How To Cancel Your Current Car Insurance Policy
If you decide you want to cancel your insurance in the middle of your policy period, Minnich suggests obtaining your new coverage. Once it kicks in, immediately contact your current auto insurer to cancel that policy.
You’ll typically need to request the cancellation in writing.
In many states, your insurer is required to report the cancellation to your state department of motor vehicles. That means you should have the proper insurance in place beforehand.
Once you cancel, you should automatically receive a refund from your previous insurer if you’ve prepaid and are owed money, Minnich says, but you might be charged an early cancellation fee.
When Should I Switch To A New Car Insurance Company
There’s never any downside to shopping around for a better price than you’re currently getting on car insurance, so you can check for better rates as often as you want. But you’re especially likely to find a big difference in price when you experience a life change that impacts how insurance companies calculate their rates.
For example, your current company might offer the best rates for single drivers, another insurer might offer a better price to a married couple, so it can be a good idea to shop around after you get married.
Request A Refund Of Unused And Prepaid Premiums
If you paid for your policy six months or a year in advance and canceled before the coverage is up, ask your insurer to refund your unused premiums. Your insurer should provide information on how and when a refund will be processed.
Knowing how to change car insurance the right way will help you avoid any unpleasant surprises, such as being reported as uninsured to your state or having a lapse in coverage, which could be financially crushing if you’re in between policies and get into an accident.
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Is It Bad To Switch Car Insurance Companies Frequently
Reviewing your policies annually makes sense as your circumstances change. Perhaps youve improved the security of your home, your credit, or your driving skills. These changes can reduce the overall amount you pay.
To answer the question, Is it bad to switch insurance companies often? is complex. It largely depends on whether you have to pay a termination fee and what service you can expect. Before asking, Does Geico have a cancellation fee? or Does Progressive charge a cancellation fee, research the service the new company provides. Paying a slightly higher premium may prove worthwhile for a hassle-free claim experience. It may also pay to build up a good history with one company, although this is becoming less important as insurance evolves.
Canceling Your Insurance Isnt Always A Good Idea
Dropping your car insurance can be a mistake. Here are times you may want to rethink that decision:
Moving to a state where car insurance isnt required: Currently, there are only two states that dont require drivers to carry car insurance, Virginia and New Hampshire. If you happen to live in one of these states it doesn’t mean you can drop your coverage and hit the road.
Even though insurance isnt a requirement, youre still financially responsible for any accidents or damage caused by your vehicle. In states that dont require insurance, you usually have to meet certain financial thresholds that prove you can cover the costs of any at-fault accidents. Unless you are fairly wealthy, you shouldnt be out on the road without coverage.
You don’t drive much anymore: Even if you barely drive anymore, you still need car insurance. Not only is it the law in almost every state, but insurance can also be a financial lifesaver if you are in an accident. Car accidents can lead to expensive medical bills, legal fees and the cost to replace another person’s car, making car insurance a necessity.
Talk to your car insurance agent to see if they can lower your premium. Insurers often give discounts to people who dont drive much.
If you want to lower your premium, drop all coverages except comprehensive, which covers damage not caused by a collision. However, if you do this, dont take it out on the road. You wont be covered if you get in an accident.
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How To Switch Car Insurance Companies In A Hurry
Breaking up, it turns out, isnt so hard to do. If you want to know how to switch car insurance companies weve got good news. It isnt that difficult so long as you steer clear of a few pitfalls.
Americans dont switch insurance as they should. Survey data from 2015 suggests that drivers on average stay with the same company for 12 years This means they could be missing out on the savings that come from shopping around.
So, if youre left wondering why your insurance went up, or just feel like you could be getting a better deal elsewhere, here are a few things to keep in mind so you can make a clean break and switch car insurance companies successfully.
What To Know About Changing Car Insurance
Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. He earned the Chartered Financial Consultant® designation for advanced financial planning, the Chartered Life Underwriter® designation for advanced insurance specialization, the Accredited Financial Counselor® for Financial Counseling and both the Retirement Income Certified Professional®, and Certified Retirement Counselor designations for advance retirement planning.
You spotted a great deal for a hot new car insurance startup with incredible insurance options while watching your favorite television show. Or perhaps you remembered that 15 minutes could save you 15% or more, did some online rate shopping, and found yourself with an enticing new car insurance policy offer.
Or maybe youre moving to a new state, and youre currently insured by a great but small and hyper-local car insurance agency in your current state. Maybe youve recently become an empty-nester and are downsizing from owning two large luxury SUVs to owning one adorable energy-efficient two-door sedan.
There are all sorts of reasons to change your auto insurance. Maybe you’ve bought a new car or truck and need to add it to your current policy. Maybe your overall personal finances have improved, and your assets increased significantly, and you want to protect them better with more coverage.
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What Are Some Disadvantages Of Changing Auto Insurers
In many cases, switching auto insurers pays off for savvy shoppers. At the same time, if you are tempted by low quotes, be sure to consider what you will be leaving.
Pay Termination Fees or Penalties
Some insurance companies charge penalties for consumers who cancel their coverage before their renewal dates.
If your current insurer charges early termination fees, make sure that the savings you gain from switching companies offset these penalties.
Can you lose loyalty discounts?
Many auto insurance companies reward customers who have been insured with them continually for three years or more. In some cases, these discounts equate to savings of up to 25 percent.
Factor in these discounts when you are comparing quotes from several different cheap auto insurance companies.
You Can Lose Accident Forgiveness
Most drivers fear that their insurance rates will increase after an accident. To minimize this stress, a few companies have started accident forgiveness programs.
For drivers who have been accident-free within the previous three years, these programs guarantee that a minor collision will not increase rates.
Some companies go a step further and guarantee that a major accident will not impact rates for people with safe driving records over the previous five years.
Leaving A Coverage Gap
Never leave a coverage gap. You want to make sure your new policy is in place before you cancel your old policy.
A coverage gap leaves you unprotected if youre in an accident between policies. In other words, youll pay for all repairs and medical bills yourself.
In addition, if you have a long-term gap in coverage, insurance companies will charge you more later. Insurers hate gaps in coverage. A lapse in coverage means youll wind up paying 9 to 13% more, on average, when you get your new policy, according to CarInsurance.coms rate analysis.
If you wait until the end of your policy term to switch, you’ll want to have your new policy start on the same day your current policy expires.
“Many policies start at 12:01 a.m., so be sure you have coverage on any previous policy all the way until the new policy takes effect,” says Herndon. “An accident can happen at any time, and you don’t want a gap in coverage to exist.”
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Customer Treatment And Satisfaction
If you’ve had a negative experience with filing a claim or with your car insurance company’s customer service, that’s a perfectly good reason to start looking elsewhere for a policy. You may not be happy with the resolution of a recent claim, or you may feel you got poor treatment from your provider’s customer service. This is a good time to switch.
If you want to see how a particular car insurance provider stacks up for keeping their customers happy, check out J.D. Power’s annual auto insurance study.
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Get Your New Auto Insurance Policy
Contact your new auto insurance company and finalize the policy. Once you receive your new policy insurance binder or card, contact your outgoing auto insurance provider and ask to start the cancellation process. Your old insurer will provide you with the necessary forms to fill out and walk you through the steps you need to take.
After you’ve filled out the proper paperwork and it’s resolved, you should receive a refund of any money remaining from your previous policy, minus any fees.
Tailoring Your Coverage To Save Money
The first thing to do when you’re comparing auto insurance alternatives is to look at your current policy. If you’re in the market to save money, reviewing your coverages for savings opportunities is a good place to start. You might even kick things off by contacting your current insurance company to ask about modifying your coverage or applying discounts to bring your premium down.
Additionally, consider these three ideas for fine-tuning your policy to reduce your auto insurance costs:
Downgrade your coverage. If you own your car outright, nixing comprehensive and collision coverage can bring down your premium drastically. This coverage kicks in to help you pay for repairs or replace your vehicle if you’re in an accident or another covered event . Review your policy for “extras” like roadside assistance or car rental coverage. Proceed with caution, though: Downgrading your coverage is only a good idea if your remaining coverage and savings are such that you won’t be left high and dry if something happens to your vehicle.
Check your credit. In most states, insurance companies use what’s called a to help determine premiums. Check your to see where you stand. If your credit is good, it may be a bargaining chip when you talk to prospective insurance companies. If not, taking steps to improve it can help bring down your premiums.
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When Does It Make Sense To Stay With The Same Insurer
While switching insurers can end up saving you money on car insurance, there are sometimes good reasons to stick with the insurer that you currently have. If you’re considering a change, it may be useful to consider the advantages that you might be giving up by leaving your old insurance company. This way you’ll have a way to compare the costs of switching as opposed to the benefits.
Why Switch Auto Insurance Companies
The main benefit of switching car insurance providers is saving money on your premiums. Even if you found the cheapest rate when you first signed up for insurance, the formulas insurers use to set insurance premiums change frequently, so the company that gave you the lowest price two years ago might not be the best option now.
And if any life circumstances that impact your car insurance rates have changedlike you bought a new car, added a new person on your policy or you movedthere’s an even bigger possibility you’ll be able to find a better rate. Below we list the cheapest car insurers by their average six-month rate.
Insurers with an asterisk offered quotes in at least 20 states.
Of course, a low premium isn’t the only thing to consider when choosing an insurance company. If you have had a bad customer service experience with your current provider, or are interested in a benefit or perk that a different car insurance company offers, you might consider switching, too. Some examples include free roadside assistance, or gap coverage for the lease or loan on a new car.
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Look At Your Current Coverage
We mean reallylook at itnot just the part that tells you how much to pay every month.
Double-checking your current policy now will help you know what to look for when you start shopping for a new one. After all, its kind of hard to shop for something when you dont even know what you need.
So ask yourself questions. Are you just carrying the minimum liability insurance? Did you buy collision but not comprehensive? Figure out if you have any gaps in coverage or other things you want to change, and make a shopping list.
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Faq About How To Switch Car Insurance Companies
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Make Sure Your Old Policy Is Canceled
If you are switching car insurance to a new insurer, do not assume that if you stop paying premiums, your policy is automatically canceled. If you signed up for auto-renewal, your current provider could report you to credit bureaus for non-payment. Most insurance experts recommend that you contact your current auto insurance provider to cancel your policy when you are switching to a new car insurance company.
You can take the following steps to terminate your prior policy:
- Contact your current insurance company and notify them that you are terminating your policy. This will prevent them from billing you for future coverage.
- If you signed up for auto-payment, you may need to log into an online account and cancel the auto-withdrawals. If you use your banks bill pay service to pay your premiums, be sure to stop the payments with your bank.
- Ask your carrier to confirm the termination in writing.
Each insurance company has its own process for cancelling policies. You may need to sign a form authorizing a cancellation, or you may need to call and speak directly with an agent. Some companies might let you do it online, but you may feel more comfortable putting it in writing or speaking with someone to confirm that cancelation.
Looking to save money on auto insurance?
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Is It Better To Renew Or Switch Car Insurance Policies
Weigh up the pros and cons before jumping ship. On the plus side, you may get a better deal elsewhere or your current insurer may come back with a better offer. On the downside, you may lose any discounts you currently have or your no-claims bonuses may not be transferrable.
If nothing else, its probably worth shopping around to see if you can do better, and to consider trying to work it out with your current insurer before making the switch. It will often be happy to extend discounts if it means keeping customers, particularly ones who have been loyal for many years and not made any claims. Give your insurer an opportunity to match or better any new deal you have found and you may be pleasantly surprised at whats offered.
How can I negotiate a better deal with my current provider?
If youre considering switching but havent made the decision yet, let your current insurance company compete for your business. You might be able to get a better deal on your current rates by letting your provider know youre shopping around or found a better rate somewhere else.
Consider the best way to get informed and talk to your current insurer.