8 Mistakes to Avoid When Switching Car Insurance Companies

Yes, auto insurance is one of the biggest expenses that come with owning a vehicle. On the other hand, if you ever need to file a claim, owning an auto insurance policy can save you a lot more than it costs.

There are all kinds of reasons to cancel or switch your car insurance as well. You want to shop for a cheaper car insurance policy, a different level of coverage or better service. You’re moving to another state. You sold your car. Your marital status has changed. There’s also a right way do it. Not knowing it can cost you money or even put you on the wrong side of the law.

How to Switch Car Insurance?

There are 3 steps you should take when switching your car insurance.

First, it is always smart to shop around and compare quotes before settling on a new insurance carrier.

Second, call your current insurance company to see if they are willing to price match the other quotes you received. If they are unable, you can schedule to cancel your policy and ask for refund.

Third, remember to cover the gap between your old and new policy to avoid liability if an accident were to occur.

If you need auto insurance sample cancellation letter to help you prepare for the refund process, go to Insurance – Sample Cancellation Letter.

Can I Switch Car Insurance At Any time?

Yes. You can cancel or switch your car insurance policy whenever you want. You don’t have to wait for the expiration date or a renewal notice. Most insurance policies do require that you give them notice of your intent to cancel.

Every state has different laws about car insurance cancelation. Most of them are an effort to crack down on the growing number of uninsured drivers.  For instance, many states require that your car insurance company notify them when you cancel your policy. Your state may also require confirmation from your new insurer before you’re allowed to cancel your old policy. Or your state laws may require that you inform the DMV of cancelation. Check their website or consult our State Guides to Car Insurance Coverage in the Auto Insurance section of this website.

Depending on your car insurance carrier, you may be charged a cancelation penalty. Call your agent and ask before you cancel so you can weigh the cost against the advantage of switching, or at least delay the decision.

What Not To Do When Switching Car Insurance Companies

If you’ve decided it’s time to switching car insurance companies, avoid making the following mistakes:

1. Comparing apples to oranges.

Don’t make the mistake of automatically going for the cheapest policy. Compare policies thoroughly including types of coverage, benefits, coverage amounts, deductibles and so forth. If you don’t compare policies point-to-point, you could end up having a policy that costs less, but also covers less.

2. Failing to shop around

Making a couple of phone calls based on brand recognition alone won’t necessarily get you the best deal. Instead, do a search online using a comparison tool. The comparison engine will walk you through and, based on things like where you live, your age, recent accident history and credit rating, give you your top options to consider. Then, you can compare costs and dive deeper from there.

3. Getting minimum coverage because it’s cheaper.

Don’t underinsure your car just because it’s a little cheaper, or go for a huge deductible to save when you really can’t afford to pay it in the event of an accident. Weigh a policy’s limitations versus its benefits. An insurance broker or representative can help you understand your options, and their consequences, more thoroughly.

4. Not including any discounts you may qualify for.

Be sure to ask about available discounts when you are shopping for a new policy. Companies offer discounts based on a variety of situations including the following:

• Driving record: If you haven’t filed any auto insurance claims or paid any moving violation tickets in the past three to five years, you will pay less.
• Demographics: Certain demographic categories might earn you a discount. These include: student, senior, military, homeowner and low income.
• Bundled coverage: Companies include discounts when you purchase more than one kind of insurance from them, such as homeowners as well as auto, or if you insure more than one vehicle.
• Memberships: Discounts are often available through memberships such as emergency roadside assistance, team, employer, trade group, and club.
• Auto-based: Buying coverage for an electric, hybrid or other type of green auto can earn a discount. You can also pay less if your car is less than three years old.
• Safety and anti-theft features: Anti-lock breaks, alarms, tracking systems, passive restraint systems, blind spot detection and lane departure warning systems.
• Administrative: Discounts are usually available when you pay for a policy up front rather than monthly, make automatic payments or opt for paperless billing.

Learn more about saving on auto insurance.

5. Keeping your current insurance agent or company in the dark.

Let your current provider know you are shopping around. Give them the opportunity to work with you and perhaps even offer you new benefits.

6. Not cancelling your old policy.

Don’t assume that just because you quit sending payments in you’ll be dropped. If you haven’t formally cancelled, it could be renewed automatically or the company may continue to take money out of your account if you have auto-pay.

7. Failing to be continuously covered.

Be sure you don’t cancel your old policy until you have a new one in place. Even just a few days of being on the road without insurance opens you up to the risk of not being covered when you’re in an accident, or getting stopped for a violation and not having proof of insurance.

8. Not getting a refund if it’s due to you.

If you cancel your old policy for which you paid up front, be sure to get the refund you are entitle to for the portion you’re not using. If you aren’t automatically given the refund, follow up with a phone call to make sure you get it.

To get started on a search for a better deal with auto insurance, use our online quote tool and start comparing and switching car insurance.