Can I Switch My Car Insurance Mid Policy? Here’s What To Consider.

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Published on July 25, 2020

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Can I Switch My Car Insurance Mid Policy? Here’s What To Consider.

So you might have heard from a friend that they’re paying lower premiums for their car insurance. I’ve been paying too much, you think to yourself. 

But is it possible for you to switch auto insurance even before your policy is due for renewal? 

The short answer is, yes! In fact, people switch their car insurance all the time. Insurance companies are always competing to get customers, so lower rates often come on the market. 

That doesn’t mean you should just switch your auto insurance policy blindly though. You should consider if doing so is right for you. On top of that, there is a right and wrong way to go about doing it. 

In this article we’ll tell you exactly when you should switch your auto insurance, how to switch your car insurance, what you should look out for. Let’s get into it, shall we? 


When Should You Switch Your Auto Insurance? 

If your auto insurance is working out for you, then there’s usually no reason to switch your auto insurance. 

But, if you could lower your premiums by changing to another provider – that’s when you should look into shopping around for another policy. 

Why would your insurance premiums be lower though? 

One reason is that insurance providers are all competing for market share. A new upstart might be willing to offer a better rate in order to get you as a customer. 

The calculations that insurers use also change over time. Insurance companies will rarely tell you that a better rate is available for you, even if their methods to determine premiums have changed. That’s why it’s a good idea to ask friends and family what premiums they are paying from time to time. 

Your circumstances may have changed, opening the door to a different type of insurance policy. Let’s say you’ve just gotten married and you need to add your spouse as an additional driver. There may be special policies for married couples out there that offer a better rate than what you’re going to get from your current provider.

Even if you’re not going to get a better rate, don’t forget about the perks. For example, you might want to get new perks such as free roadside insurance. You can often find all the perks that insurers offer on their websites. 

For example, Allstate offers a mobile app that shows low gas prices near you, rewards (in the form of gift cards and products) for safe driving, and Accident Forgiveness (an accident won’t make your rates go up.) 


Switching Car Insurance After an Accident

One time that you should NOT switch your auto insurance, is right after you’ve been in an accident. The reason is this – a new insurance provider will likely do a premium calculation based on your driving record. 

With such a fresh claim on your policy, they’ll likely assess you to be a greater risk. That will most surely cause your premiums to be higher. 

After an accident, you’ll usually need to wait three to five years before the accident stops having an effect on your premiums. 

Sure, your premiums will still go up for your current policy, but the changes won’t take effect until your policy is up for renewal. That difference could save you a few hundred dollars. 

How to Switch Car Insurance?

Step 1: Consider If You’re Likely to Get a Lower Premium by Switching

Are lower premiums available to you? There are two quick ways to find out: 

Firstly, you could check the average rate of insurance in your area. You could use an online tool, but we prefer asking friends and family as they’ll also be able to give you an idea of the kind of customer service they’re getting from the insurance provider. 

You’ll also know your friends and family better. This means you’d get an idea of what kind of situation they’re in, and you’ll be able to compare it to your own to decide if you’ll get a similar rate. 

Secondly, assess if your eligible for any common discounts. Your situation may have changed such that you’re eligible for certain premium discounts. Some common discounts are: 

  • Having car safety features such as anti-lock brakes – 10% discount
  • Being accident free – 5% discount
  • Being over 65 – up to 35%

Step 2: Compare Rates Between Different Insurers

You’ll want to compare the rates of a few different insurers. You should get a pretty good idea of the going rate after approaching three or four insurers. 

This is why we like asking friends and family about what they’re paying first. You’ll get a rough idea of the different insurers to approach, and they could even make a connection for you!

In fact, we like the approach of asking friends and family the most because they’re not compensated by the auto insurance company for making recommendations. This is likely to give you an objective view.

The second-best way to compare rates is to use an online comparison tool. You can rest assured that websites are obligated to display accurate rates. But be aware that websites offering comparison tools are often compensated by auto insurance providers. 

Why is this important?

If an insurance provider does not compensate the website owner, there is often little incentive for them to list their rates in the tool. So just be mindful that these websites might not show you all options available.

Another approach that we like, is to work with an independent auto insurance broker. These are insurance agents that work with multiple insurance companies. 

Like comparison sites, they can give you a good lay of the land. The main advantage they offer on top of that is customization. They’ll be able to advise you on the best option for you given your circumstances. 

Like comparison sites though, they are compensated by insurance companies. Some insurers pay more than others. So you must keep their motivations in view when accepting their recommendations.  

Step 3: Give Notice to Your Current Insurer that You Want to Cancel Your Policy

Check with your current insurer what your notice period is for cancellation. Most insurers will require at least 30 days notice. 

This notice period is important because you don’t want to start your new policy too early, and be left unable to give up your old one. This would mean that you’d be paying premiums on two different policies!

At the same time, you should have at least a couple of days of overlap, as driving without insurance could cause you to lose your license. In some cases, it might cause your premiums to increase. 

Step 4: Remember to Tell Your Auto Lender that You’ve Changed Insurers

In the off chance that your auto lender realizes that you’ve canceled your current policy, they may assume that you’re no longer insured if you’ve not told them about your new policy. 

They’ll likely confirm that you’ve still got insurance. But you don’t want to take any chance that they might repossess your car without warning!


Is It Bad to Switch Insurance Companies? 

There are no penalties to switching insurance companies. You might have to pay a small cancellation fee, but any savings you get on your lower premiums will likely outweigh this fee. 

The only two scenarios that we can think of where it would be bad to switch insurance companies is this: 

Scenario One: You end up paying a higher premium. You might have had a bad driving record, causing you to pay a higher premium.  However, the chance that this might happen is incredibly small. 

You’d likely know what rate you’ll be paying when you shop around, and if your premiums are going to be higher, then you can always choose to stick to your current policy. 

Scenario Two: Your new insurer drops you if you have multiple violations. There is a period of time after joining a new insurer, where they can choose to drop you as a policy holder. This could be as long as 60 days. 

The only real reason they may drop you as a client is if you’ve had multiple violations in the short time that you’ve joined them. Again, this would be highly unlikely as any bad driving would have been known when you signed up with them in the first place. 

In summary, it’s not bad to switch insurance companies at all. 


Can You Get a Car Insurance Refund When You Cancel Your Policy?

Yes, if you’ve paid your premiums on an annual basis, your insurer will likely refund you on a pro-rated basis. Here’s an example:

Your annual premiums are $1,500 and is due for renewal in January. If you cancel your policy at the end of June (halfway through the year), then you’ll likely get a $750 refund. Which is 6/12 months * $1,500 = $750. 

Do remember that you may have to pay a small cancellation fee though. This could be a percentage of your premiums, which usually won’t total more than $200. 

Final Thoughts: Can You Switch Your Auto Insurance Before Renewal? 

As we showed in this article, it is fairly common and beneficial to switch your auto insurance. The process is often straightforward because insurers are familiar with people changing their policies. 

The hard part is having to compare different insurers – for something like that, we recommend talking to friends and family first. If you need someone to guide you, an independent agent should be your go to. Otherwise, use a comparison site if you’d like to be more hands on yourself. 

Have you switched your auto insurance before? Let us know your experience in the comments below!

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