Switching Auto Insurance: Is It Worth The Hassle?

Switching car insurance companies is a relatively simple process and can be done at any time. There are many reasons why someone may want to switch, including saving money, a change in family situation, or poor customer service. It is recommended to compare car insurance quotes from at least three different providers to ensure you are getting the best deal. When switching, it is important to avoid a lapse in coverage, as this can result in negative consequences such as higher insurance premiums in the future or legal penalties for driving without insurance.

You've moved

Moving is a significant event in a person's life and can be a good reason to switch auto insurance. Here are some key points to consider when it comes to auto insurance and moving:

Update Your Auto Insurance Policy

Whether you are moving across the country or just a few streets away, it is essential to update your auto insurance policy. Contact your insurer and inform them of your new address to ensure your coverage remains valid. Even a short move can impact your premium rates due to factors such as crime rates, accident frequency, and population density in your new area.

Understand State-Specific Requirements

If your move involves relocating to a different state, it is crucial to understand that each state has its own minimum levels and types of auto insurance coverage required by law. The specific insurance requirements in your new state can be found by checking with the Department of Motor Vehicles (DMV). You will need to ensure your policy complies with the new state's regulations.

Compare Rates and Switch if Necessary

Moving to a new state may also present an opportunity to compare rates and switch to a different auto insurance provider. Rates can vary significantly from state to state, and you may find that your current insurer is no longer the most cost-effective or suitable option for your new location. Shop around, get quotes from multiple insurers, and consider factors such as coverage options, customer service, and discounts offered.

Update Your Driver's License and Registration

In addition to updating your auto insurance, don't forget to transfer your driver's license and update your vehicle registration and license plates. Each state has its own timeline for completing these tasks, usually within one to three months of establishing residency. Check with your new state's DMV for specific requirements and deadlines to avoid any fines or penalties.

Inform Your Lender

If you have a car loan or lease, remember to inform your lender of your new insurance coverage. Lenders typically require comprehensive and collision insurance on the vehicle, so they will need to know about any changes in your insurance policy.

Your family situation has changed

If your family situation has changed, it may be a good idea to switch auto insurance. Changes in family situations can include getting married, having a teenager start driving, retiring, or experiencing a milestone birthday. These changes can impact your insurance rates and coverage needs. For example, many insurers require married couples to share a car insurance policy if they keep their cars at the same residence. Adding a spouse to your policy can often lead to a discount. On the other hand, if you divorce your spouse, you will both need separate policies, and your premiums may increase.

If you have a teenager who starts driving, adding them to your policy can be expensive due to their lack of driving experience. However, some insurance providers offer discounts for young drivers. It is also important to disclose a permit driver on your policy. Similarly, older drivers are generally considered less risky to insure and may enjoy lower premiums.

When considering a switch, it is essential to review your current policy for coverage and deductible amounts and check for any cancellation fees. Compare quotes from multiple providers and choose a policy that meets your changed family situation's needs. Remember to have your new policy in place before canceling your current one to avoid a lapse in coverage, as this can result in higher future rates.

You want to save money

If you're looking to save money, shopping around for a new auto insurance policy can be a good idea. According to a 2022 study by ValuePenguin, 26% of policyholders saved $200 or more per year by switching their coverage to a new provider.

Compare Auto Insurers:

Get quotes from at least three insurers if you're considering switching. Review and match policy features such as coverage types, limits, and deductibles to your current policy. Keep your declaration page, which summarises your policy and premium, handy when comparing rates. Look out for perks or freebies that could pay off later. For example, some companies offer accident forgiveness or new car replacement coverage.

Research the Company:

While price is important, don't overlook other factors such as customer complaints and coverage options when picking a new auto insurer. Check reviews, customer satisfaction scores, financial strength ratings, and the number of consumer complaints to ensure you're choosing a reputable company that fits your needs.

Contact Your Current Auto Insurer:

Talk to your current insurer to see if they can match a lower offer before you switch. If they can't provide a better rate, find out the cancellation process and any associated fees. You may be eligible for a refund of a portion of your premium payment if you cancel before the end of your policy term.

Avoid a Coverage Gap:

Ensure there is no lapse in coverage by setting your new policy to begin on the same day your old policy ends. Many insurers offer a discount for having continuous coverage, even if you switch companies.

Change Your ID Cards:

Update your old car insurance ID cards with new ones from your new insurer. Most states allow digital proof of insurance, which can be downloaded to your phone.

Inform Your Leasing Company or Lender:

If you have a car loan or lease, inform your lender of the switch. They may require a certain amount of insurance coverage, including comprehensive and collision insurance. Ask your new insurer to send proof of insurance to your lender.

By following these steps, you can save money on your auto insurance while ensuring continuous coverage and compliance with any lender requirements.

You're not happy with your current provider

If you're not happy with your current auto insurance provider, it's a good idea to switch to another company. 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 car insurance companies at any time, even if you just renewed a policy with your current insurer. However, it's important to do some research and communicate with your old and new insurers during the process. Here are some detailed steps to help you switch auto insurance providers:

• Compare auto insurance providers: Shop around and compare quotes from at least three different insurance companies. Review and match policy features, including coverage types, limits, and deductibles, to your current policy. Look for perks or freebies offered by the new insurers that can benefit you in the long run.
• Research the new company: While price is important, don't overlook other factors such as customer complaints, coverage options, customer service, and claims handling. Check reviews, ratings, and industry reports to assess the new company's reputation and financial stability.
• Contact your current provider: Before making a final decision, reach out to your current insurance company to discuss your concerns. They may be willing to match a lower offer or make adjustments to your current policy to retain your business. Ask about any cancellation fees or possible refunds if you decide to switch.
• Purchase the new policy: Once you've decided on a new provider, purchase the new policy before cancelling your current one. Ensure that there is no lapse in coverage by setting the new policy's start date to the same day your old policy ends. This will help you avoid higher rates and legal issues associated with driving without insurance.
• Cancel your current policy: Contact your current insurance company to cancel your policy. Provide the necessary information, such as policy number, name, date of birth, and Social Security number. Ask for written confirmation of the cancellation and inquire about any refunds for prepaid premiums.
• Update your ID cards: Obtain the new insurance ID cards from your new provider and keep them in your vehicle or wallet. Most states allow digital proof of insurance, so you may also download an app or store the digital ID card on your phone.
• Inform your leasing company or lender: If you have a car loan or lease, update your lender or leasing company about the switch. They have a financial stake in your car and will want to ensure that the vehicle remains insured. Provide them with the details of your new policy.
• Review your new policy: Once the switch is complete, carefully review your new insurance policy. Understand the coverage, deductibles, limits, and any additional benefits or exclusions. Make sure you are clear on what is covered and what steps to take in case you need to file a claim.

You're adding a new driver to your policy

Adding a new driver to your policy is a common reason to switch auto insurance. Here are some key points to consider when making this decision:

Who to Add to Your Policy

Firstly, it's important to identify who needs to be added to your policy. Generally, licensed drivers who live with you or are related to you should be added to your car insurance policy. This typically includes spouses, partners, and children of driving age. Teen drivers with a learner's permit or valid driver's license must be added to your policy. If a driver doesn't live with you but regularly operates your vehicle, they should also be added to your policy. This could include roommates or friends.

Impact on Premiums

Adding a new driver to your policy may or may not affect your premiums. If you add an inexperienced or teenage driver, your rates will likely increase due to the higher risk associated with their age and lack of driving experience. However, good student discounts or discounts for additional driver's education courses may be available to help offset the difference. On the other hand, adding an adult driver with a clean driving history could even lower your insurance premiums.

Required Information

When adding a new driver to your policy, you will need to provide some basic information about them, including their full name, date of birth, Social Security number, and driving record (including accidents and traffic violations). Additionally, you may need to provide their driver's license number.

Timing and Convenience

Adding a driver to your car insurance policy is usually a quick and convenient process that can be done online or over the phone. Most major insurers offer this option. Remember to review your policy and research alternative options annually to ensure you're getting the best rates and coverage for your circumstances.

Alternative Options

Before adding a new driver to your policy, consider other options such as permissive use. If someone who doesn't live with you borrows your car occasionally, they don't need to be added to your policy as they will be covered automatically under permissive use. However, this may not apply to excluded drivers, who are often omitted from policies due to their age or poor driving record.

Frequently asked questions