling auto coverage with home insurance.

Cons of frequently changing auto insurance:

• You may have to pay a cancellation fee or termination fee to your current insurer.
• You may lose loyalty and multi-policy discounts that you have accumulated with your current insurer.
• You may need to get a new insurance agent, which can be a deterrent for those who value familiarity.
• You may not be eligible for certain benefits, such as accident forgiveness, that are often offered to long-term customers.
• You may find it challenging to build a long-term relationship with an insurance company, which could impact your ability to negotiate better rates or receive more personalized service.

How to avoid penalties when switching auto insurance

Switching car insurance companies is easy, and it can be done at any time. However, there are a few steps you should follow to avoid penalties.

Firstly, shop around for new rates and purchase your new policy before your old one expires. This will help you avoid a lapse in coverage, which can increase your insurance rates in the future and may lead to penalties if you are caught driving without insurance. When shopping around, try to get quotes from at least three different insurers and compare similar coverages, limits, and deductibles to ensure you're getting a better deal.

Secondly, cancel your old policy. Contact your old insurance company and notify them of your cancellation date, which should be at least one day after your new policy begins. If you have any open claims, be aware that your old company will still handle them. If you paid your previous policy in full, you should receive a refund for the unused portion.

Thirdly, get proof of your new insurance and keep it in your vehicle or wallet. Most states allow digital ID cards, but check if your state allows it and save it locally for offline access.

Finally, if you have a car loan or lease, inform your lender of the change. Your old insurance company will notify your lender of the cancellation, but it's a good idea to call your lender and provide them with the details of your new coverage.

By following these steps, you can switch auto insurance companies without incurring any penalties.

Best practices when switching auto insurance

There are several reasons why you may want to switch your auto insurance provider. It could be because of a rate increase, poor customer service, or a change in your credit score. Whatever the reason, here are some best practices to follow when switching auto insurance:

• Shop around for new rates: Start by comparing quotes from at least three different insurers. Make sure to compare similar coverages, limits, and deductibles to ensure you're getting a better deal than your current insurer. The best time to shop is about a month before your current policy renews.
• Find the best policy for you: Consider the type of insurance you need, such as liability coverage, collision coverage, or comprehensive insurance. Opting for less car insurance will lower your premiums, but it also means you'll pay more out of pocket if you get into an accident or your car is vandalized.
• Purchase your new policy before cancelling the old one: Schedule your new policy to begin at least one day before your current coverage expires to avoid a lapse in coverage. A gap in coverage, even for just one day, can increase your car insurance rates in the future and may result in penalties, such as fines or jail time.
• Cancel your previous insurance: Once your new insurance coverage is in place, contact your old insurance company to cancel your policy. You should also receive a refund for any unused portion of your policy, minus any cancellation fees.
• Get proof of your new insurance: Print out your new insurance ID card or download the insurance company's app to access it digitally. Most states accept digital ID cards, but make sure to save it locally for offline access.
• Notify your car lender: If you have a loan or lease on your car, inform your lender of the change. Your old insurance company will send them a cancellation notice, and they need to know the details of your new coverage.
• Be aware of potential penalties: Check with your current insurer to see if there are any cancellation fees or other penalties for switching in the middle of your coverage period. You may save money by waiting until the end of your policy term to switch.
• Research the new company: Price isn't the only factor to consider when choosing a new insurer. Look at customer service scores, financial strength ratings, and claims satisfaction scores to ensure you're choosing a reputable company.

How to choose the best auto insurance company

Yes, you can switch your auto insurance provider at any time. However, it is important to have a new policy in place before cancelling your old one to prevent a lapse in coverage. Here are some tips on how to choose the best auto insurance company for you:

• Shop around: Compare quotes from multiple providers to find the best rate and coverage options for your needs. Consider using a quote comparison tool to make this process easier.
• Consider your specific needs: Evaluate your current coverage and think about any life changes that may impact your insurance needs. For example, if you have recently purchased a new car, moved to a new ZIP code, or added a teenage driver to your policy, you may need to adjust your coverage accordingly.
• Research the company: Look into the customer service, claims experience, and financial strength of the insurance provider. Check reviews, ratings, and scores from independent sources to get a sense of the company's reputation and reliability.
• Evaluate coverage options: Consider the types of coverage offered by the company and choose a policy that provides the protection you need. For example, if you have a loan or lease on your vehicle, you may need full coverage insurance, which includes collision and comprehensive coverage.
• Ask about discounts: Many insurance companies offer discounts for various factors, such as safe driving, student status, or bundling multiple policies. Be sure to inquire about any potential discounts that may apply to you.
• Understand the cancellation process: Before making a switch, find out if there are any cancellation fees or penalties for ending your current policy early. Some companies may charge a fee for cancelling before the renewal period, so it is important to review the terms and conditions of your policy.

Frequently asked questions