Breaking up, it turns out, isn’t so hard to do. If you want to know how to switch car insurance companies we’ve got good news. It isn’t that difficult – so long as you steer clear of a few pitfalls.
Americans don’t switch insurance as they should. Survey data from 2015 suggests that drivers on average stay with the same company for 12 years This means they could be missing out on the savings that come from shopping around.
So, if you’re left wondering why your insurance went up, or just feel like you could be getting a better deal elsewhere, here are a few things to keep in mind so you can make a clean break and switch car insurance companies successfully.
1. How to switch car insurance companies
Generally, the way to switch car insurance companies is to buy your new policy first, and then send written notice to the company you will be parting ways with.
This written notice should set out when the effective date of the cancellation will be, and mention who you are switching to.
This might seem strange but, in some states, if you cancel your car insurance without letting the company know you are switching providers, they have to notify the state that you are uninsured.
Mostly it’s that easy but here are 8 things you should keep in mind before you switch your car insurance.
2. You can switch at any time
You are allowed to switch car insurance providers at any time. Car insurance isn’t like a cell phone plan. It’s not a contract that you are legally bound to see out for the duration.
The best time to switch is when you are getting towards the end of the coverage period. But that doesn’t mean you can only switch before your policy is going to be renewed. Strike the right balance between giving yourself enough time to shop around for a good deal and minimizing possible cancellation costs by switching providers too early into your insurance.
It might also be worth looking into switching if there is any big change in your situation. If you bought a new car, or a second car, or moved house, this could affect your rate and another insurance carrier might be able to get you a better deal.
3. There could be a fee
Insurance companies have the right to retain unearned premiums, however they can’t take any more money from you. However they could take a percentage of the unspent premiums back in the form of a cancellation fee.
Make sure you check with your carrier’s specific policy – particularly if you are a long way from your renewal date. Generally speaking the further out from that you are the higher any potential fees will be.
After all, if you are switching car insurance companies to save on premiums, you don’t want to lose money on cancellation fees.
4. Get your new policy first
If you are going to switch car insurance providers buy your new policy first. This is really important.
If your insurance current insurance ends before the new policy kicks in, the quote you had may no longer be valid. Why? Because without your old insurance you would be classed as an uninsured driver.
Insurance companies look at your history and prefer drivers with a continuous insurance record. By ditching your old policy too early, you have broken your insurance streak. You do not want to have a lapse in coverage.
This could mean that the quote you thought you had with your new insurer no longer applies, and any new quote could be significantly higher.
5. Make sure your old policy is done
Even though you have to buy your new policy first, you don’t want to be left paying for two policies.
Confirm that your old insurer has received and is acting on your notice of cancellation. Keep tabs on your bank records to make sure the payments have stopped.
6. Don’t stop paying
This matters because most policies will automatically renew, meaning if you don’t make sure, your old policy premiums could continue.
It probably goes without saying, but don’t just stop paying your old policy. Your insurance could be stopped for non-payment when your new policy hasn’t started yet. Again, you would then be without coverage and not legally allowed to drive.
Non-payment of premiums also has the potential to hurt your credit score, which in turn can impact your car insurance premiums.
7. Remember your other insurance
If you have other types of insurance, such as homeowners, with the company you are leaving work out how this will impact you. If you are enjoying any discounts by getting a home and auto insurance bundle with the same company, you could lose this if you switch one and not the other.
8. How to shop for new insurance
There are lots of options out there, but shopping around really will help you save money. Even when it isn’t clear which carriers would be best for your situation, stick with it – you could save yourself hundreds of dollars per year.
The Cover app is all about making this process a whole lot easier. Just by answering a few simple questions on the app we can match you up with an insurer that suits your needs.
We’ll find you a competitive quote in a matter of minutes, compared to the hours you might have to spend doing your own research.
9. How to change your insurance when moving
Even if you’re moving to a different city within the same state, you will still see a change in your premium.
For example, if you were living in an urban area and are moving to a rural area, your rates could decrease. Insurers also look at the crime rate in your area. Living in an area with a higher risk of car theft will increase your premium.
You can take this time to compare rates offered in your new location to get the best deal.
If you’re moving to a new state, your policy will most likely change after you relocate even if you stay with your current insurer. This is because auto insurance laws vary across states.
For example, if you’re moving to a no-fault state, you’ll be required to purchase Personal Injury Protection (PIP) as an add-on to your policy. Make sure you talk to an agent so you understand the different insurance coverages you’ll need in your new location.
Moving states gives you an opportunity to shop around for new insurance since your current insurer might not operate in your new location. Not only that, you can use this time to figure out with these new coverages which insurance company will give you the best rate.
10. Deciding on the right coverage levels
When you switch providers it’s a great time to reassess what coverage you need. Think about whether have the right level of the different types of car insurance.
If your car is getting older do you still need to pay for full coverage vs liability only? Are you covered in case of a collision with an uninsured motorist? Do you have the right level of liability coverage?
Auto insurance doesn’t have to be confusing. Let the Cover do the work for you including finding the appropriate levels of car insurance for you.