Switch Car Insurance Companies With 3 Simple Steps

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Written by Nick Versaw

Updated June 23, 2022

So you want to find a cheaper rate for your car insurance because you believe you’re not getting the best rate. You do a bit of research and find that you can save money by going with a different provider. Now, you just need to learn how to switch car insurance to a new policy.

But before you switch car insurance companies, there are a few things you should know. By learning when to switch and understanding the proper way to switch your current policy to a new policy, you can avoid any pitfalls that may result in increased premiums or higher rates.

Whether you’ve never done it before or you just need a quick refresher, learn how to switch car insurance as quickly and easily as possible with these tips.

Make Sure You Won’t Face Any Penalties

While some insurance companies don’t charge cancellation fees, others may assess a small penalty if you switch mid-policy. The amount varies, but it’s typically 10-20% of your remaining insurance premium. For example, if you currently owe $1,000 on your car insurance premium and you cancel before the expiration date, you may incur a penalty of $100-$200.

But because of these cancellation policies, you need to double-check whether your current insurer charges a fee before you switch to a new insurance policy. If they don’t have a cancellation charge, you’re golden. If your current insurer charges a fee, you need to weigh this charge against getting a new auto insurance policy.

If the cancellation fee is more than you’ll save on new insurance coverage, wait until your current policy expires to save money on a new policy.

Know Your Desired Coverage Before Getting Car Insurance Quotes

If you own your current car, you have free rein to choose the best car insurance for your needs. This means that you can select coverage options such as”full coverage” with comprehensive and collision, or liability-only policies for more basic coverage. You can also choose your insurance claim levels and your deductible to whatever you’d like.

However, if your car is one of the 85% of all new car purchases that are financed, your car insurance coverage needs can change based on your lender. Your car is your collateral in a car loan, so lenders want to ensure that it has the proper coverage and deductible to ensure it’s safe during an accident.

A vast majority of lenders will require full coverage, and depending on your financial situation, some lenders may also require a deductible of $500.

While you’re shopping for lower rates for your car insurance on a financed vehicle, use the declarations page from your old insurance as a guide. Put in the same coverage levels, deductible, and types of insurance to make sure you’re getting accurate car insurance quotes.

Try to Negotiate With Your Current Provider

Although you may find better rates online, talking to your current car insurance provider about your car insurance rate works as a failsafe. Like any other type of business, your current insurance company doesn’t want to lose your business over a negligible amount of money.

Sometimes, knowing how to switch car insurance is more about knowing when you don’t have to. When you talk to the insurance agent from your current company, simply tell them the facts. You found a new car insurance company with a cheaper car insurance premium and you want to know if your current insurance company can match it.

While not every insurer is willing or able to match a new car insurance quote, your previous insurance provider may offer ways for you to save. Here are some common ways that you can save with your current insurer rather than get a new policy:

• Take advantage of car insurance discounts, including loyalty discounts, good student discounts, safe-driver discounts, and new driver discounts (such as adding a child or spouse to your policy).
• Use telematics programs to get a discount. Some of the bigger auto insurance companies offer these programs to help you save. The more popular ones are Liberty Mutual RightTrack, Nationwide SmartRide, and Travelers IntelliDrive.
• Ask about bundling for homeowners. By combining your home insurance and auto insurance, you can save on your insurance needs.

Keep in mind that not every car insurance company will be able to keep you as a customer and different companies have different protocols for customer retention. But with nothing to lose, asking a few simple questions is well worth the effort.

How to Switch Car Insurance 101

Now that you’ve done a bit of investigation into whether your new auto insurance rate or the old one is the better option, you’re ready to learn how to switch car insurance. Obviously, you only want to do this if the math and savings work out in your favor. If they do, simply follow these three steps to get the cheapest car insurance possible without endangering your continuous coverage or incurring fees and penalties on your current policy.

1. Figure Out Your Start Date

If your policy expires at midnight, is that midnight Eastern time or Pacific time? Is that midnight Tuesday or midnight Wednesday? Will I get into trouble for having two policies in place?

The simple answer is that you should always start a new car insurance policy before you end your old policy. It’s better to have a slight overlap than to have any kind of gap or lapse in your insurance policy.

Lapses in coverage are one of the many factors that can negatively affect your car insurance quotes and potential rate. Avoid them at all costs.

2. Cancel the Old Policy

Public service announcement: You don’t have to wait until your policy renews to cancel, so long as you’ve read the cancellation process and understand it.

If you’ve found a better deal elsewhere, you can cancel and switch anytime, so long as doing so is the cheaper option after assessing any potential fees. As long as you notify your current auto insurance provider, usually in writing or over the phone, you shouldn’t see any problems.

If you decide to cancel in the middle of a cycle, your insurer should refund you the unused portion of your premium (unless you’ve made a claim or you have an open claim). Just make sure that you know the ins and outs of canceling your car insurance to streamline the process.

3. Pay Up on Outstanding Premiums

Believe it or not, it’s common for people to switch car insurance policies and simply cease to pay their previous policy. It could be that they simply forget, or maybe they’re hoping to avoid paying for premiums they can’t afford.

However, failing to pay bills can negatively affect your credit score and you could be held accountable for missed payments and late fees. Make sure that you read the declarations page on your current policy or call your current insurer to ensure you follow the proper steps to pay outstanding premiums and cancel your insurance correctly.

Unlock Savings That Most People Overlook

It’s always a good idea to shop around for car insurance on a semi-annual or annual basis. Car insurance rates can change without warning and things like moving to a new state, life changes, tickets, and your driving record can make huge changes in what you pay.

Now that you know how to switch car insurance, just make sure that you do your due diligence by checking and double-checking your current coverage against rates from Compare.com.

If you find a better rate with Compare.com, congratulations! You’ve unlocked savings that most people overlook. If you haven’t done so yet or you want to give it one more go-around, type in your ZIP code below to find the best rates in your area.

Nick Versaw Insurance Managing Editor

Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.