How to Switch Car Insurance in 5 Steps

If your car insurance needs have changed, it might be time to switch insurance companies. You can change insurers if your rates are too high, customer service is lacking, or you’re looking for better coverage options. Life changes, such as moving, getting married, or adding a new teen driver, might also prompt you to switch.

It’s easy to switch to a new company (as long as you follow a few simple steps) — and you can switch policies anytime. When switching companies, it’s best to shop around and compare car insurance rates, discounts, and policy features from different companies. You can find the right balance of affordability and protection tailored to your needs by exploring different options and getting quotes from as many companies as possible.

Let’s review exactly how to do that quickly and painlessly.

Key Takeaways:

• Switching car insurance companies is a great way to save money, get better coverage, and access other benefits your current company may not offer.
• Only a few insurers charge cancellation fees and will refund any unused portion of your premiums.
• Make sure you buy your new policy before canceling your old one to avoid a costly lapse in coverage.

1. Assess Your Current Policy

When assessing your current car insurance policy, start by reviewing your current coverage details, including:

• Coverage types
• Coverage limits
• Deductibles
• Policy perks
• Discounts

Also, consider how you prefer to access your policy — app, website, or by phone — so you’ll know to look for the same or better with your next insurer.

Most insurers don’t charge early cancellation fees but check to see if your insurer has any cancellation penalties or processing fees. If you’re close to the end of your policy, you may want to start your new policy just before your current term ends to avoid unnecessary fees.

Consider what you like and dislike about your current insurer. Some things may be negotiable. For example, if your rates are high, talk with an agent about ways to get a lower rate — for example, raising a deductible from $200 to $500 can save 15% to 30%. Sometimes, you can fix your issues without switching.

2. Shop Around and Get Quotes from Multiple Insurers

Start by researching and comparing your options to purchase a new car insurance policy. Use a car insurance comparison site, or gather car insurance quotes by calling different companies. You’ll need a few pieces of information to get the most accurate quotes, including your (and anyone else on your policy’s):

• Driving history
• Vehicle information
• Coverage preferences

Consider the reputation and reviews of different insurers, and ensure each policy has the same (or similar), coverage options, policy limits, deductibles, and perks.

If some parts of the policies are different, that’s okay. But account for differences when considering the value of each policy. Some policies have slightly higher rates but offer better coverage and perks than ones with slightly better rates.

It’s not always about finding the cheapest car insurance rates but getting the best coverage for the price.

3. Decide How Much Coverage You Need

When deciding coverage limits, you want to ensure you buy enough to cover yourself, your property, and any damages you might cause. Here are a few factors to consider:

1. Vehicle value: Low-value vehicles may not need collision and comprehensive coverage.
2. Ownership status: Financed and leased cars must have full coverage and may need gap insurance, as well.
3. Budget: Understand the amount you’re comfortable paying each month before shopping for a new policy.
4. Potential claims: Consider the average value of other vehicles on the road and any potential medical costs you might be responsible for if you cause an accident.
5. Vehicle use: Rideshare drivers need special coverage options, and people who drive with passengers want more robust medical coverage protection.

You should also consider if your new insurer has the policy add-ons you want, such as:

• Accident forgiveness
• Rental car reimbursement
• New car replacement
• Diminishing deductible
• Pet injury protection
• Auto glass coverage
• Accidental death and dismemberment
• Personal umbrella insurance

Finally, work with an insurance agent if you have any doubts about coverage. An agent can help you understand your options and what you need to be fully protected.

4. Purchase Your New Policy

The purchasing process is a little different for each insurer, but here’s a general overview:

1. Provide additional information: You’ll need your driver’s license number, vehicle identification number (VIN), lender or lease company information, and payment information.
2. Submit your application and purchase your policy: Many insurers let you do this online, but some may ask you to finish the binding process (a temporary proof of insurance coverage before your permanent policy becomes active) with an agent.
3. Policy issuance and reviewing documents: Review your policy documents to ensure your information, desired coverage options, and policy start date are correct.
4. Payment: Process your payment and get a copy of your receipt. You should also keep your policy paperwork somewhere safe and accessible.

It’s critical that you purchase your new policy before canceling your old one.

5. Cancel Your Previous Insurance

Be sure to cancel your policy with your current company after completing your new policy paperwork and confirming your start date. The process for canceling your previous policy will depend on your insurer’s rules.

You’ll likely be able to cancel over the phone or on your insurer’s website. But some insurers require you to send a written request to cancel, so be sure to comply with any requirements.

If you’re in the middle of your policy term and have prepaid premiums, your insurer should refund you for unused premiums (minus a cancellation fee, if applicable). You should ask about how and when you’ll receive your funds.

Set your previous policy end date for the day after your new one begins, so you can confirm that your new policy is active. Administrative errors are rare but can happen. That way, if something goes wrong, you have time to correct it and won’t experience a lapse in coverage.

Avoid a lapse in coverage

A lapse in coverage is when you don’t have car insurance for any period of time. For example, a coverage lapse can happen if you don’t pay your car insurance after your insurer’s grace period. Sometimes, the end date of an old policy and the start date of a new one don’t align, leaving you briefly uninsured.

Whatever the reason, you should avoid letting your coverage lapse. Driving without insurance is illegal in most states, leaves you financially vulnerable, and can raise your future rates by 7% to 21%. So always follow up to ensure your current company and your new insurance company have processed everything correctly.

6. Swap Your Insurance ID Cards

Put proof of insurance from your new insurer in your glove box as soon as possible. Even if your insurer provides digital cards, having a hard copy in your car is always a good idea — you can lose your phone, not have service, or run out of battery. If you have a digital option, add it to your digital wallet, if possible.

You can also put a copy of your policy documents, like the declarations page, in your car as that can also act as proof of insurance. Be sure to have a digital or hard copy at home for reference as well. Now is also a great time to program your new company’s phone numbers into your cell phone, including:

• Customer service
• Claims service
• Roadside assistance (if applicable)

When Can You Switch Car Insurance?

You can switch your car insurance policy anytime, but you should consider a few things beforehand. First, review your current contract to see if your insurer charges any fees for early cancellation. Second, check to see how long it takes to process a cancellation. Be sure to note anything you must do to cancel, like submit a written cancellation request.

Set the start date for your new policy to allow time for your current insurance company to process your cancellation — but don’t cancel your current policy until you sign your new contract. Wait until you have your new policy start date to ensure you never miss a day of coverage.

4 Things to Keep in Mind When Switching Insurance Companies

Switching car insurance is easy, but missteps are possible. Here’s what to remember:

1. Research thoroughly: Gather quotes from at least five insurers (the more, the better) and note each policy’s coverage terms.
2. Evaluate carefully: Price is just one part of getting a better deal, so look for differences in auto coverage, customer service, discounts, etc.
3. Plan a seamless transition: Align the start date of your new policy with the old one’s end date to avoid a coverage lapse. Save your policy paperwork and phone numbers, download the mobile app, and put proof of insurance in your car.
4. Follow up: Verify your new policy is active and that your insurer has canceled your old policy on the day of the switch. It’s easier to correct errors when you catch them early.

Switching Car Insurance FAQs

Some people find it confusing to switch insurance, so we’ve provided some quick answers to common questions about the process.

Can you switch car insurance companies while you have an open insurance claim?

Yes, you can switch car insurance companies while having an open claim. But you may lose valuable policy perks, like accident forgiveness. Whatever you choose, be sure to coordinate your transition so you’ll have continuous coverage.

Do car insurance companies refund premiums?

It depends. Car insurance companies may refund premiums in certain circumstances, such as canceling a pre-paid policy in the middle of the term or for overpayment. Overpayment is usually handled as a credit to your account. Insurers usually send a check or ACH payment for unused portions of your premium. This process can take a few days to a few weeks.

Do you need to cancel your insurance before switching?

Yes. Ideally, you want to cancel a policy so that it ends the day your new policy starts. This way, you’re not paying for double coverage. But overlapping your policies by a day or two offers a little cushion in case of an administrative error.

Can you change your car insurance coverage midway through your policy period?

Yes, you can change your car insurance policy anytime during your policy period. Some insurers charge administrative fees for early cancellation, so review your policy documents before you switch.

Sources

1. Insurance Information Institute, “Is it legal to drive without insurance?,” accessed March 28, 2024.