Switching Auto Insurance: A Smooth Transition

Switching car insurance companies is a straightforward process, but it's important to ensure you don't leave yourself uninsured at any point during the transition. Here's an introduction to the steps you need to take to switch auto insurance companies successfully:

Firstly, shop around and compare policies from different insurers. While cost is an important factor, it's crucial to also consider the level of coverage, customer service, and claims handling. You don't want to sacrifice valuable protection to save a few dollars in the short term. Once you've found a suitable insurer, purchase your new policy to ensure there's no gap in coverage.

Next, cancel your previous insurance policy. You'll need to take care of this yourself by contacting your old insurer, as your new insurance company typically won't do this on your behalf. Remember to ask for a cancellation confirmation to ensure your old policy doesn't automatically renew.

Finally, update your insurance ID cards and notify any relevant parties, such as your car loan provider or leasing company, of the change in insurance.

By following these steps, you can switch auto insurance companies smoothly and ensure you maintain continuous coverage.

Compare car insurance quotes

Comparing car insurance quotes is a straightforward process once you understand what parts of a quote you need to compare. Here are some tips to help you compare car insurance quotes:

Decide on auto insurance coverages:

When comparing car insurance rates, select the same set of coverages for each quote as coverage requirements vary and some coverages are optional. Comprehensive coverage, for instance, may pay for losses resulting from incidents other than collision whereas collision coverage may pay for damage to your car when it hits, or is hit by another vehicle or object.

Choose deductibles:

A deductible is the amount of money you pay out of pocket towards a claim. If you choose a higher deductible, it may lower your premium. Make sure you choose the same deductible for each quote when comparing auto insurance rates with different insurers.

Review and compare liability limits:

Liability coverage is required in most states and you can easily check your minimum state car insurance coverages. The liability limit is commonly presented in a format such as 100/300/50, where each number corresponds to:

• $100,000 per person in bodily injury liability coverage limit
• $300,000 per occurrence in bodily injury liability coverage
• $50,000 per occurrence in property damage liability coverage

Gather your information:

To quickly and easily compare insurance online, you should have personal information such as the address, date of birth, occupation, driver’s license, and marital status of everyone you want included on the policy. You should also have vehicle information, including the mileage, date of purchase, and vehicle identification number (VIN) for each car. If you haven’t purchased the car yet, have the mileage, make, model, and year handy.

Choose the right liability car insurance coverage levels:

Liability auto insurance protects you from financial ruin in the event of a serious accident by providing a cushion between your assets and the amount you’re liable for. That’s why choosing the right liability limits is the most important part of a car insurance quote comparison. NerdWallet typically recommends having at least as much liability coverage as your net worth.

Decide if you need full coverage car insurance:

Liability coverage doesn’t pay for your car or injuries—or for any injuries your passengers sustain—if you cause a wreck. This is why you may want “full coverage” car insurance, especially if your car isn’t paid off. However, full coverage insurance isn’t actually a type of coverage but typically refers to policies that include liability coverage plus comprehensive and collision coverage.

Collect and compare car insurance quotes:

You’ll want to get car insurance quotes from at least two or three companies. To make sure you’re able to accurately compare auto insurance quotes, each one should include the same levels of liability and uninsured/underinsured motorist protection, the same deductibles for collision and comprehensive coverage (if you’re buying them), the same drivers and cars, and all discounts you’re eligible for.

How to choose an insurance company:

Even if you've compared rates and found the cheapest car insurance companies for you, there are a few other factors besides price to consider before you buy a policy. Confirm your insurer has any extras you're looking for, like a mobile app or accident forgiveness, and check the company’s financial strength to ensure it can pay out your claim. You can also look at customer complaint records on the National Association of Insurance Commissioners' site.

Avoid a lapse in coverage

When switching auto insurance companies, it is crucial to avoid a lapse in coverage, even if it is just for a day. A gap in coverage can lead to negative consequences and is considered illegal in most states. Here are some essential steps to ensure continuous coverage:

Start the new policy before ending the old one:

When purchasing a new auto insurance policy, ensure that it starts at least a day before your current coverage ends. This overlap will prevent any lapse in coverage and is crucial as insurance companies consider you an uninsured driver during any period without coverage.

Understand the consequences of a lapse:

A lapse in auto insurance coverage, even for a short period, can result in higher insurance rates in the future. Insurers may classify you as a high-risk driver, potentially leading to increased rates or even refusal to insure you. Additionally, driving without insurance can result in legal penalties, including fines, license suspension, and, in some cases, jail time.

Maintain continuous coverage:

If you are unable to find a new insurance provider before your current policy ends, consider contacting your current provider to discuss alternative options. They may offer temporary coverage extensions or suggest other solutions to prevent a lapse in coverage.

Be mindful of open claims:

If you have any open claims with your current insurer, be aware that switching insurance companies might be challenging until the claims are settled. Changing insurance providers during an open claim could result in higher rates to account for the cost of the claim. It is essential to be transparent with your new insurer about any outstanding claims to avoid unexpected rate increases.

Understand the impact of location changes:

Even moving a short distance can impact your insurance rates. If you change your address, be sure to update your insurance provider. This proactive step will help ensure that your coverage remains valid and compliant with the regulations of your new location.

In summary, avoiding a lapse in auto insurance coverage is crucial when switching insurance companies. By starting a new policy before ending the old one, understanding the consequences of a lapse, maintaining continuous coverage, addressing open claims, and updating your information after location changes, you can help ensure uninterrupted protection and compliance with legal requirements.

Cancel your old policy

Once you've purchased a new insurance policy, it's time to cancel your old one. This is typically your responsibility and can usually be done over the phone, although some companies may allow you to cancel by letter, email, or in person. You may need to provide your policy number, name, date of birth, and Social Security number. If you've sold or no longer own the vehicle under coverage, you may also need to provide proof of the license plate forfeiture or a bill of sale.

It's important to be certain that your new insurance policy is active before cancelling your current coverage. Driving without auto insurance is illegal in most states and can lead to license suspension, state fines, and higher insurance rates. You should also be aware that your current provider may request information about your new policy, including the policy number, provider, and effective date. In some states, you may also need to inform the Department of Motor Vehicles (DMV) or Division of Insurance of the cancellation.

When you cancel your old policy, you may be entitled to a refund for any time left on your policy or for any premium payments you've made in advance. However, your insurer may also charge a cancellation fee, so be sure to check their policy.

Get proof of your new insurance

Getting proof of your new insurance is an essential step in switching auto insurance companies. This is because you want to avoid a lapse in coverage, which could result in rate increases or even driving unlicensed. Here are some detailed steps to ensure you get proof of your new insurance:

Buy the new policy before cancelling the old one:

It is important to have your new insurance policy in place before cancelling your current one. This will ensure there is no gap in coverage. Even a one-day gap can result in penalties, so it is crucial to plan this in advance. Contact your new insurer to confirm that your new policy is active and request confirmation or a digital copy of your new policy.

Cancel your old policy:

Once you have received confirmation of your new policy, you can proceed to cancel your old policy. Contact your previous insurer and provide them with the details of your new policy, including the policy number, provider, and effective date. You may also need to inform the Department of Motor Vehicles (DMV) or Division of Insurance about the change. Ask your previous insurer about any cancellation fees or refunds for unused portions of your policy.

Swap your old insurance ID card:

Remember to replace your old insurance ID card with the new one. This may involve physically swapping the cards in your wallet or glove box, or downloading your new insurer's app to access a digital copy. Most states accept digital ID cards, but be sure to save it locally on your device for offline access.

Inform your lender:

If you have a car loan or lease, it is crucial to inform your lender of the change in insurance. Your lender must be listed on your new policy as they have a financial interest in the vehicle. Your previous insurer will notify your lender of the cancellation, but providing them with the details of your new coverage will ensure there is no lapse in their records.

Keep records and be aware of timing:

When switching insurance policies, be mindful of the timing to ensure there is no gap in coverage. You can request a statement from your old insurer confirming the date your old policy will end, and your new insurer should be able to start your new policy on the same date. Keep all official documentation and proof of your new policy, as your previous insurer may request this information.

Notify your car loan provider

If you have a car loan or lease, you must inform your lender of your new insurance coverage. Your lender was listed on your old car insurance, so they will be notified of the cancellation by your old company. However, it is good practice to call your lender to ensure they have all the details of your new coverage.

Most lenders and leasing companies require you to have collision and comprehensive insurance. Therefore, if you have an auto loan, you will likely need to get full-coverage insurance, which includes at least collision coverage and comprehensive insurance.

Your new insurer should be able to provide proof of insurance to your old company if necessary, but they are generally not authorised to cancel a policy with another insurer on your behalf. It is your responsibility to cancel coverage with your previous insurer.

Your old company will still be responsible for investigating and closing out any open claims.

Frequently asked questions