How to Switch Car Insurance Companies: Let’s Find Out!
TLTR: Have you ever wondered how to switch car insurance companies, and if it will ever affect your rates? In this article, we will cover three important issues: why you should switch, when to switch, and how to switch between insurance companies.
Do you want to switch auto insurance companies, but you don’t know if your insurer will allow it before your policy expires?
Switching car insurance companies isn’t off the table until your next renewal date—you can change insurers any time! It doesn’t hurt to keep your options open and look around for better offers and quotes.
A study by J.D. Power found that 46% of auto insurance customers sought to make changes to their insurance. Out of those, around 12% switched to another carrier, and 15% shopped for another carrier. If you’re one of those shoppers, you’re probably making these changes because you’re dissatisfied with current insurer, or you want to find better rates, or you’re moving to another state.
While it can sound a bit complicated, the process of switching car insurance companies is very straightforward. But before discussing the steps involved, it’s important to first understand why you might want to switch in the first place.
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When to Switch Car Insurance Companies
The answer to this question is completely up to you. You can switch car insurance any time you like. However, you may come across a few life situations where you cannot avoid making a change to your policy. Let’s take a look at some of them:
You’re Moving to A Different State
Different states have different laws and requirements for car insurance rates. And your preferred insurers may not be selling insurance in the state you’re moving to. Consider shopping around for a new provider well before you’ve settled down in your new home.
Agency Height’s insurance directory, for example, was designed to help insurance shoppers connect with local insurance agents with ease. From the directory, you’re able to search for the agent of your choice in your area and choose from multiple experts.
You’ve Just Bought a New Car
Buying a new car for your kids, spouse, or yourself is a great gift! But without insurance, your new car is a huge liability for you. Your current insurers will only cover the car you’ve listed at the time of purchasing the policy. That means your new car needs new coverage. Sometimes, you may find that other insurance companies offer better rates for the new car. During such situations, you may consider a new insurance company.
Experiencing Big Life Events
Getting married, turning 25 years old, getting a better job, and buying a house are major life events that can possibly lower your insurance rates by a huge margin. Insurance companies view a settled-down family person as a lower-risk driver than a single individual living on rent.
Your Insurance Company’s Customer Service is Horrendous
A car insurance company shouldn’t have to make you wait a week to respond to a claim you’ve filed. Customer care should be the #1 priority for any business. If your insurer isn’t giving it to you, it’s time to jump ship.
What’s the Best Reason to Switch Car Insurance Companies?
According to a study by the American Automobile Association, the average cost of owning and operating a 2020 model automobile was $9,561. That’s a sizable chunk of change. Therefore, the main reason to consider switching car insurance companies is simply because you can save significant money on your premiums.
Forbes released a study that backs the claim by Geico that switching to their insurance can save a policyholder over 15%. Of course, the percentage varies by state, but one thing is consistent: the shoppers save a whole lot.
Staying loyal to your original insurer may get you a loyalty discount five or six years down the line, but switching to a more affordable insurer will save you money right away!
How Can You Switch Your Car Insurance
Now that you’ve made up your mind, here are six simple steps for making the switch.
Compare Car Insurers
First off, ask for quotes from at least three or four insurers. While you’re comparing rates for personal auto policy, also compare specific features that the companies provide. This includes the coverage type, their exclusions, limitations, and deductibles.
As a means of staying competitive, some insurance companies also provide special perks and offers like discounts and accident forgiveness (based on your state’s policies). Other companies will even avail you of new car replacement insurance that will compensate you for buying a brand-new car of the same model if your vehicle is destroyed or stolen.
Research the Company You Select
Rates aren’t the only factors that you should consider when you switch car insurance. Use online tools to research the customer-service track record of the shortlisted companies. Read the customer reviews and complaints. What have other customers experienced during the auto insurance claim process? All of this should provide you with a lot of insightful information that the company won’t advertise.
The last thing you want from an insurance company is to find a good rate for car insurance, only to feel obliged to switch to another company after six months due to a bad claims experience.
Contact Your Current Insurer and Learn About Cancellation Fees and Refunds
Every insurance company will fight hard to retain you as their client. They might offer competitive discounts and other special offers if you’re insistent about leaving. The majority of companies will allow you to cancel your car insurance for free, but some might charge you a cancellation fee if you decide to part ways mid-policy.
So contact your insurance provider to clarify before contacting a new provider. You might also receive refunds from your current provider if you decide to switch before your policy expires. Let’s say you paid for a six-month policy, but decide to cancel it after three months. Your insurer should reimburse you for the remaining three months. Doing this promptly will result in your receiving a bigger refund.
Avoid Any Coverage Gap
Insurance companies will see any gap in your car insurance as a potential risk. As a means to offset it, they can charge a significantly higher rate for a new policy even if you’re a day late. So make sure that your car is insured at all times during the switch.
Also, make sure that you set your new policy to start the same day the previous one ends. If you get into an accident during the gap period, you won’t have a financial safety net.
Most insurance companies reward people for having continuous coverage, despite switching companies. Some companies also make it mandatory for you to sign up for their policy a week before your current policy ends.
Cancel Your Previous Policy and Inform Your Leasing Company About the Switch
If you don’t communicate with your previous insurance company about your switch, they may not find out any other way. Let them know and ask for confirmation of cancellation in your mail. Additionally, make sure that you’re not missing any important document you need from your previous company. This way, you can rest assured that your current insurer will not continue to bill you.
After you switch car insurance, confirm that it has been activated.
If you have leased your car, you will be required to have a fixed amount of insurance coverage. The National Insurance Crime Bureau reports that in 2020, at least one vehicle was stolen every 36 seconds. So, the leasing company will naturally want coverage to be kept up to date.
Make sure to avoid problems with your lender or leasing company by asking your new insurance company to send them proof that they are now covering the vehicle.
Update Your ID
A new insurance company means a new ID and new documents. Once you switch car insurance companies, don’t forget to replace your old insurance ID with the new one. All states besides New Mexico now allow you to provide digital proof of your car insurance.
Your insurance company should provide you with a digital insurance card that you can download onto your smartphone. Ask them what you need to do to acquire the digital ID card.
Even though you won’t need one (outside of New Mexico), you might want to have a printed copy with you in your car’s glove compartment, just in case you find yourself without your phone or access to the internet.
Some Auto Insurance Companies to Consider
Now that you’ve learned how to switch car insurance companies, let’s look at some companies you should consider:
Geico is a great option for high-risk drivers and offers a higher discount (as mentioned above) for those who switch companies. Bankrate reports that the six-month rate for Geico car insurance is $398.
If you have a below-average credit score and just recently started driving, Geico will make sure you get competitive rates.
USAA is known for its stellar customer care, diverse coverage options, and great financial ratings by AM Best, S&P, and Moody’s. The average six-month rate for USAA car insurance is $223. Although everyday citizens can enjoy some coverage options, veterans and their families will find that USAA offers a multitude of coverage options and discount offers.
Arguably the biggest insurance company in the country, State Farm is usually the first choice for most policy shoppers. The six-month average rate for a car policy by State Farm is $309. State Farm also has a highly-rated mobile app that makes it easier for you to contact your agent or file a claim.
When you switch car insurance, you can save a considerable amount of money on your premiums. Switching to a new car insurance company is a very straightforward process that you can do by yourself. However, some of the details can seem overwhelming if it’s your first time making a switch.
This is where having an insurance agent can come in handy. An insurance agent can accurately assess your situation and help you switch car insurance in a hassle-free and prompt manner. Your insurance agent can also find out if there are any cancellation stipulations, and provide suggestions on how you can lower any related costs.
This is where hiring an independent insurance agent can come in handy. Unlike a captive agent, independent agents can shop around with numerous insurance companies to find you the best insurance at the lowest price.
Find an agent near you and find the right car insurance company to switch to today!
Has this article been helpful to you? Comment below and let us know.
How often should I shop for a new car insurance policy?
As often as you’d like! There’s no rule for shopping around when you feel like it. Sometimes, you may find insurance companies that offer exclusive discounts and offers for someone with your car model or credit score. Similarly, you can ask your insurance agent to review your current policy and make changes to the rates according to your changing needs. As long as there are no gaps to your insurance, making changes won’t affect your rates.
Is it bad to switch car insurance companies too often?
No. If you’re switching car insurance companies to get better rates, services, and offers, then you’re not in any trouble. Additionally, you don’t get penalized for making the switch. If you wait until your renewal date, you may even avoid any cancellation fees.
Will switching car insurance companies affect my credit score?
Not at all. Insurance companies will check your credit scores when they’re running a background check. However, they won’t be visible to your lenders. Therefore, switching insurance companies won’t affect your credit score.
What are some disadvantages of switching car insurance companies?
Usually, changing insurers is a great deal for smart shoppers. But there are some considerations you should know before making the change.
Some auto insurance companies will ask their policyholders to pay a certain cancellation fee if they want to cancel their policy before their renewal date is up. Make sure that the money you’re saving with the insurance switch amounts to more than these penalties. Or else you’re better off waiting for the renewal date. Consider looking for the best auto insurance companies with your agent.
Additionally, you could lose out on loyalty discounts from your old insurance company by changing companies too soon. Usually, companies offer loyalty discounts to customers who’ve stayed with them for more than two years.
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