Insurance Coverage: Can They Change It?

In most cases, you can change your auto insurance coverage whenever you want. However, there are a few things to keep in mind. Firstly, you should be aware of any related fees and have a new policy lined up before cancelling your old one. Secondly, while you can add or remove coverage, you cannot add coverage after an incident and expect it to cover that loss. Finally, it is important to ensure there is no lapse in coverage between policies, as this could lead to negative consequences such as increased premiums or even legal trouble for driving without insurance.

Cancelling your old policy

Cancelling your old auto insurance policy is a relatively simple process, but there are a few things to keep in mind to ensure you don't experience a lapse in coverage, which could cause your insurance rates to increase or result in fines from your state's Department of Motor Vehicles (DMV). Here are some detailed steps to guide you through the process of cancelling your old auto insurance policy:

Purchase a new policy before cancelling:

It is crucial to secure a new auto insurance policy before cancelling your existing one. This will protect you from any gaps in coverage, which is important because driving without insurance is illegal in most states. Contact your new insurance provider to finalise the start date of your new policy, ensuring it aligns with the cancellation date of your old policy.

Contact your current insurance provider:

Get in touch with your current insurance company to initiate the cancellation process. You can do this by calling your insurer, contacting an agent through their website or mobile app, mailing a cancellation request, or speaking to an agent in person, depending on the options provided by your carrier. Ask to speak with an agent about any specific requirements, such as cancellation fees or advance notice.

Sign a cancellation letter:

Although less common nowadays, some auto insurers may require you to submit a written request for cancellation. This letter typically includes your policy number, your name, and the desired date of cancellation. If you have prepaid your policy and have remaining coverage, you can also include a refund request for the unused portion.

Request a policy cancellation notice:

Once your cancellation is finalised, ask your current insurer for a policy cancellation notice. This document confirms that your policy has officially been cancelled and serves as a written record of the transaction.

Understand potential fees and refunds:

Depending on your auto insurance company and state regulations, you may be charged a cancellation fee. This could be a flat fee or a percentage of the remaining policy premium. On the other hand, if you prepaid your premium and are switching insurers, you might be eligible for a refund of the unused portion.

Remember, it is essential to have continuous auto insurance coverage to avoid any negative consequences, such as increased insurance rates, fines, or legal issues. By following these steps, you can effectively cancel your old auto insurance policy and transition to your new coverage without any lapses.

Avoiding a lapse in coverage

A lapse in auto insurance coverage can have several negative consequences, including higher premiums, license suspension, fines, or even repossession of your vehicle. Therefore, it is essential to take steps to avoid a break in coverage. Here are some ways to help you avoid a lapse in your auto insurance coverage:

• Reevaluate and update your policy after significant life events: Life changes such as marriage, relocation, a change in employment status, or adding a teenage driver to your policy can impact your insurance needs. Reviewing and updating your policy after such events can ensure you have the appropriate coverage and may even help you take advantage of lower rates.
• Switch insurance providers: If you find a better rate or are unhappy with your current insurer, consider switching to a different provider. Compare quotes from multiple insurers and choose one that best suits your needs. However, be sure to have a new policy in place before cancelling your old one to prevent a coverage lapse.
• Maintain continuous coverage: Avoid cancelling your existing policy before your new policy takes effect. Ensure there is an overlap of at least one day between the two policies to prevent any gaps in coverage.
• Set up payment reminders: To avoid unintentional lapses due to missed payments, set up a system to remind yourself when your premium is due. Most insurers offer various payment options, such as automatic payments or recurring billing, which can help ensure timely payments.
• Communicate with your insurer: If you are facing financial difficulties or need to make changes to your policy, communicate with your insurance provider. They may be able to offer alternative payment plans or adjust your coverage to make it more affordable.
• Consider alternative coverage options: If you are not driving your car for an extended period, consider alternative coverage options. Some insurers allow you to suspend your coverage or switch to a comprehensive-only policy while your car is in storage. This can help reduce your premiums while maintaining continuous coverage.
• Shop around for quotes: Different insurers offer varying rates, so it is beneficial to compare quotes from multiple providers. You may be surprised at the premium differences and find a more affordable option that suits your needs.
• Take advantage of discounts: Many insurers offer discounts for various reasons, such as paying premiums online, setting up automatic payments, or enrolling in usage-based telematics programs. Taking advantage of these discounts can help reduce your premiums and make maintaining coverage more feasible.

Remember, it is essential to maintain active auto insurance coverage to comply with legal requirements and protect yourself financially in the event of an accident. By following the above tips, you can help avoid a lapse in coverage and ensure you have the necessary protection.

Adjusting your deductible

However, it's important to consider the trade-offs when adjusting your deductible. With a higher deductible, you'll pay more out of pocket if you need to file a claim. On the other hand, a lower deductible means a higher premium, but you'll pay less if you need to make a claim.

You can change your deductible at any time by contacting your insurance agent or company, but the change will usually take effect at the start of the next policy period. It's important to choose a deductible that fits your budget and financial situation.

Some insurers offer disappearing deductible programs, where your deductible decreases or is waived if you go a certain amount of time without a claim. Additionally, some insurers offer separate windshield deductibles, which are often lower than comprehensive deductibles, as glass damage is one of the most common car insurance claims.

When deciding whether to adjust your deductible, consider the potential savings and your ability to pay a portion of the costs of a claim. You can ask your insurer for pricing with different deductible options to determine the best value for your situation.

Adding a new driver

You should add any licensed driver who lives in your household and has access to your vehicle to your insurance policy. For example, you may include the following household members on your auto policy:

• A partner who moves in
• Teenage children who obtain their driver's licenses
• College-aged children who drive your vehicle when they return home for the holidays

You can add new drivers to your insurance coverage as your personal or professional circumstances change. Most insurance companies allow you (and may require you) to add another driver to your car insurance policy if the person drives the insured cars regularly or shares the same permanent residence.

When adding someone to your car insurance, you can either call your car insurance company or log in to your account online to add a new driver to your policy. Your insurance company will typically need the driver's name, date of birth, driving history, license information, and their vehicle identification number (VIN) if you also plan to share one policy that covers both of your vehicles.

There is usually no charge for adding a driver to your insurance policy. However, your premiums may change. Your premiums may become more expensive if you add an inexperienced driver or one with a poor driving history to your policy, as they are high-risk motorists. But they may also become more affordable if you include a more experienced driver who's never had a car accident on your coverage, as they are a low risk to the insurer.

In general, it's cheaper to add your teenager to your existing car insurance policy than to purchase a separate policy for them. Being a homeowner, experienced driver, or long-time customer of the insurance company, or bundling your home and auto insurance with the same provider, are all factors that can lower your rates compared to what a novice driver would expect to pay.

Changing your insurer

Shop Around:

Before making any changes, it's essential to explore your options and compare different insurers. Get quotes from at least three companies to ensure you're getting a better deal than your current insurer. Compare similar coverages, limits, and deductibles to make an informed decision. Consider factors such as customer service, claims handling, and financial strength when evaluating potential insurers.

Select and Enroll in a New Policy:

Once you've found a suitable insurer with competitive rates, it's time to enroll in their program. Ensure that your new policy is active before cancelling your old one to avoid any lapse in coverage, which could impact your rates. It's crucial to maintain continuous coverage, as a gap, even for just a day, can lead to consequences such as rate increases, license suspension, fines, or repossession of your vehicle.

Notify Your Lender:

If you have a loan or lease on your car, it's essential to inform your lender of the change. Instruct your new insurer to provide proof of insurance to your lender, as they need to be listed on your new policy. This step is crucial because once you cancel your old policy, your lender will be notified, and failing to provide proof of new insurance could result in repossession as maintaining car insurance is part of the loan/lease agreement.

Cancel Your Old Policy:

After verifying that your new policy is active, you can proceed to cancel your current policy. Contact your previous insurer to inform them of your cancellation date and request a refund for any unused portion of your premium. Be mindful of any cancellation fees that your previous insurer may charge, and review the terms and conditions of your old policy to avoid unexpected charges.

Get Your Proof of Insurance:

Obtain proof of your new insurance policy, either by printing out your insurance ID card or downloading an app that provides digital access. Most states allow digital ID cards to be shown if you're pulled over, but ensure you have offline access to the app or document.

Be Mindful of Timing:

While you can switch insurers at any time, it's generally recommended to shop around at least 30 days before your renewal date. This allows you to avoid any potential cancellation fees, and you may be able to take advantage of loyalty discounts by staying with your current insurer for a more extended period.

Reasons for Switching:

There are various valid reasons for changing your car insurance provider. These include purchasing a new car, moving to a new ZIP code, adding a teenage driver, experiencing poor customer service, changes in your credit score, or simply finding a better rate or improved customer service with another insurer.

Remember, it's your right to choose the insurer that best meets your needs and provides you with the coverage and service you require. By following these steps, you can ensure a seamless transition to your new car insurance provider.

Frequently asked questions