Auto Insurance

How to Switch Auto Insurance

If you feel your current rates are too high or you’re lacking proper coverage, it may be time to switch your auto insurance policy.

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There are a lot of great reasons for wanting to switch auto insurance companies. You might think your rates are too high, you feel you don’t have enough coverage or the right coverage, you’re moving to a state your carrier doesn’t cover, you bought a new car, or are looking for better customer service.

No matter what the reason, it’s okay to want to change your auto insurance policy, but there are some things you should know about the process and the timing of your change.

When Can You Switch Auto Insurance Policies?

You can switch auto insurance policies at any time, but you might not want to. If you’re considering a car insurance change, you might want to look at the fine print of your current policy to see if there are any repercussions to canceling insurance.

Many auto insurers have cancellation fees and, to avoid those fees, you’ll have to change policies when your current policy expires.

Another thing to consider is how you pay for your insurance. Some people prefer to pay for the entire year in a lump sum payment; there’s often a discount for doing this. It’s great to take advantage of that discount but if you cancel in the middle of your policy, you might not get any of that money back.

Typically, the best time to switch insurance is within a few months prior to your renewal time to avoid fees or lost premiums.

Changing Insurers with Open Claims

If you have an open claim with your insurance company, you can still switch to a different company – but it might not be the best idea. If you’re not at fault, then there’s no problem changing during a claim, it’s when you’re at fault in an accident that there can be some issues.

If you’ve been in an accident and it’s your fault and the claim is still open, it’s often in your best interest to hold onto your current insurance. When you’ve caused an accident, your premium rates will rise. If you try to avoid this by switching to another company without telling them about the accident, you may face even higher rates when they discover it, or you might have your policy canceled. You’re a higher risk for the insurance company after an accident, so sticking with your current insurance is usually the best option.

How to Shop for New Car Insurance

When it’s time to shop for new insurance, you’re going to want to pull together some information first, so you have everything you need handy.

  • Current policy (know fees, deductible, coverage, expiration date, etc.)
  • Vehicle identification number(s) (VIN)
  • Any outstanding car loan balances and loan holder information
  • List of drivers who will be on your policy
  • Auto information (make, model, year)

You’ll also want to spend some time evaluating what coverage you currently have and if you want to make any changes to your policy. If you live in a state that requires auto insurance, you might be in compliance but that doesn’t mean it’s enough coverage for you and your situation. Typically, state-mandated insurance is just the bare minimum, so you may want more. You might also want to rethink your deductibles and premiums.

If your current policy is bundled to save you money on premiums, this is something you’ll need to consider too. Will a new insurance provider allow you to bundle and give you a discount or are you going to have to separate your policies, and what will that cost?

Finally, you’ll want to look if there are some other ways you can get discounts. Not all companies offer the same discounts, but these tips might help you get a lower rate.

  • Boost your credit score
  • Take a defensive driving course
  • Bundle other types of insurance
  • Put all autos on the same policy
  • Are there anti-theft device discounts
  • Ask about safe driver discounts
  • Check for “black box insurance”
  • Drive less for low mileage discounts
  • Military/veteran discounts
  • Student discounts

How to Determine What Coverage You Need

One of the most important steps in getting new car insurance is knowing how much insurance you need. This isn’t just about understanding what’s required, but knowing what’s best for you, what you can afford, and what insurance might not be necessary.

  • Required insurance: The first thing you’ll need to consider is what is required by your state. This is the bare minimum of what you’ll need, but it’s key to at least have this much insurance.
  • Deductible amount: Your deductible is the amount you pay out of pocket before your insurance starts covering damages. The lower your deductible, the higher your premiums may be. If you’ve never been in an accident, you might consider a high deductible to save monthly premium fees.
  • Add or remove full coverage insurance: Some people sign up for “full coverage” thinking that this is what they need. It’s better to look at each type of insurance that’s in your policy and determine if it’s essential or not. Some of it may not be required and if you have an older vehicle, it might not be as important as it is with a new car.
  • Add or remove other coverages: There are many different optional policies you can add to your auto insurance to give you more coverage. Understanding all of the policies you carry and their associated costs is important, but it’s also important to understand how likely you are to use them. For instance, if you don’t carry uninsured motorist coverage as an optional plan and you live in an urban area, you might want to add this. If you live in a rural area, it might not be as important.
  • Who is driving?: If you have a spouse, significant other, or dependents who drive your vehicle, you’ll want to include them on your policy. It’s worth looking into how each insurance company handles a claim when the primary driver isn’t behind the wheel.
  • How much liability do you need?: Liability insurance pays for injuries to others and their property. If you’re at fault in an accident and someone is injured, the costs can quickly skyrocket. One thing to research is getting an umbrella policy to raise liability protection for both home and auto situations.

How to Compare Your Options

Too often, people compare auto insurance rates by looking at one quoted price. This price is usually just a generic price and doesn’t include special discounts and additional fees. It’s like comparing apples to lawnmowers – there’s no correlation at all.

Instead, take your list of coverages you’ve determined you need and ask an agent to give you a specific quote based on your unique situation and your requirements. Look for the same or similar discount opportunities with each company. And make sure there aren’t any exclusions that make the policy undesirable – like no one else is allowed to drive your vehicle.

At this point, you might want to approach your current insurance carrier and let them know you’re considering switching policies and ask them if there are any discounts that you’re not making the most of. Insurance companies do switch their promotions and discount programs regularly, so it doesn’t hurt to ask. You might even qualify for a discount for being a long-term customer.

How to Cancel Your Old Policy

The most important thing when you’re canceling auto insurance is to make sure your new insurance policy is in effect before you cancel your current policy. Any gap in coverage can have serious repercussions, like the state imposing fines or revoking your driver’s license, and higher insurance rates.

Next, cancel the old policy according to its specifications. Some insurance companies require you to talk to an agent or submit a written, formal request to cancel. You’ll want to follow their instructions, or you might not actually be canceling your policy when you think you are. Remember to look into any refunds you may be due or if there are any cancellation fees.

To protect yourself after canceling, ask for written cancellation for your records (this can be digital) and, if you’re on an autopay program, make sure that’s canceled, too.

If you’re not canceling your old policy until you have a new one, there may be some overlap. This might seem like a good thing, but it’s not. There can be some serious consequences from having double coverage and you may lose your insurance entirely or face some legal issues depending on the state you’re in.

The best way to manage this is to make sure your new policy is in effect. Once you’re satisfied you have coverage with the new company, immediately contact your “old” insurance and cancel that policy. They may need written confirmation, but an email will suffice. This way you can prove that you weren’t attempting fraud by having two insurance policies in effect at the same time.

How to Activate Your New Policy

Once you’ve completed the paperwork and paid for your new insurance policy, coverage typically starts immediately. At the very least, your insurance company will tell you what the activation date is. It’s a quick process since insurers know it sometimes happens at the dealership and you need it to drive home.

How to Change the Insured Car

If you’re keeping your old insurance but you just want to change the vehicle (perhaps you bought a new one), the process is fairly easy. In most situations, you’ll need to call your insurance company and let them know there’s a change. Some policies can be handled online without making a phone call.

If you have an agent, give them a call a few days before you plan on buying a new vehicle and that can speed up the process on purchase day.

It’s also worth researching your policy, just so you feel safe driving a new vehicle, but many auto insurers give you a grace period to change the vehicle on your policy. This grace period varies from 2 days to 30 days. The faster you can make the change the better, but it does give you peace of mind knowing you have a little leeway.

Do Not Let Your Policy Lapse

The most important part of any auto change is making sure you always have coverage. Gaps in insurance have different consequences, depending on what state you live in.

In some states, coverage gaps are illegal, and you can face fines or suspension of your license. Insurance companies may see you as a bad risk if you have a long gap and they won’t offer you insurance or the rates will go up.

Even worse, if you’re in an accident and uninsured, the financial and potentially legal consequences can be devastating.