Switching Auto Insurance Mid-Year: What You Need To Know

You can get a new auto insurance policy at any time, even mid-year. However, it's important to have a new policy in place before cancelling your old one to avoid a lapse in coverage, which can result in penalties such as fines and license suspension. When switching policies, it's a good idea to shop around and compare quotes from multiple providers to find the best rate and coverage for your needs. Additionally, some insurers may charge a cancellation fee, so it's worth reviewing the terms and conditions of your current policy before making any changes.

Switching mid-policy

Switching car insurance providers mid-policy is possible and relatively painless. However, there are a few things you should keep in mind to ensure a smooth transition.

Firstly, shop around for a better rate. Compare rates from at least three providers and consider providers that offer discounts applicable to you. You can use a quote comparison tool to make this process easier. Once you've found a few suitable options, research each company's customer service, claims experience, and financial strength.

Next, find the best policy for your needs. Consider the type and amount of coverage you require. Opting for less coverage 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 damaged or stolen. If you have a loan or lease on your car, you'll likely need full coverage insurance, which includes liability, collision, and comprehensive insurance.

Purchase your new policy before cancelling your old one to avoid a lapse in coverage, which can result in higher rates and penalties. Set the start date of your new policy to be at least one day before your current coverage expires.

After purchasing your new policy, contact your previous insurer to cancel your old policy. You may be entitled to a refund for the unused portion of your policy.

Finally, update your proof of insurance and inform your lender or leasing company of the change. Download the insurance ID card from your new provider or use their app to access it. If you have a loan or lease on your car, inform your lender of the change and ask your new insurer to send them proof of insurance.

By following these steps, you can switch your car insurance provider mid-policy without any gaps in coverage or penalties.

Grace periods

A grace period for car insurance is the amount of time you are allowed to drive your new car before adding it to your auto insurance policy. This period varies depending on the state and insurance provider, but it is usually a maximum of 30 days.

A grace period only applies if you already have insurance on a car you currently own or are trading in. If you don't have insurance on another vehicle, there is no grace period. You'll have to buy insurance online or over the phone at the dealership before driving off the lot.

If you get into a car accident before adding the new vehicle to your policy, you'll likely be covered under an existing policy. Check with your provider to be sure.

If your new vehicle is uninsured after your provider's grace period ends, that's considered a lapse in coverage, which is a misdemeanour in most states. You could face penalties such as paying a fine, having your driver's license and registration suspended, and possibly serving jail time. Your insurance premium will also increase once you have coverage again.

Cancelling your old policy

Purchase a New Policy First

Before cancelling your existing policy, it's recommended to secure a new auto insurance policy to protect yourself from a lapse in coverage. Driving without insurance is illegal in most states and can result in fines and other penalties. Having a new policy in place will ensure you maintain continuous coverage.

Contact Your Insurance Provider

To initiate the cancellation process, contact your insurance provider. You can do this by calling your insurer or agent, using their mobile app or website, 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 to clarify their specific cancellation requirements and procedures.

Understand Cancellation Requirements

Different insurance providers may have varying requirements for cancelling a policy. Some providers may require you to pay a cancellation fee or give advance notice of your intended cancellation date. Others may require you to sign and submit a cancellation letter or form. It's important to understand these requirements to ensure a smooth cancellation process.

Request a Cancellation Notice

Once your cancellation is finalized, request a policy cancellation notice or confirmation from your insurance carrier. This document serves as written proof that your policy has been officially cancelled, providing you with a record of the transaction.

Understand Refund Policies

If you have paid your premiums in advance, you may be eligible for a refund for the unused portion of your policy. The refund amount is usually prorated, and your insurance company will calculate it based on the number of days your policy was in effect. However, some companies may charge a cancellation fee, which will be deducted from the refund.

Choose an Appropriate Cancellation Date

When selecting a cancellation date for your old policy, ensure it is the same day as or before the effective date of your new policy. This will help you avoid any gaps in coverage and prevent you from being uninsured, even for a single day.

Getting proof of insurance

The information on your insurance ID card will vary, but it typically includes:

• Named insureds (who's on the policy)
• Vehicle information (like your VIN)
• Policy effective date (when your policy started)
• Policy expiration date (when your policy ends)
• Insurance company's name and address
• Policy number and National Association of Insurance Commissioners (NAIC) number
• The policyholder's first and last name

You may need to show proof of insurance when registering your car, if you get pulled over, or if you get into a car accident. In most states, you can show a digital copy of your proof of insurance on your phone. However, in New Mexico, you must present a physical copy.

Informing your lender

If you have a car loan or lease, you must inform the lender 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. It is a good idea to call the lender to make sure they have all the details of your new coverage.

If you do not inform your lender of your new insurance coverage, they may receive a notification that your old policy has lapsed. In this case, they may buy a new insurance policy to protect their investment and add the charges to your loan.

Frequently asked questions