Major life changes, such as getting married, buying a new car, or even moving to a new state, affect your auto insurance policy premium rates.
If your car insurance needs have changed, you may want to start shopping for a new policy to save money. In this article, we’ll explain how to switch car insurance in five easy steps and help you figure out when it’s best to make the switch.
For recommendations from service providers, we invite you to consult our opinions on the best car insurance.
How to change car insurance
Changing car insurance is not that different from changing other insurance policies. You have to shop around, evaluate the benefits of coverage, buy the best policy, and cancel your previous insurance. Remember to call your company and speak to an agent to find out if they have cancellation fees.
From comprehensive coverage – liability, property and casualty, and collision – to medical payments and gap coverage, understanding the different types of auto insurance coverage is an essential first step. If you need a refresher on which type of cover to choose, our guide to how to get car insurance has everything you need to know.
When you’re ready to switch to a new strategy, here’s what to do:
1. Get quotes from multiple vendors
The first step when changing car insurance companies is to shop around. Get car insurance quotes from at least three companies and compare coverage options, deductibles and premiums.
Drivers who need an affordable policy can get better rates from the companies featured in Money’s best cheap car insurance article. You may also want to consider providers that offer auto insurance discounts that apply to you and the vehicle you drive. For example, Farmers Insurance offers discounts for essential workers and veterans and Nationwide offers discounts for cars with anti-theft devices.
Similarly, car owners with poor credit can turn to telematics insurance companies, which offer bad credit car insurance by prioritizing a safe driving record over creditworthiness.
2. Evaluate Reputation and Ease of Use
The next step is to find out more about the companies. Read customer reviews and ask friends and family about their experience with their current car insurance provider. You want new insurance coverage that makes it easier to manage your policy, file claims, track repairs and get reimbursed.
If you want to go the extra mile, check out the company’s financial rating from agencies such as AM Best – this will give you a good idea of the provider’s financial ability to pay future claims.
Bonus services include car insurance apps, insurance discounts, multiple payment options, and round-the-clock assistance with insurance claims.
3. Avoid a gap in coverage
Now that you have a list of companies and are ready to buy the new plan, there is only one thing left to do before switching insurers: protect yourself against a break in coverage. A continued lack of coverage not only leaves you unprotected, but may also cause insurers to raise future rates, as some insurance companies consider you an uninsured driver for that period.
You can avoid this by ensuring that the activation date of your new policy coincides with the last active date of your current car insurance. If you change companies in the middle of the insurance period, you can avoid the coverage gap by scheduling when you want the coverage to start.
4. Request a new policy
Once you know which company and coverage is best for you, it’s time to buy a new plan.
Gather the following information to request a new policy:
- Identity cards and social security number
- Driving license
- bank account information
- Vehicle information – registration, make, model, VIN number
- Personal information and proof of residence of secondary drivers
5. Cancel your old policy
You may need to speak to an agent or submit a formal written request to cancel your old policy. We recommend calling your current insurance company so an agent can walk you through the cancellation process. If you paid premiums in advance, be sure to ask about insurance refunds and any cancellation fees or penalties.
Once the cancellation is finalized, you should receive written confirmation from the insurer. Finally, check that any automatic payment or bill payment service is also cancelled.
When to change auto insurance
Consider switching auto insurance if you:
Move to a new zip code, city or state
Car insurance is regulated differently in each state, which means you’ll need to purchase a new policy once you arrive. Keep your old policy active until you arrive at the new location, as it is illegal to cross state lines uninsured.
As a married couple, a new car insurance policy translates to lower rates. Couples can take advantage of these savings even more with loyalty discounts, multi-car discounts, and bundles for renters and homeowners insurance.
Buy a new vehicle or add an additional car to the policy
An additional car on your policy will most likely increase insurance rates. New vehicles, in particular, will increase premiums, as they will be more valuable than your previous car.
See a significant change in your credit score
Your credit score can have a direct impact on your car insurance rates. If your credit score has increased significantly since you took out the policy, you might see a reduction in your premium with a new insurer.
See an increase in your car insurance premium
Your current insurer will not increase rates during the term of the policy, but it could happen at renewal. Although the typical culprits are major life changes, sometimes car insurance rates increase due to factors beyond your control, such as an increase in reckless driving.
Add a teen driver to your policy
Insuring teenage drivers is expensive as they are considered high risk by car insurance companies. Offers such as “student discount vouchers” as well as multi-vehicle, mileage and groupage discounts can help offset the cost.
You want to increase or decrease coverage
There are situations where the current policy coverage no longer meets your insurance needs. For example, a lease buyout – dealerships typically require higher coverage when leasing a car, but the same policy may be too high for an auto loan.
Are close to policy renewal
Auto insurance policy terms expire every six months or once a year. To ensure it is still suitable for your lifestyle and budget, it is advisable to review the policy before renewing. Canceling close to renewal means you don’t have to face penalties.
Frequently Asked Questions
How to change car insurance for a new car?
Insurance companies offer a grace period of 7 to 30 days, during which they will cover your new vehicle while you arrange to update the current policy or purchase a new one entirely.
You can transfer your current coverage to the new vehicle or purchase a new policy entirely. No matter what you choose to do, the car dealership will allow you to drive the vehicle off the lot as long as you provide proof of insurance.
Can I change auto insurance at any time?
Yes, you can switch auto insurance at any time, near policy renewal or even mid-term, and receive a refund on any premium payments made up front. However, if you have an ongoing claim, it may be best to wait for it to be settled, as the previous provider will still handle the claim.
If your current provider charges cancellation fees or refuses to refund unused premiums, we recommend that you calculate whether the savings from a new policy outweigh the cost of premature cancellation.
How do I cancel my auto insurance?
To cancel your auto insurance coverage, contact your insurance agent. You may be able to do this over the phone, but some providers require a cancellation document by mail or fax with your signature. We recommend that you have the cancellation confirmed in writing and verify that automatic payments are disabled.
How to change auto insurance in another state
Switch to a new provider once you’re settled in your new state, as costs vary by state, location, and travel distance. On the other hand, if you are happy with your current provider, call your agent to find out how to transfer the policy.
Remember to keep the current policy active until you reach your new home, as it is illegal to cross state lines without insurance.