Switching Auto Insurance: What's The Process?

Changing your auto insurance is a straightforward process that can be done at any time, but it's important to understand the steps involved to ensure a smooth transition. The procedure for changing auto insurance typically involves the following steps:

1. Shopping around for better rates and comparing quotes from multiple insurance companies. Consider factors such as coverage options, customer service, and discounts offered.

2. Contacting your current insurance company to discuss cancellation policies and potential penalties for early termination. Some companies may charge a fee for cancelling before the end of the coverage period.

3. Finalizing and purchasing a new insurance policy, ensuring there is no gap in coverage between the old and new policies.

4. Cancelling your old policy and obtaining proof of the new policy.

5. Notifying relevant parties, such as your car lender or leasing company, of the change in insurance.

It's important to review and update your car insurance after significant life events, such as marriage, relocation, changes in employment, or adding a teenage driver. By following these steps, you can switch your auto insurance with ease and ensure you are getting the best coverage and rates for your needs.

Shop around for better rates

Shopping around for better rates is the first step to switching car insurance companies. You can do this by getting free online quotes. Take your time to find the best car insurance company that offers you the right mix of cheap rates, useful coverage options, and dependable customer service. The more insurance companies you get quotes from, the better.

While shopping around, think carefully about whether you should change your coverage or if there are any new discounts that you may be eligible for. For example, the value of your older vehicle may have dropped enough that you can remove collision coverage, or your driving may have improved to the extent that you qualify for a safe driver discount. You may also not be driving as much and could save money by switching to a pay-per-mile or telematics policy.

When comparing quotes, pay attention to coverage options, limits, and deductibles. While price is an important factor, it is not the only thing to consider. Do you need increased liability coverage in case of a lawsuit? Or is it time to drop collision and comprehensive coverage because your vehicle is several years old?

When comparing new quotes to your current premium, make sure you are comparing "apples to apples". Ensure that coverages are in line with the coverages you already have in place so that you don't find yourself over or underinsured.

You can also use comparison tools located on specific websites to examine the costs of several providers.

Contact your current company

Contacting your current insurance company is an important step in the process of changing your auto insurance. Here are some detailed instructions and considerations to keep in mind when reaching out to your current provider:

• Timing and Notice Period: It is recommended to contact your current insurance company after you have found a new provider and are ready to commit to switching. Check if your insurance company requires advance notice for cancellation, as this can vary from company to company. Some may require up to 30 days' notice.
• Cancellation Process and Fees: Ask about their cancellation process and any associated fees. Some companies may charge a cancellation fee, especially if you are cancelling in the middle of your policy term. It's important to understand these potential costs before making the switch.
• Refund for Unused Coverage: If you have paid for your coverage in full for a longer period, such as six months or a year, you will likely be entitled to a refund for the portion of the coverage that you haven't used yet. Cancelling your policy as soon as possible will help you get the biggest refund.
• Loyalty and Bundle Discounts: If you have been a long-term customer, you may be eligible for loyalty discounts. Additionally, if you have bundled your car and home insurance, you might be getting a significant discount. Consider these advantages before making the switch, as you may not have access to similar discounts with a new provider.
• Open Insurance Claim: If you have an open insurance claim, you can still switch insurance companies. However, your current insurance company will remain responsible for handling and paying out that claim. You will need to continue communicating with them until the claim is resolved.
• Communication and Confirmation: Once you have decided to switch, contact your current insurance company to cancel your policy. You can do this by calling their customer service line or speaking to your local agent. After cancellation, ask for written confirmation to ensure your policy is officially terminated and won't automatically renew.

Start your new policy and cancel your old one

Starting a new policy and cancelling your old one is a simple process. You should first shop around for a better rate, then contact your current company to see if they can match the quote. If not, you can go ahead and purchase the new plan, ensuring it starts at least one day before your current coverage expires to avoid a lapse in coverage. Once you have your new insurance coverage in place, you can start the cancellation process for your old policy. You may need to give your insurance company advance notice to cancel your policy, and you should ask about any cancellation fees. You will likely be refunded for any unused portion of your policy.

Notify your lender

If you have a loan or lease on your car, you must notify your lender or lessor of your new insurance coverage. Your lender would have been listed on your old car insurance, and they will be notified of the cancellation. Therefore, it is a good idea to call the lender to ensure they have all the details of your new coverage.

If you have a lease or loan on your car, your lender or lessor will require you to have collision and comprehensive insurance. If your loan company thinks you have cancelled your insurance, they may repossess your car or buy a separate policy for you, known as a force-placed policy.

If you have financed or are leasing your current vehicle, you must notify the lender or lessor immediately after changing insurance companies.

Avoid a lapse in coverage

A lapse in coverage can lead to serious legal and financial challenges. It is important to avoid a gap in coverage, even if it is just for a day or two, as this is still considered a lapse.

If you cause an accident and you do not have insurance, you will be responsible for all damages, including any applicable medical bills, out of pocket. Even if you are not at fault, most states require insurance providers to file proof of insurance with the Department of Motor Vehicles after an accident if police are called. If you do not have car insurance, your driver's license could be suspended.

A gap of as little as one day can increase your car insurance rates in the future, as insurance companies consider you an uninsured driver for that time. It is much better to have two car insurance policies for one day than none at all.

To avoid a lapse in coverage, make sure your new policy starts the same day your old policy expires.

Frequently asked questions