There are many good reasons to change car insurance companies. A life event may require you to switch companies, or you may want to look for savings on your monthly bill or a better service experience. MoneyGeek explains how to switch providers, even if you're in the middle of a policy.
How to Switch Car Insurance Companies
MoneyGeek has researched the pros and cons of switching car insurance and found that certain drivers can save hundreds of dollars per year by switching. You may also benefit from changing companies if you're unsatisfied with an insurer's service experience, or if a major life event requires you to find a new insurer.
However, you should note that if you change car insurance while you still in the middle a policy, there is no guarantee you'll get a refund on the rest of the policy's term, and you may have to pay a small cancellation fee. But there's no downside to doing research on whether the switch is worth it, and MoneyGeek explains the steps you should take to figure out the best company for you.
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Switch car insurance companies when you think you can save money or get better service. You can do this any time, but especially when your personal circumstances change.
Make sure your new insurance is active before canceling to avoid any lapse in coverage.
You can change your car insurance at any time, typically with no or limited penalties.
Reasons to Switch Car Insurance Companies
There are plenty of reasons to change car insurance providers when your currently policy ends or even mid-policy. You should consider switching car insurance if:
- You're looking for savings on your car insurance premiums
- You're unsatisfied with your provider's service and are looking for a higher quality service experience
- A life event makes another company a more sensible option
If savings or high quality customer service are important to you, you should at least investigate switching car insurance. It doesn't take long to compare multiple companies online to find the cheapest car insurance coverage. And if you're looking to balance service quality and affordability, MoneyGeek has analyzed the best car insurance companies.
If your current policy is expiring soon, it may make more sense to switch when your current car insurance ends. An insurance company might not refund you for the remainder of your policy and may even charge a small cancellation fee. But if the benefits of joining the new insurer outweigh costs, you should still consider making a switch mid-policy.
Even if you're currently satisfied with your rates and service, notable life events may force you to change insurers, or may just be a good time to assess whether you have the right company. For instance, if you move to a new state, your current car insurance company may not cover you in your new home. Even moving within a state may alter your rates, and it may be worth examining your options in your new town or city.
Find Cheap Insurance by State
Another reason to switch is if you add a family member to a policy or have purchased a new vehicle. The following life events are usually a good time to do some research on which insurance company best fits your circumstances:
- Adding a young driver to a policy
- Attending college
- Purchasing a new vehicle
When Shouldn't You Switch Car Insurance?
If you haven't done your research, you should consider how switching car insurance can help you save money or get better service. However, if you've examined all the alternatives and your current insurer offers the best combination of coverages, rates and service, it may make sense to stay with the same insurer. The risk of changing car insurance companies is that you won't get a refund on your current policy and that your new policy doesn't offer you better value for your money.
When making a decision to change car insurance, you should also consider other insurance policies you hold. For instance, most people find the cheapest home and auto insurance when they bundle those two policies together with the same insurer. If you have other insurance policies like homeowners insurance, renters insurance or umbrella insurance, you'll want to compare quotes to see if the cheapest options are those with bundling discounts. Not all insurance companies offer the same level of bundling discounts, which can be as high as 25% of your premium.
To ensure you find the best policy, MoneyGeek has detailed all the steps you should take when deciding whether to change car insurance companies.
Steps to Take Before Switching Car Insurance Companies
Because of the ease of online research and purchasing, switching car insurance should be a breeze. Follow the steps outlined below to help you narrow down the best car insurance companies for your needs.
Determine How Much Coverage You Need
The type of insurance you decide to carry depends on how much your state requires and how much coverage you want in the event of an accident. The state minimum is how much any driver must carry, while liability insurance offers protection for any damage you cause to others. Full coverage auto insurance pays for damages caused to both yourself and others by adding comprehensive and collision coverage.
The level of coverage you need depends on your car's value, the coverages required by your leasing company or lender, the value of your assets and several other factors.
Average Car Insurance Costs by Coverage Type
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- Coverage LevelAnnual Premium
- State Minimum - Liability Only$672
- 50/100/100 Liability Only$863
- 100/300/100 Liability Only$976
- State Minimum Liability Insurance with Comprehensive and Collision ($1,000 Deductible)$1,075
- 50/100/100 Liability Insurance with Comprehensive and Collision ($1,000 Deductible)$1,252
- 100/300/100 Liability Insurance with Comprehensive and Collision ($1,000 Deductible)$1,357
- 50/100/100 Liability Insurance with Comprehensive and Collision ($500 Deductible)$1,363
- 100/300/100 Liability Insurance with Comprehensive and Collision ($500 Deductible)$1,466
Evaluate Cancellation Fees and Refunds
Insurance companies may charge you a cancellation fee if you end your policy early, but you may also be eligible for a refund of the remainder of your policy. Just because you may pay a penalty for cancelling doesn't not mean you shouldn't switch. If the monthly savings and refund are higher than the cost of a cancellation fee, it may make sense to switch car insurance companies right now, even if you are mid-policy.
Some companies may penalize you for terminating your coverage early. Those that do often charge either a percentage of the remaining premium or a flat fee. Be sure to investigate the cancellation fee before making a decision about when to switch car insurance. If you only have a month or two remaining on your current policy, it may make sense to wait until the end of your term before switching.
On the other hand, it may be possible to get a refund on the remainder of your policy. Not all companies offer refunds, but you should always ask, especially if you cancel mid-policy or already paid in advance. Many companies process refunds automatically but always keep an eye on your account to ensure the money arrives. If not, you may need to call the company or, if possible, use an online chat feature on their website. A few things to say or ask when calling include:
- What amount was left on the policy the day I canceled?
- What percentage should I expect to get back?
- How will the money be sent?
- How long will it take to arrive?
Research and Compare Car Insurance Quotes
If you want to save money on your auto insurance, comparing quotes is one of the smartest things you can do. Reaching out to several insurance companies and providing information specific to you (e.g., age, gender, type of car, etc.) can provide a clearer picture of what to expect. If you haven't shopped around in a while, you may qualify for new discounts with different companies.
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Remember, price shouldn't be the only factor. If you value quality service in a time of need, the best insurance company for you will also have a low rate of customer complaints and a high rate of customer satisfaction.
Find the Best Rates for Your Driving History
Comparing quotes is especially important if you have a blemish on your driving record, as high-risk drivers pay more for insurance. Switching car insurance after an indiscretion falls off your record could be a good decision and lead to a significantly lower rate. Even if an incident appears on your driving record, it's still worth it to shop around.
Car insurance quotes can vary greatly depending on the severity of your violation, as the table below demonstrates.
Average Annual Premium by Driving Record
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- CompanySafe Driver*At-Fault AccidentDUI
- State Farm$1,235$1,583$2,222
** The average driver is defined as a 40 year-old male w/ no violations. All policies in this table have 100/300/100 liability insurance and comprehensive/collision coverage with a $1K deductible. *
Buy a New Policy First to Prevent a Lapse in Coverage
Before you cancel your existing your car insurance policy, you should buy the new car insurance policy first. A lapse in car insurance coverage could result in rate increases of hundreds of dollars per year with your next insurer.
A lapse in coverage occurs when you have a period of time in which you don't have a car insurance policy. Penalties are more severe if your car insurance lapses for more than 30 days, but even going one day without coverage can result in limited penalties.
Before ever canceling your current policy, your new one must be active. After identifying the new company, you want to provide your auto insurance, pay the quoted premium and ask for confirmation. Ensure that the date your new policy starts matches the day the old policy ends.
You can also ask for a digital copy confirming your coverage until mailed copies arrive. Only after you receive this documentation should you contact your previous insurer and notify them of your desire to cancel the policy.
Swap in Your New ID Card
Lastly, remember to swap out your old insurer's identification with your new one. Doing this may involve changing them out in your wallet or glove box or downloading your new insurer's app to carry a digital copy.
Frequently Asked Questions About Switching Car Insurance Companies
If you still have questions about the process of switching car insurance companies, check out answers to some of the most frequently asked questions below.
About the Author
- Allstate. "Switching Your Car Insurance in Four Steps." Accessed August 10, 2020.
- Car and Driver. "How to Switch Car Insurance: Everything You Need to Know." Accessed August 11, 2020.
- Nationwide. "What to know about switching car insurance companies." Accessed August 11, 2020.