Switching Auto Insurance: Mid-Policy Changes

You can change your car insurance policy at any time, but it's important to have a new policy lined up before cancelling your old one, and to be aware of any related fees. You can either adjust your current policy or switch to another provider. If you're looking to save money, you may be able to do so by raising your deductible or lowering your coverage limits.

Cancelling mid-policy

You can cancel your car insurance policy at any time, but you won't automatically get your money back and your insurance provider may charge you a cancellation fee. If you took out your car insurance policy via a broker, they could charge you a cancellation fee on top of the insurance provider's fee.

If you cancel during the "cooling-off period" (the first 14 days of your policy), you won't have to pay any extra fees, but you will only be entitled to a refund minus any days the policy was active for. After the cooling-off period, you will have to pay cancellation charges and admin fees, which could cancel out any refund. If you paid for your policy upfront, your refund will be calculated on a pro-rata basis, minus any charges. If you pay monthly, you might not get a refund and may have to pay extra to cover the time you've been insured, as well as a cancellation fee and any administration charges.

If you have open claims, your old company will still be responsible for investigating and closing out those claims.

To cancel your policy, you might be expected to inform your insurance provider in writing (either by letter or email). If you're able to cancel your policy by phone, make a note of the time, date and the name of the person you spoke to, and follow up the conversation in writing.

When you cancel your old policy, you'll need to get proof of your new insurance. Most states allow you to show a digital ID card if you get pulled over.

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, so your old company will notify your lender of the cancellation. You should also list your lender on the new car insurance policy.

Switching insurers

Switching car insurance companies is relatively painless and can save you money, or help you get stronger customer service or a policy better tailored to your needs. You can switch at any time, even if you just renewed a policy or have an open insurance claim. However, if you have an open claim, it must remain with your current insurer.

Shop Around

Get quotes from at least three insurers and compare rates, reviewing and matching policy features to your current policy. Keep your declaration page—the one- or two-page document summarising your policy and premium—handy when comparing rates. When comparing companies, be on the lookout for perks or freebies that could pay off later.

Research the Company Before You Switch

While price is important, don't overlook other factors like customer complaints and coverage options when picking your new auto insurer. Check out studies like the J.D. Power U.S. Insurance Shopping Study and the J.D. Power U.S. Auto Insurance Study. You can also check out online scores by the Better Business Bureau and the complaint index from the National Association of Insurance Commissioners. To assess a company's financial strength, you can check out the financial ratings by AM Best.

Contact Your Current Auto Insurer

If price is your main consideration for switching, talk to your current insurer to see if it's willing to match your lower offer before you commit to changing. If it can't provide a better rate, find out how you can cancel and request the policy end date in writing. In some cases, you might need to provide a written request to end your policy. Your new company may even help you "break up" with your current insurer by sending a cancellation letter on your behalf. Take this opportunity to find out about any cancellation fees or possible refunds from your current insurer.

Avoid a Coverage Gap

Insurers charge significantly higher rates after a lapse in coverage, so make sure your new policy starts before you cancel your old one. Many insurers offer a discount for having continuous coverage, even if you're switching companies. To qualify, some companies require you to sign up for a new policy seven days before the term ends, so keep this in mind when determining your start date.

Change Your ID Cards

Don't forget to swap your old car insurance ID cards with fresh ones from your new insurer. Every state except New Mexico and Washington, D.C., allows digital proof of insurance, and some insurers allow you to download a digital ID card on your phone.

Let Your Leasing Company or Lender Know About Your Switch

If you have a car loan or lease your vehicle, you may be required by your lender to have a certain amount of insurance coverage, including comprehensive and collision insurance. Because the lender or leasing company has a financial stake in your car, it will want to make sure the vehicle is covered by insurance. Ask your new insurer to send proof of insurance to the lender or leasing company as well as to you.

Avoiding a coverage gap

It is important to avoid a coverage gap when changing auto insurance mid-policy. Here are some tips to help you do that:

Shop around for a new policy

Before cancelling your current auto insurance policy, take some time to shop around for a new one. Compare rates and coverage options from multiple providers to find the best deal for you. Ensure that you are comparing similar coverage types and limits to get an accurate idea of the potential savings.

Set up your new policy

Once you have found a new policy that suits your needs, finalise the purchase and set a start date for the new policy. It is important to ensure that there is no gap between the end of your old policy and the start of the new one. Aim to have your new policy begin on the same day that your old policy ends to avoid any lapse in coverage.

Cancel your old policy

After finalising your new policy, contact your old insurance company to cancel your previous coverage. You may need to provide written notice of cancellation and confirm the cancellation date. Be sure to ask about any potential cancellation fees or refunds for unused portions of your policy.

Update your insurance cards

Once you have cancelled your old policy and started the new one, remember to update your insurance cards. Carry your new insurance cards in your vehicle, or download the insurance company's mobile app if they offer one. This will ensure that you have proof of insurance if you are stopped by law enforcement or are involved in an accident.

Notify your lender or leasing company

If you have a car loan or lease, be sure to inform the lender or leasing company of the switch. They will need to know the details of your new insurance policy to ensure that the vehicle is still adequately covered. Ask your new insurer to send proof of insurance to the relevant parties.

Maintain continuous coverage

Maintaining continuous coverage is crucial to avoiding higher insurance rates and negative consequences. Even a short lapse in coverage could lead to increased rates, as insurers may label you as a high-risk driver. It is better to have two policies overlap for a day than to have no coverage at all.

Cancelling your old policy

Step 1: Finalise and Purchase a New Policy

Before cancelling your old policy, it is essential to finalise and purchase a new insurance policy to ensure continuous coverage. Shop around and compare quotes from multiple providers to find the best deal. Consider factors such as coverage types, limits, and deductibles, customer service, and any applicable discounts. Once you have found a suitable new policy, go ahead and make the purchase.

Step 2: Notify Your Old Insurance Company

After finalising your new insurance, it's time to contact your old insurance company to initiate the cancellation process. Let them know your desired cancellation date, which should ideally be the day your new policy begins to avoid any gaps in coverage. You may need to provide a written request for cancellation, either via letter or email, depending on your insurance provider's procedures. Make sure to review your policy terms and conditions to understand their specific requirements.

Step 3: Understand the Costs and Refunds

Cancelling your auto insurance policy may incur cancellation fees or administrative charges, so be sure to review your policy carefully to understand any potential costs. If you paid for your old policy in full upfront, you may be entitled to a pro-rata refund for the remaining period, minus any cancellation or administrative fees. If you pay monthly, you may not receive a refund and may even have to pay extra for the time you've been insured, in addition to any fees. It's important to be aware of these potential costs before initiating the cancellation.

Step 4: Follow Up and Keep Records

After informing your old insurance company of your cancellation, follow up the conversation in writing to confirm the details. Keep a record of all communications, including dates, times, names of individuals you spoke to, and any relevant correspondence. This will help ensure a smooth cancellation process and provide evidence if any disputes arise regarding cancellation costs or other issues.

Step 5: Be Aware of Add-ons and Lender Requirements

If you have any optional add-ons or extras included in your old policy, such as breakdown cover, remember to cancel them separately as they may continue to be charged even after your main policy is cancelled. Additionally, if you have a car loan or lease, inform your lender of the switch as they have a financial stake in your car and will need to be updated on your new insurance details.

Changing your ID cards

Your auto insurance ID card contains essential personal and policy information that you will need in various scenarios, such as filing a claim, calling for roadside assistance, or speaking with an insurance agent. Therefore, it is important to keep this information easily accessible and handy at all times.

Most states in the US, except New Mexico and Washington, D.C., allow digital proof of insurance. However, it is recommended to save your digital ID card locally on your phone for offline access in case you do not have cellular service when you need it.

Frequently asked questions