Do you want to switch car insurance providers but need help figuring out where to start? You may wish to change your auto insurer for many reasons, and the process is pretty standard. You may swap insurance companies to obtain better coverage or lower your premiums. Comparing multiple providers is essential to choosing the best car insurance for your needs.
You'll also have to understand your existing policy's cancellation rights and liabilities, including any associated fines or penalties, and switch before your current policy expires.
In this article, you'll learn everything you need to know about changing car insurance companies, including why you may want to and tips to make the process as efficient as possible.
Why Switch Car Insurance Companies?
There are many reasons you may decide to switch car insurance providers, including:
- You're moving to a different state, and your current auto insurance company is unavailable in your new location.
- You qualify for better rates with a different car insurance company.
- You can get more discounts with another insurer.
- You can get better coverage with a new company than with your current provider.
- You bought a new car, and your current company is no longer the best insurer for you.
- You recently celebrated a milestone birthday, which often leads to reduced rates because of more driver experience.
- You need to add a teen driver to your policy.
- You're not satisfied with your current provider's service.
Car insurance rates vary depending on your age, gender, credit score, driving history, and vehicle. Any changes to your policy or driving record can significantly affect your car insurance rates, including getting a new vehicle, adding a teen driver, or receiving a traffic violation.
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Additionally, insurance companies may increase your rates at renewal for no apparent reason. Therefore, it's usually a good idea to compare the prices of a few different companies before your renewal date. Reviewing your car insurance each year ensures you have the best option at the most affordable price.
How to Compare Car Insurance Rates
Before deciding to switch insurers, compare the car insurance rates of other companies against what you currently pay. When obtaining quotes for car insurance, have all the necessary information readily available to make getting prices much faster and easier.
Almost every insurance company will want the same information to provide you with an accurate price for your policy. Before you contact insurance companies, gather the following information:
Vehicle Information
The insurance provider will want your vehicle's identification number, often called the VIN. They will also need the mileage and ownership status of the vehicle. Keep in mind your current coverage and the type you want from the new company. You can find this information on the declarations page of your auto insurance policy.
Current Address
Your address is an essential part of receiving an insurance quote. The insurance company wants to know your home location to determine your risk. They'll consider the vehicle's overnight parking location, the availability of a garage or covered parking, and the theft rate in your zip code. The insurance carrier will also review accident rates in your city.
Your insurance policy quote will include a price based on risk factors involving:
- Theft
- Extreme weather damage
- Vandalism
- Exposure to traffic
- Accident likeliness based on traffic conditions
The insurance company will also use your address to determine the minimum requirements set by your state. Minimum car insurance coverage varies among states, and insufficient coverage can lead to expensive fines. According to the Consumer Federation of America, these fines can be as high as $5,000.
Driving Record
Insurance companies will inquire about your driving history to give you the most accurate price. A good driving record will get you better insurance rates, but even if your record isn't ideal, be honest with the insurance company.
Otherwise, you risk your insurer not covering your claim if you are in an accident. Tell the insurer about all previous car accidents and tickets. The insurance company may also ask about any car insurance claims you have made for theft, weather damage, and at-fault or not-at-fault accidents.
The best way to get a copy of your driving record is from the Department of Motor Vehicles. Depending on your state, you may have to pay a small fee, but the document will be accurate and provide all your driving information from at least the last three years.
Personal Information
Your potential new car insurance company will need information on all covered drivers. This includes everyone's legal names, ages, driver's license numbers, vehicles, and driving histories. The insurance company will use this information to calculate risk when creating your quote.
Car insurance companies use age, gender, marital status, and credit score to generate your quote. This is why specific life changes mean it's a good time to shop around. Teen drivers should obtain quotes with each year of driving experience they gain.
If you get married or divorced, you may lose eligibility for specific discounts, making it essential to evaluate available insurance products.
Previous or Current Insurance Provider Information
Most insurance companies request information about your previous provider. While they may not care who you used for your past insurance or how much you paid, they may give you a higher rate if you haven't had continuous coverage.
Insurance companies consider drivers with lapses in their insurance history to be riskier, so don't cancel your old policy until you have a new one.
How to Switch Car Insurance Companies
If you find a lower rate, you may change car insurance companies. When switching, follow these steps:
1. Time the Switch Carefully
The first step in changing car insurance is to time it properly. Switching car insurance providers immediately before your current policy renews is best. You want to avoid any gaps in coverage, so don't let your policy expire. If you do, it could cost you more than you think on your monthly premium.
Luckily, most insurance companies have refund policies allowing you to get back any prepaid premiums for months they no longer cover. You'll want to contact your insurance provider to see if you're eligible for a refund when you terminate your policy. Make sure that you cancel your policy correctly to qualify.
2. Obtain Proof of Insurance
Once you pay the required deposit and first-month premium, you can request proof of insurance from your new auto insurance company. Ensure you have this document before canceling your previous car insurance policy.
Double-check that the new provider has the correct information and proper coverage. Print out a copy of the proof of insurance and always keep it in your vehicle.
3. Cancel Your Previous Policy
You can officially cancel your previous policy once the new one is active. Contact customer service to inform them you want to terminate your policy. Ask for documentation that shows you canceled the policy.
Just because you've stopped paying your monthly premium doesn't necessarily mean the insurer has ended your policy. Get a written cancellation notice from your insurance agent so you have proof.
4. Inform Your Lender of Your New Policy
You'll want to notify your lender of the new insurance policy if you have an auto loan or lease the vehicle. Lenders and leaseholders require the vehicle to be insured at all times and may purchase their own policy at your expense if they don't have proof of insurance on record.
Make sure you also swap out your previous insurance card with the new one in your vehicle. Most states require you always to carry proof of insurance, so you want to ensure you have the correct copy. Quick access to this information can also make it easier to file a claim if you're in an accident.
When Not to Switch Insurance Companies
Switching car insurance companies may not always be the best decision. The following are a few situations in which it may not be a good idea to change providers:
- You have had a recent accident or ticket: If you were recently in an accident or got a ticket, it may not be the best time to change insurance providers. However, you may consider price-shopping a new policy if your current insurer increases your rates.
- You're eligible for a loyalty or bundle discount: Account for any loyalty or bundled discounts you're currently receiving before switching auto insurance providers. For example, you could pay more for your home or motorcycle coverage if you change your car insurance provider.
- You qualify for accident forgiveness: Some car insurance companies offer accident forgiveness, which forgives your first accident. Consider this when comparing the cost of a previous policy with a new one.
However, the great thing about price-shopping insurance providers is that you're not locked into a new policy just because you request a quote. You can compare your current auto policy with others and decide not to switch.
Tips for Switching Car Insurance
Consider the following tips before choosing a new auto insurance company:
Consider Your Coverage Options
You always want the right amount of coverage for your vehicle, driving style, and budget. If you don't have enough, you could end up with a large debt if you're in an accident where you're at fault.
On the same note, over-insuring yourself could cause financial strain each month when your premium is due because the more coverage you have, the more your monthly insurance bill will be.
Evaluate the Age of Your Vehicle
If you drive an older vehicle, you may need less insurance. Your insurance company will only pay out what your car is worth, so you may not need full coverage if it's worth less than $4,000. However, the more valuable your vehicle is, the more insurance coverage you'll want to have. Additionally, if you have an auto loan, your lender may require that you carry full coverage.
Adjust Your Deductible
You can adjust your deductible based on your budget to get cheaper rates. A deductible is the amount of money you'll have to pay out-of-pocket when filing a claim. Set a higher deductible to lower your monthly bill and reduce it if you can't afford a higher deductible.
However, remember you'll have to pay your deductible in full when filing a claim with your insurance company.
Contact Your Current Provider before Switching
Another option to lower auto insurance rates is contacting your current provider before switching. If you inform them you're in the market for a new policy, they may offer a deal to keep you as a customer.
You'll also want to ensure you don't have to pay a penalty or cancellation fee for terminating your insurance policy early. Most companies won't penalize you, but you should double-check before canceling to avoid surprises.
Compare Multiple Quotes
Shop around for quotes from different insurance companies to get the best possible rate. You may get cheaper prices and find the best coverage for your needs. When getting multiple quotes, prices may be similar, but the amount of coverage may vary. Make sure you're getting both the cost and coverage you need.
If your car insurance rates have increased or other life events have influenced your driver risk, it may be time to switch car insurance providers. Compare rates among different insurers to get the best ones. Then, pay for your new policy, get proof of insurance, and cancel your old one.
Steve Glass is a retired insurance professional with over 34 years of experience in the Property & Casualty insurance industry. Â Over the course of his career he led teams that handled Homeowners and Commercial property and casualty claims, Auto Medical claims, Auto Bodily Injury Claims, Catastrophe claims and Insurance Subrogation recovery efforts. He also has experience as an Insurance Subrogation Arbitrator.
