Most people likely cannot recall the last time they thought about switching car insurance, unless they have gotten a new vehicle or added a new driver to their policy. The general advice is to shop around every 6 months, but in reality, that is likely unnecessary. Shopping for car insurance once a year — around the time your policy is set to renew — will likely be enough due diligence to help save you money.
Reevaluating your car insurance coverage annually can help ensure you are not paying for coverage you no longer need. For example, if you have been driving the same car for years, your vehicle is aging and depreciating, so you do not need as much insurance as you did when it was newer. Changes in your driving habits or added incentives can lead to a lower monthly car insurance bill as well.
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Why Consider Changing Car Insurance?
There are many reasons to switch car insurance companies: you’re unhappy with your current insurance company, you want more or less coverage, your rates are too high, or you bought a new vehicle. Even buying a new home can prompt a car insurance change with a bundling discount. These are reasons to consider changing your current insurer or to shop around for a different policy:
- You bought a new car. When you buy a new car, you’ll need auto insurance, but you might want to change coverage levels and carriers. New vehicles often deserve more protection because they’re more expensive to fix due to using newer parts or being more complex builds. If you must shop for new coverage anyway, you may as well look into getting quotes from other insurance companies.
- Your car’s value has changed. Each year, your vehicle depreciates and loses value. There’s no reason to keep a ten-year-old car insured for the same amount as when it was new. Conversely, if you’ve made expensive additions to your vehicle over time, such as upgrading the sound system or tires, you’ll want to increase your insurance amount to cover the changes.
- You’ve moved or changed where you store your car. Moving can change car insurance in many ways. You might be moving to a new state with different requirements, an urban area where accidents are more likely, or you might be able to get a bundle deal by insuring your vehicle with your homeowner’s policy. Even where you store your car — such as moving from street parking to a garage — can affect insurance rates, so it is worth shopping around whenever this happens.
- You’re adding drivers to your policy. A common reason people look for new auto insurance plans is when they must add a new driver added to their policy. For example, you may be a parent adding your now driving-age teenager to your insurance. Shopping around can help you find a good deal.
- Your driving habits have changed. If you’re now working from home, you may be eligible for cheaper auto insurance if you now drive significantly less. On the other hand, if you’re driving more, you might benefit from added coverage due to increasing your risk of collision from being on the road more.
- You cleaned up your driving record. Your old tickets and adverse driving history typically drops off your record after about three years. If you’ve cleaned up your driving history or taken a defensive driving class to remove points, it’s time to shop for a better insurance deal or update your current policy to get a discount.
Reasons to Not Change Car Insurance
Changing car insurance is an excellent idea if the timing is right. The following situations can make it a bad idea to switch policies.
- Your policy term is not over. Future insurers look at changing carriers midterm as a negative, which can harm your chance of getting insurance. You might also have to pay cancellation fees for terminating early.
- You have an open at-fault claim. If you currently have an open at-fault claim, you can change insurers, but it can make the process much more complicated and slow it down.
- You have bundled or loyalty discounts. If you have a bundled discount, you’ll lose that when you change auto insurance. Any policy tied to the bundle will probably go up in price.
How to Switch Car Insurance
When you’re ready to change your car insurance policy, use the following steps.
1. Determine What Coverage Changes You Need
Go into the process knowing what coverage you have and what you want or need. Consider the following:
Should you change your deductible?
Your deductible is the amount you pay before your insurance starts paying its portion of covered expenses. Usually, a high deductible means lower monthly payments, but there are other reasons to change it. Consider your driving record, your odds of getting in an accident, and your vehicle’s value. Each one of these factors might play into your deductible decision.
Should you add or remove full coverage?
Full coverage is a term used to describe auto insurance with several critical types of coverage, such as collision and comprehensive. You might not need each type when you look at them individually, especially when you consider your driving record and your car’s value.
Should you add or remove other optional coverages?
Suppose you have optional insurance coverages and decide it’s not worth paying for those extras, especially if you do not use them. Conversely, you might want to add protection, especially if you’ve purchased a new vehicle.
Common optional coverages include collision, uninsured and underinsured motorist coverage, and personal injury protection (PIP). In some states, uninsured/underinsured motorist coverage and PIP insurance is required. All of these coverages help protect you if you’re in an accident with another vehicle and they do not have enough or any insurance to pay for damages.
No states require collision insurance, which pays for damages to your vehicle from incidents like hitting an object or flipping the car. However, those with car loans may be required to purchase collision insurance so the lender can protect their asset. That means you cannot opt out of it until you repay the loan.
Do you drive infrequently enough for a low-mileage plan?
If you do not drive your car very often, you may be eligible for a low mileage discount, a pay-per-mile policy, or you could change to a non-drivers policy completely. Most low mileage discounts are for people who drive under 7,500 miles a year, but some insurance companies will give you a discount if you drive less than the national average, which was 13,476 miles as of May 2022. If you do not drive much, this is worth exploring.
2. Compare Your Options
Shopping around and comparing quotes will help you get the best deal on car insurance. But the quote is not the only thing to review. Compare the deductibles, the types of coverage offered, how much coverage you’re getting, and if there are any exclusions to the policy. Finally, ask about discounts. All of these things together will help you truly compare each insurance offering. However, keep in mind that a quote is not a promise: though quotes often reflect a good estimate of what you can expect to pay for your insurance rates, your actual rate may be slightly different upon application.
3. Time Your Policy Change
Timing a change in auto insurance can be tricky. You usually do not want to cancel insurance before it terminates. But you do not want to have a coverage gap in your coverage, either. The best approach is to ensure your new policy begins on the day your old policy ends. Having two auto insurance policies is legal, but you do not want to do it for long because it can get complicated if there’s a claim you must file.
When Can You Switch Auto Insurance Policies?
You can change auto insurance policies at any time, but some will charge a cancellation fee if you terminate early. One thing to keep in mind is that if you prepay your insurance, you might not get any of it refunded with early termination. Your best bet is to time your insurance change with the end of your existing policy or renewal time.
Changing Insurers With Open Claims
Nothing prohibits you from changing insurance carriers, even if you have an open claim. The most important thing to remember is if you change insurance with an open claim, that claim will still be handled by your old insurance, not the new company. Whether you were at fault or not, you’ll have to abide by the policy you signed with the insurance company you had on the day of the accident.
4. Activate Your New Policy
Typically, your new insurance policy becomes active on the day you sign the policy and pay the premium, but you can schedule an effective date if that works best. You’ll want proof of insurance immediately, which may be provided instantly if your insurer has a mobile app. You may also be able to print out a copy of your insurance card while you wait for your official card to arrive in the mail.
5. Cancel Your Old Policy
To cancel an auto insurance policy, speak with your insurer’s customer care representative to let them know you’re canceling, or you can mail in a cancellation request.
However, do not stop paying your premiums and let your policy expire without giving your insurer an official notice. Having your insurance canceled due to non-payment goes on your credit record and can prevent you from getting insurance in the future.
6. Alert Your Car Loan or Lease Lender
You must tell your auto lender that you’ve changed your auto insurance so they can ensure you are maintaining the minimum required coverage for the vehicle. Usually, your lender or the lease company is listed on the insurance policy, and the insurer will inform them of the switch, but it’s a good idea to make sure they know on your own.
How to Switch the Insured Car
If you like the level of insurance you have and the insurer, but you’re getting a new vehicle, you can change the vehicle on your policy in most cases. The first step is to call your insurance carrier and let them know you’re getting a new car and want the same coverage. They’ll check to see if this is possible. If you have a loan on the new vehicle but did not on the old one, your lender might have some additional insurance requirements, which would change your policy.
if you’re purchasing a newer vehicle or a more expensive model than your last one, you can expect your rates to go up a bit – even if it’s precisely the same coverage. If the vehicle has a higher value, it costs more to insure.
Important Considerations When Changing Your Car Insurance
Do Not Let Your Coverage Lapse
You want to smoothly transition from one auto insurance policy to the next without a coverage gap. If you’re uninsured even for a day, there can be problems. The best plan is to have your new policy start the same day your old policy expires.
In most states, you do not just stand the risk of significant losses if you’re in an accident when uninsured, you can also be in legal trouble. In states where drivers must be insured, you cannot legally get behind the wheel and drive without insurance.
Make Sure You Meet Your State’s Minimum Requirements
Each state has different minimum requirements for auto insurance. If you’re moving to another state, check what the new state requires and make sure you arrange to have insurance that meets the minimum requirements.
Common types of insurance that are required legally include bodily injury liability, property damage liability, personal injury protection, and uninsured/underinsured motorist. However, it should be noted that many drivers carry more than the required amount of coverage to better reflect their vehicle’s value and their driving habits.
Check For New Insurance Discounts
There are auto insurance discounts for many situations, and your new insurer may even offer one for being a new customer. Some standard discounts are based on good driving, bundling other insurances, student discounts, paying early or in full, loyalty, having safety equipment, and driving low miles. Each insurance company offers different discounts, so it pays to ask what discounts might apply to you when considering changing auto insurance.