Time To Switch Auto Insurance: When And Why?

There are many reasons why you may want to switch auto insurance providers, such as a change in your marital status, location, or vehicle. You can switch your auto insurance at any time, but it's important to have a new policy in place before cancelling your current one to avoid a lapse in coverage, which could result in higher insurance premiums in the future, fines, or even jail time. When switching providers, it's a good idea to compare rates from at least three companies and research their customer service, claims experience, and financial strength. You should also check for any cancellation fees that your current provider may charge and make sure to update your lender if you have a car loan or lease.

After a major life event

Life is full of surprises, and some of them can be significant enough to warrant a review of your auto insurance. After all, big life changes could mean you need to adjust your auto insurance coverage. Here are some examples of major life events that could prompt a switch in your auto insurance:

Moving to a new location

Your insurance rate is impacted by your location. Even moving a few blocks away from your old location can affect your rate. Even if you are not switching insurance providers, it is a good idea to inform your insurer if you are relocating to a new ZIP code, city, or state.

Getting married

If you and your partner both own a car, it may be more economical to insure both vehicles under the same policy instead of maintaining separate policies. You may be able to save even more by bundling your car and home insurance. Discounts for having multiple drivers on the same policy or for sharing a vehicle may also be available.

Buying a new vehicle

If your policy was purchased years ago when your car was new, it may be time to make some changes to your plan, such as reducing coverages or increasing your deductible. Collision coverage and gap insurance are most beneficial for newer vehicles. On the other hand, liability and comprehensive insurance may be sufficient for an older vehicle.

Teenager getting their driver's license

Teen drivers are more expensive to insure due to their lack of driving experience. While adding a teenager to your existing car insurance policy will likely be more affordable than insuring them separately, it will still result in higher premiums. Many insurers offer discounts on car insurance for teens if they get good grades or leave the car at home while they're in college.

Retirement

Older drivers enjoy some of the cheapest car insurance rates on average. If you're no longer commuting to work daily, you may also be able to save with a low-mileage insurance policy.

Milestone birthday

Older drivers are generally considered less risky to insure than younger ones, resulting in lower car insurance premiums.

Change in daily commute

Insurers take into account the number of miles you drive annually when calculating premiums, and some even offer low-mileage policies. If your daily commute has changed, you may be able to take advantage of these policies and save on your insurance costs.

Job change

A change in your job or employment status can impact your driving habits and, consequently, your insurance needs. For example, if you start working remotely, you may drive fewer miles, which could lead to a lower insurance rate.

Remember, it's essential to have a new policy in place before canceling your current one to avoid a coverage gap, as driving without auto insurance is illegal in most states and can result in serious consequences.

To save money

Saving money is a common reason for switching auto insurance providers. Here are some detailed tips on how to save money by switching auto insurance:

Shop around for better rates

Firstly, it is recommended to shop around for a new auto insurance provider by getting multiple quotes from different companies. The more insurance companies you get quotes from, the better. It is also important to consider the mix of cheap rates, useful coverage options, and dependable customer service that each company offers.

Contact your current insurance company

After finding the best rates for insurance, it is a good idea to contact your current insurance company to see if they can match the competitor's quote. You should also ask about their cancellation process and any potential fees.

Start your new policy and cancel your old one

Once you have decided to switch insurance companies, it is important to buy your new policy and confirm it is active before cancelling your old insurance policy. Some companies charge a cancellation fee, so it is important to check with your current company to avoid any unexpected costs.

Notify your lender

If you have a lease or loan on your car, it is important to notify your lender or lease provider of the change in insurance companies. Most car leases and loans require you to have car insurance, and the lender may repossess your car or buy a separate policy for you if they think you no longer have insurance.

Switch insurance after major life changes

Major life changes can impact your insurance rates, so it is a good idea to shop around for a new provider after events such as getting married, having a teenager start driving, retiring, or moving to a different address or state.

Compare car insurance rates regularly

It is recommended to compare car insurance quotes at least once a year to ensure you are getting competitive rates. You can also consider switching insurance providers before the end of each six-month policy, as auto insurers often increase rates when a new term begins.

Switch insurance companies for better service or coverage

In addition to finding cheaper rates, switching auto insurance can also lead to better service and coverage. Certain auto insurance carriers offer stronger service standards, better claims processes, and more comprehensive coverage than others.

Take advantage of discounts

Car insurance discounts can significantly reduce the cost of coverage. It is worth researching and taking advantage of any discounts that you may be eligible for, such as good driver discounts, student driver discounts, or safe driver discounts.

Switch insurance companies after improving your credit score

Credit history plays a major role in determining car insurance premiums. If your credit score has improved, you may be able to find lower rates by switching to a different insurance company.

Switch insurance companies for additional perks

Some insurance companies offer perks such as accident forgiveness, varying deductibles or policy terms, and savings opportunities for bundling auto coverage with home insurance. If your current provider does not offer these perks, it may be worth considering a switch.

When reviewing your policy annually

It is recommended to review your car insurance policy annually to ensure you are getting the best rates and coverage. Here are some detailed instructions on what to do when reviewing your policy annually:

Review your current coverage:

Check your current policy for the types of coverage you have, such as liability, collision, and comprehensive insurance. Also, consider whether you need to make any changes to your coverage limits or deductibles. Keep in mind that full coverage, which includes liability, collision, and comprehensive insurance, provides better protection in case of an accident or damage to your vehicle.

Research and compare other insurers:

Shop around and compare quotes from at least three other insurance providers. Look for insurers that offer similar coverage types, limits, and deductibles as your current policy. Additionally, consider insurers that provide perks or discounts that may benefit you in the long run. Price is important, but also consider factors like customer complaints, claims handling, and financial strength when making your decision.

Contact your current insurer:

Before making any changes, reach out to your current insurer to discuss any concerns or adjustments you are considering. They may be able to offer you a better rate, additional discounts, or help you optimize your coverage to meet your needs. Ask about any cancellation fees or refunds if you decide to switch insurers.

Avoid a lapse in coverage:

Ensure that there is no gap in your coverage when making any changes. Set your new policy to begin on the same day your old policy ends to avoid being uninsured, even for a single day. A lapse in coverage can result in higher rates, fines, or other consequences, depending on your state.

Update your documentation:

Once you have decided to switch insurers, gather all the necessary documents, including your current policy details, driver's license, and vehicle identification number (VIN). Cancel your old policy and obtain proof of your new insurance, such as an updated insurance card.

Inform relevant parties:

If you have financed or leased your vehicle, notify your lender or lessor about the change in insurance. They will need to be listed on your new policy and informed of any updates to your coverage.

When adding a new driver

Adding a new driver to your car insurance policy is a significant life event that may prompt you to switch your auto insurance. Here are some detailed instructions and considerations to keep in mind when making this decision:

Assess Your Current Policy:

Before making any changes, it's important to review your current car insurance policy. Understand the coverage you currently have, the limits, and any discounts you are receiving. This will help you make an informed decision when comparing other insurance options.

Consider Your Options:

Start by gathering quotes from at least three other insurance providers. Ensure that you are comparing similar types and amounts of coverage to get an accurate idea of the costs and benefits offered. Remember to consider factors such as the age and value of your vehicle, the driving experience of the new driver, and your budget.

Evaluate the Costs and Benefits:

When assessing your options, consider the potential impact on your premium. Adding a new driver, especially an inexperienced or young driver, may increase your premium. However, some insurance companies offer discounts for young or student drivers, good grades, or leaving the car at home while they are in college.

Contact Your Current Insurance Provider:

Before making a switch, it's worth contacting your current insurance agent or company. They may be able to review your policy and identify new discounts or savings opportunities. They can also advise you on any penalties or refunds involved in switching policies mid-term.

Timing and Overlapping Coverage:

When switching policies, ensure there is no lapse in coverage. Driving without insurance is illegal in most states and can result in serious consequences. Start your new policy on the same day your old coverage ends to avoid any gaps.

Notify Your Lender:

If you have financed or leased your vehicle, don't forget to inform your lender about the change in insurance. They will need to be listed on your new policy as they have a financial interest in the vehicle.

Cancel Your Old Policy:

Once your new policy is active and you have confirmed coverage, proceed to cancel your old policy. Contact your previous insurance company and provide the necessary cancellation request. You may also need to sign a form authorizing the cancellation or speak directly with a customer service representative.

Access Your New Insurance Information:

After cancelling your old policy, update your insurance ID card or download the insurance company's mobile app to access your new digital ID card. Keep this information with you at all times, as you'll need to provide proof of coverage if you're pulled over or involved in an accident.

Remember, while cost is an important factor, it's not the only consideration. Review customer service ratings, claims handling processes, and the overall reputation of the insurance company to ensure you're getting the best value and protection for your needs.

When buying a new car

If you decide to switch, 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 legal penalties and higher future insurance rates. You should also be aware of any cancellation fees charged by your current insurer.

• Compare auto insurance options: Obtain quotes from multiple providers, paying attention to coverage options, limits, and deductibles. Ensure you are comparing similar coverage levels to your current policy.
• Contact your current insurer: Ask if they can match a lower offer, and find out about any cancellation fees or possible refunds.
• Purchase the new policy: Ensure the new policy starts at least one day before your current coverage expires to avoid a lapse in coverage.
• Cancel your previous insurance: Contact your current insurer to cancel your policy. You may be able to do this online, over the phone, or in writing.
• Update your insurance ID cards: Obtain proof of insurance from your new provider, which is accepted digitally in most states.
• Notify your lender or leasing company: If you have a car loan or lease, inform them of the change, as they may require certain insurance coverage levels.

Frequently asked questions