Car insurance is necessary for negating your financial risk when you get into an accident. However, car insurance premiums can be expensive. Luckily, it often pays off to switch car insurance companies. You can usually get a better deal on rates if you shop around, especially if your coverage needs have changed. Find out how to switch car insurance carriers and the common pitfalls to avoid.
How to Switch Car Insurance: 10 Steps
Switching your car insurance can seem like a challenge, but if you follow this step-by-step guide, you may just end up with a lower premium and better coverage.
1. Think About Why You Want to Switch
While you have the potential to save a lot of money from switching car insurance companies, it's important to consider all of the reasons why you are searching for a new policy. Is your goal to save money? Are you interested in getting different coverage that better suits your current situation? Maybe you want to switch for both reasons. Pinpointing why you want a new policy will help you find car insurance that better meets your needs.
2. Get a Variety of Quotes
When you begin your search for a new car insurance company, be sure to get different quotes from a wide variety of providers. Each company may offer different forms of coverage for different prices. It may take a little extra effort, but getting many quotes will give you more opportunities to find a policy with lower premiums that also meets your specific needs.
3. Compare Quotes
Once you have gathered all of your car insurance quotes, it is time to sit down and compare them. Make sure you take not only the price into consideration, but also the flexibility of the policy, how well the policy meets your needs, their customer ratings, and more. This will also help you get a better idea of what rates you can expect with your current life circumstances, car type, driving history, and credit history.
4. Talk to Your Current Car Insurance Company
One of the best times to negotiate rates and terms with your current car insurance company is when you're shopping around for other quotes. Sometimes a company will be willing to lower your premium if they know that you are getting ready to leave. Contact your current insurance carrier's representative and let them know that you are looking for a better price. They may be able to offer you a discount that will make staying with the company worth your while.
5. Understand the Consequences of Switching
Switching car insurance policies will usually save you money, but there can be consequences to getting a new policy. Terminating your current car insurance policy mid-year, before the policy term ends, can result in cancellation fees. If your current car insurance company charges a fee, do the math to ensure that your cost savings by switching to a new policy won't be negated. If you find that you won't save, you might want to consider waiting until your current policy term ends.
6. Do Your Research
While you may favor one insurance company in particular, make sure that you do your research before committing to one particular policy. Some car insurance companies may seem to offer better premiums initially, but if you do a little digging, you may find that they're not the right fit for you. Look for other people's experiences with the company and see what challenges they've faced. Be on the lookout for customer reviews that detail hidden fees, random rate hikes, poor customer service, or arduous claims processes. The Better Business Bureau can be a great resource for this type of research.
7. Ensure You Don't Have a Coverage Gap
If you own a car, you are required to have car insurance. When you cancel your current insurance policy, make sure that you immediately pick up another car insurance policy. Having a gap in car insurance coverage can cause you to be fined by the state or result in higher premiums from insurance companies that notice your gap in coverage. Negotiate with your new car insurance company to ensure that your new policy begins as soon as your old one ends.
8. Double Check Your Old Policy
Once you have canceled your old insurance policy and have your new one, confirm that your old policy was actually terminated. Even if you aren't receiving bills for your insurance premiums, this doesn't necessarily mean that your policy has been canceled. If you fail to confirm that your policy has been canceled, you may be sent to collections, which can negatively impact your credit score. Contact your old insurance company and let them know that you are terminating your policy. Ask that they send you a letter confirming termination. This will allow you to have a written record of cancellation if you find a negative mark on your credit score.
9. Get Your New Insurance Cards
Once you secure your new car insurance policy, make sure you have the proper documentation to show your coverage. Print out your new insurance ID cards, take your old ones out of your vehicle, and put in the new cards. You are required to have this documentation if you are pulled over by the police or get into a car accident. If you forget to print out new documentation, many car insurance companies allow you to access your documentation through a smart phone.
10. Stay Safe on the Road
While you should always aim to drive safely, it is especially important to avoid getting into any trouble when you first switch car insurance companies. Many car insurance company policies reserve the right to waive your coverage if you have any issues within the first three months of signing on. Some of the common pitfalls you should try to avoid include getting speeding tickets, letting drivers that aren't on your policy drive your vehicle, and getting into accidents.
When Should You Switch Car Insurance Companies?
If you plan to switch your car insurance, you may be wondering when would be a good time to shop for a new insurance company. While you can switch car insurance companies at any time, there are some ideal times when you should consider switching. Here are some of the best times to make the move.
When It's Time to Renew Your Policy
One of the ideal times to switch car insurance companies is when your current policy is up for renewal. This provides the perfect opportunity to evaluate your current insurance company and compare them to similar policies in terms of price, coverage, customer service, and more. By getting a new car insurance company when your current policy is ending, you will avoid the cancellation fees that may come with switching your insurance mid-year. If you are considering canceling your current policy and have a quote in hand for another company's policy, call your current car insurance provider and tell them that you're considering switching. They may be willing to work with you on your policy terms and give you a lower premium.
When Premiums Rise
Let's face it, no one likes rising car insurance premiums. While it's natural to expect car insurance premiums to rise if you've recently been in an accident, random rate hikes can be demoralizing. Some insurance companies will do this to gauge how tolerant you are of rising prices. When this happens, it's a sign that you should search for another car insurance company. You will consistently need to resist against these random car insurance premium rises, meaning that you will be better off finding a cheaper policy.
When Your Life Changes
Changes in your life circumstances can impact your insurance premiums. Some of these life events include:
- Buying a new car
- Adding a new driver to your policy
- Moving to a different state
- Having a change in marital status
Discuss these life changes with your current car insurance company. See how these new circumstances will affect your rate. If the rate doesn't go down, it might be a good time to see what other car insurance companies have to offer.
When the Company Isn't Serving You
There are many ways that your car insurance company can disappoint you. You may have a negative experience with your agent. You may have to undergo arduous process after arduous process when filing a claim. Regardless of the exact reason, if your current car insurance company isn't meeting your expectations or needs, it can be a great indicator that it's time to search for a new partner.
Can You Change Car Insurance Mid-Year?
When you initially sign up for car insurance, your policy will include a term of service. These terms usually range anywhere from six months to a year. But can you change your car insurance mid-year, before your policy term is over? The good news: You can.
However, you will need to avoid some common pitfalls. Many car insurance companies will charge cancellation fees for changing car insurance mid-policy. Research your current car insurance company's specific guidelines to be prepared for this cost. Some car insurance companies will also charge hidden fees on certain policies, so perform in-depth research on your new company to anticipate these costs. It's also important to ensure that you do not have a gap in your car insurance coverage when switching companies mid-year.
Does Switching Car Insurance Affect Credit?
Car insurance rates and your credit score are related. If you're considering switching your car insurance, the insurance companies will pull your credit report to help calculate your insurance quote. Data shows that the quality of a credit score correlates with your likelihood to get into an accident, so your credit score is of great interest to car insurance companies.
Hard credit checks can temporarily reduce your credit score. This is relatively normal, but performing hard credit checks too frequently can permanently harm your score. However, car insurance companies perform a soft credit check, a less detailed type of credit report that does not impact your score.
If you live in California, Hawaii, or Massachusetts, credit score and car insurance rates are unrelated. Pulling credit scores for these purposes is banned by law in these states.