Switching Auto Insurance: Questions To Ask Your New Provider

Switching car insurance companies can save you hundreds of dollars a year, and it's not difficult to do so. You can switch your car insurance at any time, even if you've just renewed your policy with your current provider. While most insurers don't penalize customers for switching, some may charge a cancellation fee. To avoid this, it's best to review your policy annually and shop around for the best rates. When switching, make sure your new policy starts the same day your old one ends to avoid a lapse in coverage, which can lead to fines and higher insurance rates in the future.

Compare car insurance rates and coverage options

Comparing car insurance rates and coverage options is an important step in switching auto insurance. Here are some key points to consider:

Understand Your Coverage Needs:

Before comparing rates, it's crucial to assess your coverage needs. Consider factors such as your state's minimum insurance requirements, the age and condition of your vehicle, and any specific coverages mandated by lenders or lessors if your car is financed or leased. For instance, comprehensive and collision coverage may be necessary for newer or leased vehicles.

Gather Necessary Information:

To obtain accurate quotes, you'll need to provide personal information, including your address, date of birth, occupation, driver's license details, and marital status. Additionally, have your vehicle information ready, such as the mileage, date of purchase, and Vehicle Identification Number (VIN) for each car. If you're purchasing a new vehicle, have the make, model, and year details on hand.

Choose Your Liability Limits:

Liability insurance is crucial for protecting yourself financially in the event of a crash. Opt for liability limits that cover your net worth, as expenses from a severe accident can quickly exceed minimum coverage limits. Understand your state's requirements and consider uninsured and underinsured motorist coverage, personal injury protection, or medical payments coverage, depending on your state's mandates.

Decide on Full Coverage:

Full coverage car insurance includes comprehensive and collision coverage, protecting you from damages to your own vehicle. If you have a loan or lease, full coverage is typically required. However, for older, less valuable cars, you may opt for minimum coverage to save on premiums.

Collect and Compare Quotes:

Obtain quotes from at least three insurance companies, including major insurers like Allstate, Geico, Progressive, and State Farm, as well as smaller regional providers. Utilize comparison tools, insurer websites, or independent agents to gather quotes. When comparing, ensure you're using the same coverage limits and deductibles for an accurate assessment. Ask about applicable discounts, such as those for safe driving, bundling policies, or having multiple vehicles insured.

Research Individual Insurers:

Don't solely focus on price; research the reputation and customer satisfaction of individual insurers. Consider their customer service, claims handling processes, financial stability, and the range of coverage options and discounts they offer. Resources like J.D. Power studies, Better Business Bureau scores, and AM Best financial strength ratings can aid your research.

Avoid Lapses in Coverage:

When switching insurance, ensure there is no gap in coverage. Even a single day without insurance can lead to increased future rates and legal consequences if caught driving uninsured. Properly time the start of your new policy to overlap with the end of the previous one.

Contact your current insurance company

Contacting your current insurance company is an important step when switching auto insurance. Here are some detailed instructions and considerations to keep in mind:

Review your current policy:

Before making any decisions, carefully review your current auto insurance policy. Check the coverage, deductible amounts, and any applicable cancellation fees. Knowing what your current policy entails will help you make an informed decision about switching.

Assess your needs and compare options:

Think about your current needs and priorities. Are you looking for cheaper rates, better coverage, or have your circumstances changed (e.g., a new car, a move, a teen driver in the household)? Compare quotes from multiple insurance providers, ensuring you're getting quotes for similar coverage types and limits. This will help you make an "apples-to-apples" comparison. Consider using a quote comparison tool to streamline the process.

Contact your current insurer:

Get in touch with your current insurance company to discuss your intentions. Ask if they can match the quote you received from another provider or offer any new discounts. Inquire about their cancellation process and any potential fees. Some companies may require advance notice for cancellation, and it's important to understand their specific requirements.

Understand the implications:

Ask your current insurer about any potential refunds for premium payments you've made. Additionally, be aware that switching insurance may result in losing certain discounts, such as loyalty or bundle discounts, that you were previously receiving. Weigh the benefits of switching against the advantages you may be giving up.

Choose a new policy wisely:

When selecting a new auto insurance policy, don't base your decision solely on price. Consider other factors such as customer service, claims handling, and financial strength. Research the prospective company's customer satisfaction ratings, claims satisfaction scores, and financial stability ratings from independent sources. This will help ensure you're making a well-informed choice.

Time it right:

When you're ready to switch, coordinate the start date of your new policy with the end date of your current policy to avoid a lapse in coverage. Even a brief gap in coverage can lead to fines, higher insurance rates, and legal trouble. Ensure there's an overlap, even if it's just for a day, to maintain continuous coverage.

Research the new company

Researching the new company is an important step in switching auto insurance providers. While price is an important factor, it is not the only thing to consider.

Firstly, you should check customer reviews and complaints. You can use resources such as the National Association of Insurance Commissioners (NAIC), which assigns a score to each company based on the average number of consumer complaints it receives. A score above 1.00 indicates an above-industry-average number of complaints, while below 1.00 indicates a below-average number. You can also refer to studies like the J.D. Power 2024 U.S. Insurance Shopping Study and the J.D. Power 2024 U.S. Auto Insurance Study. Online scores by the Better Business Bureau are another source of information.

Secondly, you should assess the company's financial strength to ensure it is able to pay out claims. AM Best is a good resource for this, as it rates companies with letter grades based on financial measures. The higher the rating, the stronger the company's historical ability to pay out claims.

Thirdly, you should look at the company's coverage options and discounts. For example, some companies offer accident forgiveness or new car replacement. You can also check whether the company offers any discounts that apply to you, such as a student discount or a safe driver discount.

Finally, you should consider the convenience of the company's services. For example, some companies allow you to download a digital ID card to your phone, which can be useful if you are pulled over.

Avoid a lapse in coverage

A lapse in car insurance coverage can have serious consequences, so it's important to take steps to avoid this when switching policies. Here are some tips to help you avoid a lapse in coverage:

Understand the meaning of a "lapse in coverage"

Know that a "lapse in coverage" refers to any period of time, even just a day or two, when you own a car but don't have car insurance coverage. This can happen if you don't pay your premiums, your policy is not renewed, or your insurance company drops you.

Be aware of the consequences of a lapse

A lapse in coverage can result in higher insurance rates, as insurers may classify you as a high-risk driver. It can also lead to legal penalties such as fines, license and registration suspensions, and even jail time if you are caught driving without insurance.

Maintain continuous coverage

Ensure that your new policy's effective date aligns with the cancellation or expiration date of your old policy. This way, you avoid any gaps in coverage. Contact your insurance company to understand their specific regulations regarding policy reinstatement and effective dates.

Stay on top of payments

Pay your premiums on time to avoid a lapse in coverage. Consider setting up automatic payments to ensure timely payments. Also, take advantage of grace periods, which are typically between 10 to 20 days, to make payments without penalty.

Explore options to lower your premium

If the cost of insurance is a concern, explore options to lower your premium. You may be able to change your payment plan or coverage level, or qualify for additional discounts to make your policy more affordable and reduce the risk of missing payments.

Consider suspending coverage or a non-owner policy

If you won't be driving for a short period, ask your insurance company about suspending your coverage instead of cancelling it. Alternatively, consider switching to a non-owner car insurance policy if you won't own a car for a while.

Shop around for insurance providers

If your current insurance company is unable to meet your needs or offer affordable rates, don't hesitate to shop around for a new provider. Compare quotes from multiple insurers to find the best rates and ensure continuous coverage.

Get proof of insurance

Getting proof of insurance is a crucial step when switching auto insurance. Here are some detailed instructions and considerations to help you obtain proof of insurance:

• Understanding the Importance of Proof of Insurance: Proof of insurance, also known as an insurance ID card, is essential when switching auto insurance. It serves as a record of your new insurance policy and provides crucial information such as the effective date, coverage details, and policy number. Having this physical or digital document readily available is essential for several reasons.
• Obtaining Your Proof of Insurance: Once you have purchased your new insurance policy, you can obtain your proof of insurance in a few different ways. Many insurance companies provide digital access to your insurance ID card through their website or mobile app. You can usually download and save the digital ID card on your device, ensuring offline access in case you need to show it when there is no internet connection or cellular service. Alternatively, your insurance company may also mail you a physical copy of your insurance ID card. It is recommended to keep a physical copy in your vehicle or wallet for easy access.
• Verifying the Information on Your Proof of Insurance: It is important to carefully review the information on your proof of insurance to ensure its accuracy. Check that your name, vehicle information, policy effective date, and coverage details are all correct. This verification step is crucial to avoid any issues or discrepancies that may arise in the future.
• Keeping Your Proof of Insurance Accessible: Always keep your proof of insurance in a safe and easily accessible place. If you have a physical copy, consider placing it in your vehicle's glove compartment or your wallet. If you have a digital copy, save it in a folder on your phone or device that you can quickly access. It is also a good idea to email a copy to yourself for backup.
• Updating Your Proof of Insurance as Needed: Remember to update your proof of insurance if any changes are made to your policy. For example, if you change your address, vehicle, or coverage options, make sure to request an updated insurance ID card from your insurance provider. This ensures that your proof of insurance remains current and accurate at all times.
• Providing Proof of Insurance When Needed: In certain situations, you may be required to provide proof of insurance. For instance, if you are involved in a traffic accident or stopped by law enforcement, you will need to present your insurance ID card. Additionally, when registering your vehicle, applying for certain licenses, or renting a car, you may also be asked to provide proof of insurance. Always keep your proof of insurance with you when driving to ensure compliance with legal requirements and to avoid any penalties or fines for not having valid insurance.

Frequently asked questions