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  • How To Change Auto Insurance Providers

    Making the Switch to Another Car Insurance Company

    How To Change Auto Insurance Providers

    If you already have car insurance, it’s easy to simply let your policy roll over at the end of each annual period. However, changes in your coverage or changes in your own circumstances, such as buying a home, may be a good reason to look around at other companies in order to improve your rates or coverage.

    Being a well-informed consumer can help you find the best car insurance at the lowest price point.

    Making the Decision to Switch

    It is impossible to miss the television commercials, radio spots, and online advertisements touting the benefits of changing car insurance companies.

    These ads promise:

    • Lower rates.
    • Better coverage.
    • Great customer service.

    While advertisements can be very persuasive, it is important to think carefully before deciding to switch. Do your best to ensure you aren’t sacrificing quality for price, as a low price can be alluring at first, but not if it leaves you with little coverage and huge risk.

    Call Your Company First

    If you are considering making the switch to another car insurance company solely because of cost, call your own company first. Your company may be able to adjust your premium based on:

    • Any life changes you’ve had that may affect your rates and/or coverages.
    • Any discounts you might qualify for that you don’t currently have.

    Plan Ahead

    Before making a final decision to switch, identify some basic information:

    • Which coverages are required in your state.
    • How much coverage is legally required. For example, a state minimum of 15/20/10 liability coverage means:
      • $15,000 for bodily injury to one person in an accident.
      • $20,000 for bodily injury to multiple people injured in an accident.
      • $10,000 for property damage from an accident.
    • Which additional (optional) car insurance coverages you want.
      • For example, if you know you want comprehensive and collision coverages, make sure the new company factors those into the cost.
    • Your budget. You should have a clear idea of how much you’re willing to spend on car insurance.

    Know the Potential Costs

    Before you change car insurance companies, understand the risks involved. For example, you may find yourself subject to cancellation fees and/or a gap in insurance coverage.

    Cancellation Fees

    Similar to telephone contracts whose terms include early termination fees, you may be subject to a fee if you cancel before the end of your coverage.

    If you are not sure about the terms of your contract, speak to your current car insurance provider to find out:

    • Whether you would need to pay a fee to cancel your policy.
    • How much the cancellation fee is.
    • How you can avoid/waive the fee.

    Coverage Gaps

    A major concern among consumers who change car insurance companies is creating a gap in your auto insurance coverage. A gap refers to a period of time where a driver is uninsured.

    Gaps in coverage leave you:

    • Driving illegally without insurance.
    • Exposed to major financial risk if an accident does occur.
    • Facing higher premiums in the future, because they show your insurance company that you are a “high-risk” driver.

    Some states minimize the risk of coverage gaps by requiring new insurance policies to be activated before current policies can be cancelled.

    However, even if your state does not have this requirement, it is in your own best interest to carefully plan your switch so you avoid any gaps. (See “Flip the Switch” below for steps to take to ensure a smooth transition.)

    Be an Educated Consumer

    Any important purchases deserve careful consideration. You can make an informed decision by following three main steps.

    Step 1: Make a list of your priorities so you know what to look for. These may be some of the items that are important to you:

    • Cost and coverage bundles.
    • Customer service and claims service.
    • The company’s focus on social responsibility.

    Step 2: Compare quotes from at least 3 different carriers.

    Step 3: Do some background research on any insurance company that you are considering switching to:

    • Read online reviews.
    • Check ratings from the Better Business Bureau (BBB).
    • Find out what their customer service is like.
      • If they do not provide prompt and helpful service when you are scouting them out, they are unlikely to be easy to deal with during a claim.

    Flipping the Switch

    Before switching your auto insurance, take the following steps to make sure you get your new policy in place without any unpleasant surprises:

    • Make sure that you confirm your start date with your new company to avoid any gaps in coverage.
    • Double and triple check the cost.
    • Carefully read the details of your new coverage(s).
    • Contact your current company and have a representative take you through the cancellation process step by step.
      • NOTE: In some cases, your new company may help you cancel your policy with your existing company.
    • Get confirmation of cancellation, such as a receipt of the transaction or a case number that you can reference.
      • Confirm any cancellation fees are refunds that may apply.
    • Finally, print your new policy ID cards and keep one in your car.

    Making an educated decision about switching car insurance and then executing the switch with deliberate steps will ensure a smooth transition to your new provider.