Switching car insurance companies is easy, and people do it all the time. However, it’s a good idea to talk with your current insurer and see if there are any cancellation fees. If you let your insurance agent know you want to cancel, they may also offer to search for extra discounts or give you a lower rate.
When you’re ready to start looking for new coverage, here’s what to do.
1. Shop Around
The first step to switching car insurance companies is to shop around to find a better rate. We recommend comparing rates from at least three providers. An easy way to do this is to use a quote comparison tool. This way, you only have to enter your information once to see many options.
When you’re shopping around, consider providers that have car insurance discounts applicable to you. For example, State Farm has a student discount of up to 25%, which is better than any other top provider’s student discount. Also, consider usage-based insurance or pay-per-mile programs if you want to save money according to your current driving habits.
Once you’ve identified a few favorite providers, research each company to learn about its customer service, claims experience and financial strength. We recommend looking at studies like the J.D. Power 2024 U.S. Insurance Shopping Study℠ and the J.D. Power 2024 U.S. Auto Insurance Study℠.
You can also check out online scores by the Better Business Bureau and the complaint index from the National Association of Insurance Commissioners. To assess a company’s financial strength (and likelihood of paying out claims, you can check out the financial ratings by AM Best.
2. Find the Best Policy for You
When switching car insurance, this is a good time to reassess the coverage you’ve already had (and how much of it you’ve had). Opting for less car insurance will always mean lower premiums — regardless of which company you choose. But it also means you’ll pay so much more out of pocket if you ever get into a car accident or become the victim of auto theft, car vandalism, a hit-and-run and more.
Full-coverage car insurance costs more than minimum, but it will better protect you from any unwanted medical bills or car repair costs after an auto-related incident. Full coverage includes at least liability insurance, collision coverage and comprehensive insurance. Many drivers also get uninsured motorist coverage (UM), and either personal injury protection (PIP) or medical payments coverage (MedPay). Depending on the state you live in, UM, PIP or MedPay may already be required.
If you have an auto loan or lease, remember to list your lender on your new policy. The lender is a loss payee, which means it gets paid first when your car is totaled if you still owe money. You’ll likely need to get full-coverage insurance, which includes at least collision coverage and comprehensive insurance, if you have an auto loan.
To know more about what types of car insurance work best for you, check out our guides on How Much Car Insurance You Need and Liability vs. Full Coverage.
3. Purchase Your New Policy Before Your Old One Expires
The next step is to purchase the new plan. If your current auto insurance policy is going to expire soon, schedule the new policy to begin at least one day before your current coverage expires.
Doing this will avoid a lapse in coverage. A gap of as little as one day can increase your car insurance rates in the future, since insurance companies consider you an uninsured driver for that time. It’s much better to have two car insurance policies for one day than none at all. If you’re switching companies in the middle of a policy period, simply schedule the new coverage to begin whenever you would like.
It’s also important to not have a lapse in coverage because if you get into an accident or you’re caught driving without it, you could face severe penalties that range from hefty fines to even jail time. Penalties largely depend on what state you live in and how many offenses you’ve committed on the road.
4. Cancel Your Previous Insurance
Once you have your new insurance coverage in place, it’s time to start the cancellation process for your old policy. If you have any open claims, be aware that your old company will still be responsible for investigating and closing out those claims.
Call your car insurance company and speak to an agent to cancel your coverage at least one day after your new policy begins. You can also schedule an effective cancellation date in advance so you don’t have to remember to call on that specific day. However, don’t just stop paying for your old car insurance policy without officially canceling it.
If you paid for your policy in full at the start of a period, you should get a refund for the unused portion. You might also get a small refund if you pay monthly.
5. Get Your Proof of Insurance
The next step is to get proof of your new insurance, which means printing out your insurance ID card or downloading an app to access it. Most states allow you to show a digital ID card if you get pulled over. However, make sure to save it locally for offline access so you can get to it whether or not you have cellular service.
6. Let Your Lender Know
Lastly, if you have a car loan or lease, you’ll need to inform the lender right away of your new insurance coverage. Your lender would have been listed on your old car insurance, which means your old company notifies your lender of the cancellation. You should have listed your lender on the new car insurance policy as well, but it’s also a good idea to call the lender to make sure it has all the details of your new coverage.
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