To switch car insurance companies, purchase a new policy from a different insurer and then cancel your existing coverage. You can cancel your current coverage at any time, but you should always wait until you have already purchased a new policy in order to avoid a lapse in coverage. Some insurance companies charge a fee of up to $50 if you cancel mid-policy, but most do not.
Before you purchase a new policy, be sure to decide what coverage you need and then comparison shop for the best deal. If you find a better offer than your current policy, ask your current insurer to match it in order to keep you as a customer (and save you a little time).
If you ultimately decide to switch insurers, you’ll need to take care of some housekeeping once your new policy is in effect, such as updating the insurance card in your car and sending proof of coverage to your lender or leasing company. You’ll also want to collect any refund due from your old policy’s premium. But the process is pretty straightforward overall.
9 Steps for Switching Car Insurance
- Find The Most Coverage You Can Afford
- Comparison Shop
- Don’t Overlook Discounts
- Evaluate Customer Service
- Be Honest On Applications
- See If Your Current Insurer Can Match The Best Available Deal
- Avoid A Lapse Of Even A Day
- Proactively Cancel Your Old Policy
- Get Your Refund
After you switch car insurance companies, be sure to update your proof of insurance and inform your lender or leasing company about the change.
How to Switch Car Insurance Companies in 9 Steps
1. Find the most coverage you can afford
Getting the minimum coverage required will keep you out of trouble with the law, but it may not adequately protect you and your assets after an accident.
2. Comparison shop
Make sure to get at least three quotes. Comparison tools like WalletHub’s car insurance quote generator make it easy to quickly weigh a wide range of options.
3. Don’t overlook discounts
Several different discounts might be available to you – some big, some small. Learn more about them in our guide to car insurance discounts.
4. Evaluate customer service
5. Be honest on applications
Insurance companies have access to your driving and insurance claims history through your state DMV and databases like the LexisNexis CLUE Report, so it doesn’t pay to fib about accidents or tickets. If you give misleading information or withhold important information, your insurer is likely to find out and may increase your rates or drop you.
6. See if your current insurer can match the best available deal
Your current insurance company may be willing to match or surpass the best offer you find from a competing company, so it never hurts to contact them before switching – especially if you’re already happy with their customer service.
7. Avoid a lapse of even a day
Some states will find out quickly if you’ve gone without insurance. Hold off on canceling your previous policy until your new one comes into effect.
8. Proactively cancel your old policy
Don’t simply stop paying. Officially cancel your coverage or they will consider your account in default. If you use automatic bill pay, watch your bank statement to make sure the withdrawals stop.
9. Get your refund
If you’ve prepaid for your current term you’re entitled to a prorated refund of the unused portion. You may be charged a cancellation fee.
Finally, if you do switch insurance companies, don’t forget to update your insurance card. If you’re caught driving without proof of insurance, you can be fined, have your license suspended, or even go to jail.
When To Switch Your Car Insurance
We recommend checking for better car insurance deals annually. But, at a minimum, you should consider switching auto insurers when you have a significant change in circumstances.
For example, it makes sense to consider switching car insurance companies in response to changes related to:
- Marital Status – Married drivers almost always pay less for car insurance than single drivers. Make sure to notify your insurance about your nuptials so that your rates can be adjusted. But also check to see if another insurer will offer a greater discount.
- Home Ownership – Your status as a homeowner rather than a renter can affect your premiums, too. Owning a home also presents an opportunity to benefit from a home and car discount on both policies.
- New Drivers – You’re probably prepared to pay more as teenage children get their drivers’ licenses. But make sure to shop around before simply accepting the new rate from your current insurer.
- Education & Employment – Earning a college degree will lower your rates with some insurers more than others. Also getting a new job with a shorter commute may offer some savings.
- New Wheels – The best insurer for your old jalopy might not be the best for a shiny new car. Insurers will look at various models and features differently.
- Driving Record Updates – Get a copy of your driving record and your CLUE Report, and make sure you know how old your traffic violations and insurance claims are. Some insurance companies will look back at only three years of your driving history, while others will evaluate a longer period. So when violations or claims reach the three-year milestone, it’s a good time to shop for a better price on insurance.
- Credit Score Improvement – Your credit score can be a major factor in car-insurance pricing. If it has improved, let your current insurer know and find out how other companies will react, as well.
- Evolution Of Your Needs – Financing a new car or finally paying it off may change your insurance needs. You may also reevaluate your policies and their limits and deductibles. Read our guides to full coverage and types of insurance to see if more or less coverage may be right for you.
- Age & Experience – Remember that when a driver reaches various age thresholds beginning at 25, you’ll be eligible for lower rates. Similarly when a new adult driver has been driving for five years or more, lower rates will generally be available.
How Much You Can Save By Switching Car Insurance Companies
The average annual insurance premium paid in the U.S. was $1,005 for state minimum insurance and $1,134 overall, as of 2017. Insurers commonly claim you’ll save 10% - 20% by switching, which would represent savings of roughly $90 - $200 per year, based on those averages.
However, some companies suggest much more savings may be possible:
- Allstate has claimed an average savings of $400 a year, $473 if switching from GEICO.
- Progressive suggests that new customers may save an average of $550.
- 21st Century Insurance claims $474 a year in savings.
- GEICO famously claims 15 minutes could save you 15% or more on car insurance.
- State Farm claims potentially more than $500 in savings.
No single insurer will have the best rates for everyone, so not every shopper will save by switching to any one particular company. But saving money by switching is real; it’s just a matter of finding the car insurance company that’s the best match for you.