It may be easier than you think!
There are many reasons to switch car insurance companies. You might be unhappy with the service that your present company provides, or perhaps you've simply found another company willing to offer you the same level of coverage for considerably less money. Nowadays, performing a regular car insurance rate check-up and investigating your options has never been easier. When you decide to switch your auto insurance to another company, you'll find that it's fairly easy to do so.
Why switch auto insurance companies?
Regularly review your auto insurance coverage to make sure that you're receiving the best insurance value for your money. You'll discover that it pays to shop around. In most states, premiums for identical levels of coverage vary widely among different companies. The reason for this price variation involves many complicated factors, some of which are explained in "8 Things You Should Know About Auto Insurance."
One of the biggest factors is a company's claims experience with policyholders in your coverage group (e.g. people of similar age, number of accidents, type of vehicle, etc.). For example, if a large number of people in your coverage group files claims during a given year, your rates will likely rise. When this happens, better discounts and lower overall premiums may be available at other companies.
Be sure to get a new policy first.
Always have a new policy in place before canceling your old auto insurance coverage. You don't want to have a lapse in car insurance for even one day. Your new company will be able to time the onset of your new policy to coincide with the cancellation of your old coverage.
When to switch policies.
The best time to shop for insurance is about 3-4 weeks before your old policy is about to renew. Depending on the regulations in your state, a renewal notice will be sent to you approximately a month before your new policy period begins. The notice will describe your coverage, discounts, and your premium amount. Using that information, you can shop online for the same coverages to see your options.
You don't have to wait until renewal.
All standard auto insurance policies contain a provision giving you the right to cancel your policy at any time, once proper notice is given to the insurance company. You don't need to wait until renewal time. However, cancellation before a policy has renewed makes the most sense. That way, you don't have to worry about recovering the unused portion of your paid premium. But if you choose to cancel in the middle of a cycle, the company will prorate your latest premium payment up to the cancellation date and return the remainder to you.
However, some car insurance companies may charge a special "short rate" cancellation penalty if you cancel in the middle of a policy term, so be sure to ask before you switch. If they do charge a penalty, you'll need to decide if the better rate outweighs the fee you'll pay. Keep in mind that many companies offer earned accident forgiveness, future renewal discounts, and other benefits that grow with or depend on the amount of time you maintain a policy with that car insurance company.
How to cancel your old policy.
Generally, all you need to do to cancel your auto insurance policy is to inform your insurance company in writing, specifying the date you want the policy canceled.
Don't just walk away from your old policy without formally canceling it. If you do, the car insurance company will probably cancel the policy for failure to pay, which can hurt your ability to get a new policy.
Do you have any questions or comments? Please let us know.
Originally posted August 5, 2004.