How To Switch Car Insurance

To find hidden auto insurance discounts, look up your insurance company's discounts online, check your state's mandatory discount laws, and contact your insurance agent or the company's customer service department. Since discounts vary significantly by location and company, discounts might be “hidden” in that they are not widely advertised, like a buy-in-advance discount. Similarly, some of the most commonly overlooked auto insurance discounts are driver monitoring discounts, paid-in-full discounts, and the AARP driver safety course discount because they usually aren't automatically applied.

Hidden Auto Insurance Discounts

• Low mileage or short commute discount
• AARP driver safety course discount
• Buy or renew in advance discount
• Automatic or electronic payment discount
• Driver monitoring discount
• Hybrid or electric car discount
• Anti-theft or Lojack discount
• Paid-in-full discount
• Multi-policy discount
• Farm vehicle discount

Car insurance companies do not fully disclose the formulas they use to calculate a driver's premium. However, most states allow a driver's demographic information, credit history, vehicle information, and driving record to affect rates. As a result, you could also get a “discount,” in the sense of getting a lower base premium, by changing one of these factors. For instance, car insurance is generally cheaper for married individuals because they are statistically likely to be low-risk.

Since your demographic information is unlikely to change, focus on improving your credit history and driving record if you want to lower your base premium. If your car is particularly expensive, fast or unsafe, trading it in for a safer, less valuable model will help lower your insurance premium, too. Similarly, increasing your deductible and eliminating any unnecessary coverage can also help save you money, acting like a hidden discount.

If you're looking for extra savings, it's worth double checking the most common car insurance discounts as well as the most often overlooked ones listed above. Finally, no matter how many discounts are being applied to your policy, it's best to frequently compare quotes from different insurers.

You should have liability-only insurance if the annual cost of full coverage exceeds 10% of your car's value. At that point, the extra coverage might not be worth the added cost of paying for more than liability-only insurance. But this is just a general rule of thumb, and the decision to switch to liability-only insurance depends on state coverage requirements and each driver's financial situation.

When Liability-Only Insurance Is Worth It

The main advantage of liability-only insurance is that you'll save on your premium. Since liability insurance offers minimal protection for the policyholder, it is less expensive than full coverage insurance.

However, if your car is damaged by an accident that you cause or another damage-causing event, then you'll have to pay for the repairs out of pocket. If you have the financial means to pay for repairing or replacing your car, and your state doesn't require you to have any other types of insurance, then you could take the risk of switching to liability-only insurance. 

Liability-Only Insurance & State Coverage Requirements

Liability only insurance pays for other people's property damage and injuries resulting from accidents that you cause. Almost every state requires that drivers carry a certain amount of liability insurance.

Some states also require drivers to carry other types of insurance, including uninsured/underinsured motorist coverage and personal injury protection (PIP). If your state requires you to have multiple types of coverage, then you cannot legally drive with liability-only insurance.

Liability-Only Insurance vs. Full Coverage

If your state allows it, then you'll need to decide whether to purchase liability-only insurance or full coverage. Full coverage insurance generally refers to a policy that includes both collision and comprehensive coverage. Collision insurance covers damage to your vehicle after an accident. Comprehensive coverage, on the other hand, pays to repair or replace your car if it's damaged by something other than an accident, like vandalism or a natural disaster.

If your car is leased or financed, you will likely be required to carry full coverage insurance. Even if your car is paid off, you shouldn't purchase liability-only insurance if your vehicle is still worth a lot or you're not in the financial position to pay to repair or replace it. Liability-only insurance could also be risky if you live a high-traffic area where your vehicle is more likely to be damaged.

Yes. Elephant car insurance automatically renews every 12 months. One month before your renewal date, Elephant sends you updated renewal documents and billing information by email, or mail if you prefer. The documents include a summary declaration page, a new proof-of-insurance card, and a policy packet with finer details of your coverage. Your policy then renews at 12:01 a.m. on the automatic renewal date, and your billing schedule continues as it did before the renewal.

Elephant also sends a reminder soon before the automated payment goes into effect. You can change your payment method before the renewal by visiting your account page.

Your insurance-renewal rate increase should be nominal if you have a clean driving record. But it's still good practice to speak with a company representative about potential upcoming coverage and premium changes before renewal. This will allow you to policy-shop if you're unhappy with the upcoming changes. You can also cancel your Elephant insurance at any time before your automatic renewal date.

Yes, you can switch car insurance after an accident, or any time you choose. You don't have to wait until your policy is up for renewal to switch car insurance companies, and you can even change insurers if you have an open claim.

What Happens If You Switch Insurers After an Accident?

There's no penalty for switching car insurance companies after an accident, in particular, but you may face cancellation fees from your current insurance company for stopping your policy early. You're also less likely to save money switching car insurance companies right after you have an accident, as your rate will include your latest mishap on the road. In other words, you can't switch insurance companies to avoid being held accountable for the accident.

Also, keep in mind that if you cause an accident, the insurance provider you had at the time of the accident will still be responsible for handling the claim, even if you cancel their coverage and switch companies. You can't switch insurance providers after an accident to have a new company manage the claim.

What to Do Before Switching Car Insurance Companies

Switching car insurance providers on the same day you have an accident might be viewed as suspicious by some insurance companies, so it's best to wait at least until the claims process begins before switching. You might even want to wait until the process is complete, so you don't have to deal with two car insurance companies simultaneously.

In addition, if you decide to switch car insurance providers, be sure to have your new policy in place before canceling your old policy. It's better to have an overlap of policies for at least a day than it is to have a gap of even one day between auto insurance policies. A gap in your insurance history will be viewed poorly by insurance companies, and it's against the law to drive without adequate insurance coverage.

You can change insurance companies mid policy. Car insurance companies generally allow you to cancel your policy at any time. However, when you do make the switch, make sure that your new insurance coverage will start on or before the day you cancel your current policy, to avoid any coverage gaps.

The best ways to lower car insurance costs are to compare prices among insurers, take advantage of all the discounts you can, and adjust your coverage to fit your budget. While some factors that affect prices can't be easily changed—like, age, gender, location, and career—others can be. For example, you might be able to save 33% to 50% on your premiums just by switching to a cheaper carrier, according to WalletHub's research.

With the average cost of car insurance at more than $3,900 per year, it's important to look for savings opportunities wherever they can be found. Here are some easy ways to lower costs plus some that take a little more work.

8 Tips for How to Lower Car Insurance Costs:

1. Shop around

Insurance companies charge different rates for the same coverage. They also treat the factors that go into your rate (driving history, age, credit history, etc.) differently. Finding the company that is best for the kind of driver you are can save you a lot. 

When you shop for insurance, you should always get 3 or more quotes to compare. And be aware that prices change within the industry. You can maximize your savings by comparison shopping every 6 to 12 months, when your policy is about to renew.

2. Search for discounts

Every major insurer gives discounts. Look through all the ones your company offers to make sure you are getting what you qualify for. For instance, you might be able to save money if you:

• Bundle policies—save up to 25% for having your auto, home, health and/or life insurance policies with the same company.
• Auto-pay or pay upfront—having your premiums automatically deducted from your checking account or paying your entire premium in one payment can save you 5% on your total premium.
• Go paperless—view and pay your bill online for 3% off.
• Take a defensive driving course—and save up to 10%. Some companies restrict this discount to certain groups, such as seniors.
• Maintain a “B” average—if you're still in school, keeping your grades up can earn you 15% to 25% off your premiums.
• Inventory your car's equipment—anti-theft systems or safety equipment (anti-lock brakes, airbags, daytime running lights, etc.) can reduce collision or comprehensive costs by 5% to 25%.
• Think about all your groups—working for certain employers or belonging to certain clubs, alumni associations, professional organizations, social groups or charitable groups can offer savings of up to 25%.
• Stay safe—avoiding at-fault accidents and moving violations for at least five years will reduce your bill by up to 20%.

3. Increase your deductibles

Increasing your deductibles will definitely reduce your premiums. Going from $200 to $500 could reduce the cost of your collision and comprehensive coverage by up to 30%. Going from $200 up to a $1,000 deductible could save you 40%. But be careful. If you get into an accident, you don't want to face paying more out-of-pocket than you can afford. 

4. Reduce your coverage

There are two ways to do this. You can lower the limits on your coverage. Or you can eliminate unnecessary types of coverage. Maybe you don't really need rental car coverage, for example. Comprehensive coverage on an old, low-value car may not be worth the cost, either.

5. Reduce your mileage

How far you drive each year affects your insurance costs. Think about carpooling to work, riding your bike locally, or taking the bus. Driving less than 10,000 miles a year could save you 11% on average. 

As an alternative, the electronically monitored, mileage-based insurance offered by some carriers allows you to pay only for the number of miles you drive in a month. You can earn deep discounts. State Farm says that drivers who log relatively few miles in its program save as much as 50% on their insurance.

6. Buy an insurance-friendly car

Luxury cars, sports cars and cars with high theft rates can cost up to 3 times as much to insure as cheaper, less risky vehicles. Before you buy, get a quote on insuring your new car and think about whether that's in your budget.

7. Improve your credit

In most states, insurance companies take your credit history into account in setting your rates. Improving it can reduce your premiums. People with no credit pay 67% more for car insurance than people with excellent credit, on average, according to a recent WalletHub study.

8. Move to another city or state

You probably won't plan a move just to save on insurance, but the area you live in significantly affects your rates. Less densely populated neighborhoods with fewer cars and less crime put you at lower risk for accidents, theft, and collisions with injuries. Local weather and road maintenance also factor into your rates.

If you are serious about lowering the costs of car insurance, your first step should be compare the price of your current insurance to quotes from several other companies. It's also important to visit the website or call the customer service department of your current insurer and make sure you know all the ways you can save with them. Lastly, remember to repeat these steps regularly, at least once a year. Otherwise, you could be throwing money away without knowing it.