How to Switch Car Insurance the Right Way

How To Switch Car Insurance The Right Way

Many car owners switch auto insurance companies because they become aware of other providers offering better deals and better coverage, often with lower premiums. As a purchaser of an insurance policy, you have the option to change your provider literally at any time, as opposed to only changing at renewal time.

Shopping around for the lowest price on comparable policies may actually be a good habit to get into, even if you have already paid for the entire year’s worth of coverage. In cases like this, you may be able to obtain a pro-rated refund from your provider if you choose to cancel at midyear, for instance. Be advised that when you do switch providers, there may be a small cancellation fee that you could be obliged to pay, depending on what the policy is for that provider.

Why switch car insurance providers?

There are several reasons why you might want to switch providers for your insurance coverage. The main benefit, of course, would be to find a company that offers lower premiums so that you can save money on your insurance coverage. You may have signed up with the cheapest company in the business initially when you first got coverage, but that could have changed in the time since then.

The formulas used to establish insurance premiums changes fairly often, so it might well be that some other company can now offer you a better deal. There may also be some life circumstances that have changed since you first obtained insurance; for instance, you may have purchased a new vehicle or added someone else on your policy.

You may also want to switch providers because you’re unhappy with the service they provided when you made a claim on your policy. Then too, another company may offer some specific perks or benefits which appeal to you, and that’s the reason you’d want to switch.

Suffice it to say, there are a number of different reasons why you might want to switch insurance providers, and whatever your particular reason is, you should seek the provider which is most beneficial for your present circumstances.

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When to switch

The easiest time to switch insurance providers is just before your renewal comes up. Probably about a month before renewal time, you should begin researching other providers to find out which one might be more appealing to you. Even though renewal time is probably the best time to switch, you’re perfectly free to switch insurance providers at any time at all.

If one of the reasons mentioned above happens to be why you’re looking around, don’t let renewal time stand in the way of finding a better provider for your current situation.

Get new insurance first

You are much better off to arrange for a new insurance policy before dropping coverage with your old provider. This is because you can’t afford to have any gaps in coverage on your vehicle insurance. Of course, it would be a massive coincidence if you happened to be involved in an accident on the one or two days where you had no coverage, but that’s not the only reason a lapse could be dangerous.

Some states penalize registered vehicles that fail to show continuous coverage, and in some cases, these penalties are fairly severe. You might also have to pay extra when you obtain your new auto policy because you just went through a gap of several days. At any rate, auto insurers tend to look down on any gaps, and it will often affect the premiums which you’re forced to pay on any new policy.

How To Switch Car Insurance The Right Way

You don’t have to wait until renewal

It’s a common misconception that you can only switch insurance providers when your renewal time comes up. Nothing could be further from the truth. There are any number of circumstances that may have changed in your life since you originally purchased an insurance policy, and some of these changes may result in savings on your premiums.

If you have purchased a new vehicle or you have gotten married, this may have an impact on how much you pay monthly for your premiums. It’s definitely worth your while to shop around and see if you can obtain a better rate, regardless of how close it is to your renewal date.

While it’s possible you may have to pay a slight cancellation fee for switching at other times of the year, the savings that you realize from lower premiums will more than likely offset any cancellation fee. Do the research and see if it makes sense for you to switch to another provider, regardless of what time of year it happens to be.

Consider the downsides – is it worth it?

Before you make the switch to a new insurance provider, you should consider whether or not you are losing any discounts or other advantages that may have been offered by your original provider. If the cancellation fee amounts to something significant and would wind up offsetting any savings you gain with the new provider, then that would also invalidate your reason for switching in the first place

Cancel the old policy

It’s generally necessary to cancel your old insurance policy in writing so that your original provider is aware of the change. In some cases, your original provider will also ask for the policy number associated with your new provider and coverage, so that the state is aware that you will have continuous coverage on your vehicle.

Check for any refund from the old policy

Once you have confirmation from your old insurance company, you can be sure that your old policy is now void. That’s an important point because unless you’re sure of the cancellation, you could automatically be renewed and find yourself being billed for another month’s premium with your original provider.

When you cancel your policy with your old provider, you may actually be entitled to some kind of refund for the unused premiums, although they will likely subtract their own fees from this amount. At any rate, once the cancellation has been confirmed and you have received a refund, you’ll know that the old policy is completely null, and your coverage has now switched over to the new provider.

Final thoughts

Like most things in the life of an American adult, shopping around for the best combination of quality – coverage – and price for your auto insurance may be a wise choice. Even if you find yourself in the middle of your policy period, you still may be able to switch to a new provider and save a significant amount in the process.

Before you pull the plug on that old policy, however, be sure to thoroughly research new policies, review any rules that might impact the potential savings, and avoid any lapse in coverage to steer clear of costly penalties. Happy shopping!

Byron Johnson Blog Icon By: Byron Johnson