How to Switch Car Insurance Companies
Switching car insurance companies can save drivers 10% to 40%, or even more, depending on the circumstances. To find a better rate, first decide what coverage you need and 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). Otherwise, buy your new, cheaper policy and then cancel your old one. You don’t need to wait until your current policy ends before you change to a more affordable one.
Just remember that not everyone will always be able to save money by switching car insurance companies. TV commercials for car insurance promise big savings if you switch providers, but it’s important to put these claims into perspective. Insurers want new customers, for one thing, so it’s in their interest to make switching seem attractive. And, when you think about it, most people are only going to change policies if doing so will definitely save them money. As a result, proving that your average customer saved 15% or so isn’t so tough.
With that being said, competition between insurance companies does breed saving potential. So, even if you shopped carefully last time around, you may be able to get a better deal now – especially if your financial circumstances have changed. And if you do find a better offer, the actual act of switching to a new insurer is a pretty simple process. Continue reading to learn more and get some tips for success.
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
The average annual insurance premium paid in the U.S. was $889 for state minimum insurance and $1,009 overall, as of 2015. 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.
How to Switch Car Insurance Companies: 9 Tips
The actual act of switching car insurance companies is as about as easy as you could hope it to be: Buy a new policy and cancel your old one. But it’s the steps you take beforehand that ensure you’ll actually save money by making a switch. For the best results, here’s what you should do:
- 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.
- 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.
- 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.
- Evaluate customer service – The ratings and reviews on WalletHub can help you learn and benefit from the experience of other consumers. Your state insurance commission may also be a good resource.
- 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.
- 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.
- 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.
- 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.
- 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.
Image: kurhan / Shutterstock and Robyn Mackenzie / Shutterstock
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