Whether you want to adjust your current auto insurance policy because your coverage needs have changed or you want to switch insurers to save money, most companies make it easy to do this. Here’s what you need to know before changing your auto insurance policy.
Yes, in most cases you can change your car insurance policy whenever you want – no need to wait for the renewal period. To make changes to an existing policy, such as adjusting your current coverage limits or adding a teen driver, simply call your insurer’s customer service number or speak to your local agent. In most cases, policy changes take effect immediately, although you will have to pay up front for any resulting increase in your premium.
You can also switch car insurance at any time. Many insurers allow you to cancel your existing policy free of charge, but some insurers charge a fee. Please check with your current insurance company to see if any such changes apply to you. If your motivation is to save money, you may be able to do this simply by making changes to your current policy, such as increasing your deductible or lowering your coverage limits.
You can also change your insurance if you are in the middle of an insurance claim. However, your outstanding claim must remain with your current insurer. Therefore, you should continue the claim process with your original auto insurance company. Remember, if you choose to go with a different carrier during an outstanding claim, you must make sure you are aware of all payments and follow the claims filing rules.
When should I change my car insurance?
As the seasons of life change, so can your car insurance needs. That’s why it’s important to review your insurance policy regularly to make sure it still meets your coverage needs. Whether it’s refining your current policy or shopping for a different provider, reasons to change your auto insurance policy include:
- You’re getting married. If you and your partner both own a car, it may be more beneficial for you to insure both vehicles on the same policy rather than having separate policies. You may be able to save extra by bundling your car and contents insurance.
- Your car is getting older. It may not make financial sense to purchase full insurance on an older vehicle, especially if the book value of the vehicle is very low.
- You are moving. Whether your new home is across town or across the country, your address is an important factor in determining your insurance rates. Related factors, such as whether you have a garage or need to park on the street, can also affect your premiums.
- Your teen got his driver’s license. It’s no secret that insurance premiums for teen drivers are higher than for older drivers. But if your teen has started driving, it’s probably cheaper to add him or her to your existing auto insurance policy than to insure him or her separately. Many insurers offer auto insurance discounts for teens if they get good grades or if they leave the car at home while in college.
- You are retiring. Older drivers enjoy the cheapest car insurance rates on average. And if you no longer travel to work every day, you may also be able to save with low-mileage insurance.
- You want to lower your premium. Switching insurance companies can help you save money. Comparing quotes from at least three insurers is recommended by the Insurance Information Institute.
- You are dissatisfied with your current insurer. Cost isn’t the only reason people switch auto insurance companies. Customer service and claims handling are two other factors than we consider in our ratings for the best auto insurance companies of 2022.
When (or if) you decide to switch carriers, you should first review your current policy and see if there are any charges for canceling before the renewal period. This way you avoid any surprise costs. By following a few steps, you can streamline the transition between insurance companies.
- Collect the relevant documents. This includes your current policy details, your driver’s license and the vehicle identification number (VIN) of all the cars you want to insure.
- Shop. You want to automatically compare policies before jumping to a new auto insurance company. While price is an important factor, make sure you know your policy’s coverage details (i.e. deductibles, types of coverage, and coverage limits) so you can compare apples to apples. Waiving certain coverages can lower your insurance costs, but it can also minimize your coverage. In other words, you may have to pay more out of pocket if you get into a collision or your vehicle gets damaged.
- Select and register for a new policy. Once you’ve found suitable cover and you’re happy with the rate, it’s time to sign up for your new policy. Before you cancel your original policy, make sure the new policy is active. Failure to do so may void coverage, which may affect your rate. Also make sure you have a copy of your new insurance card. Some companies give you instant access to your card through their mobile app, making it easy to provide proof of insurance.
- Let your lender know. If you have financed or leased your current vehicle, you must notify the lender or lessor.
- Cancel your old insurance. After checking that your policy is active, you can cancel your current policy. Depending on when you cancel, you may be entitled to a refund of unused coverage.
While many insurance companies allow you to cancel at any time, some may charge a cancellation fee if you leave halfway through your policy. Therefore, you should contact your current insurance company to review the terms of your policy so that you can avoid unexpected costs.
Having a new policy in place before canceling the old one is crucial to avoiding coverage lapses. Since car insurance is mandatory in almost every state, not having coverage is not something you take lightly. The expiry of the cover can have consequences such as a rate increase, suspension of the driving license, fines or repossession of your vehicle. If you have an accident without insurance, you will also pay all costs resulting from damage or injury for which you are held liable.
Depending on when you cancel your current policy, it is possible to receive a pro rata refund. For example, if you pay your annual premium up front and decide to switch for four months, you’ll receive a prorated refund for the coverage you haven’t used.
Switching car insurance companies will not affect your credit score. Since insurance companies do not report your payment history to the credit bureaus, policy activity will not appear in your credit history. However, your credit score can affect the price you pay for coverage. Most insurance companies use your credit-based insurance score, which takes your credit history into account when calculating your rate.
You have the right to change insurance companies at any time, including after an accident. But keep in mind that depending on the severity of the incident and your driving habits, your insurance rate may increase. When canceling your policy, insurance companies usually look back at the last 3-5 years of your driving. As a result, an accident can translate into a higher rate with a new insurance company.
For more information on auto insurance, check out the following guides:
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