Switching Car Insurance Companies: When to Do It, How to Do It, and Mistakes to Avoid

Do you feel like you’re paying too much for your car insurance? Insurance typically costs thousands of dollars per year. Factors such as your age, your location and even the type of car you drive are considered when an agency decides how much you should be paying for insurance. If you feel the cost of your policy is too high, you may be wondering if you should switch companies. Before you do, ensure you go about it the right way.

When to Switch Companies

There is no specific timeframe for switching insurance companies, but you should consider several factors before doing so. When is the last time you read through your policy to determine how much you’re paying and what that money goes to? You should review your insurance coverage at least once per year to ensure it still covers everything you need it to and that it does it for a fair price.

Never switch insurance companies simply because a radio or TV commercial told you that another company would have a better deal. For one thing, it could be that the deal only lasts a certain number of months before the company greatly raises the price. For another, even if it is more affordable, that may be because it isn’t providing as much coverage as your current policy does. Only switch companies once you have done some comparison shopping and read the fine print to ensure it really is a better deal.

How to Switch Insurance Companies

Switching insurance companies requires a bit of work. Begin by shopping around to determine if you can get a better policy. Websites such as www.carinsurancecheap.net allow you to enter your location and information about your vehicle and lifestyle, which they then use to provide a list of companies, their policies and how much they charge.

Narrow your list down to two or three of the best policies and research the agencies providing them. Are they licensed to provide insurance in your state? Are they in good standing with your state’s department of insurance? Do they have good reviews online? These factors all determine how trustworthy each company is.

After you decide on a new policy, consider taking a moment to contact your current insurance agency. It may be able to match the new price you’ve been quoted. After all, an agency is a business and they don’t want to lose yours.

If you opt to go ahead with the switch, purchase your new policy before you terminate your old one. It is better to have overlapping coverage for a few days than to risk going without insurance. Even if you are only without for a day or two, the gap could cause you to pay much higher rates in the future. When you do cancel your old policy, be sure to factor in any cancellation fees and get confirmation that the policy was truly canceled and won’t auto-renew at the end of the term.

Once you have your coverage switched over, don’t forget to print out your new ID cards and put them in your wallet to prevent any problems should you be asked to prove you have coverage.

Mistakes to Avoid

Always confirm what your new policy includes. Read the entire contract and ask questions if you aren’t sure what something means. Additionally, ensure you cancel the old policy. If you simply stop paying the bill, your old insurance provider will just assume you are failing to make payments and could report it to the credit bureaus. Canceling your policy and getting a written confirmation prevents you from accidental credit dings.

Don’t forget to ask for a refund for any coverage that you won’t use. For example, if you only used two months of a six-month policy, you should receive a refund worth four months of coverage, less any cancellation fees.

If you lease your vehicle, be sure to tell the lessor that you are switching insurance providers. This is because a lessor may be entitled to a portion of your claim if you were to get into an accident that totaled the car.

Regardless of when and why you decide to change insurance companies, always use good judgment and follow your gut feeling about new agencies. Remember, if the deal sounds too good to be true, it probably is.

Tom Brown
Tom Brown is an automotive market enthusiast living in the United States. He holds a diverse background in automotive marketing and enjoys utilizing that to produce insights into the inner workings of the industry.