Is It The Right Time To Switch Auto Insurance Policies?


UPDATED: JUN 2020 | 3 MIN READ

There are numerous reasons to consider switching auto insurance policies. Whatever your reason, switching vehicle insurance policies could save you hundreds annually. 

Here are the most common reasons for switching car insurance policies:

1 – Your premium has increased for no reason

An increase in your monthly premium for no reason should be an immediate red flag for you. Some insurance providers employ a technique known as price optimization.

A driver and an agent review an auto insurance policy in an office before switching

Insurance providers who price optimize, will slowly increase your rates to see how sensitive you are to change. If you are insensitive, i.e. you don’t respond to slight changes, they will continue to raise your rates assuming that you will pay whatever the premium is. 

Several states have passed legislation banning this behavior, but that does not mean it is entirely eliminated. If your rates have gone up but you are not sure why, at the very least you should contact your insurance provider to get some answers.

2 – Your current insurance provider doesn’t provide certain benefits

Each insurance company provides a variety of benefits to keep their customers happy and safe. If your insurance provider does not offer a benefit that you could take advantage of, perhaps now is the time to consider a switch.

Some popular benefits include:

  • Rental car coverage
  • Good driver or good student discounts
  • Bundling home and auto discounts

3 – You’ve Had a Life-Changing Event

A major life event could mean lower insurance premiums. Moving to another state, buying a house, getting married or divorced, adding a dependent to your insurance policy, or purchasing a new car could mean lower premiums for your policy. Alternatively, if you have a major traffic violation or a DUI, you might need to switch to a non-standard insurance company to find a lower rate.

4 – Your policy is up for renewal

Most car insurance policies are up for renewal at regular intervals of 6 months or 1 year. If you are happy with your policy, continuing coverage makes sense. But having to renew your policy is a good reminder that other options are available if you are unhappy or just curious if your rates could be lower. 

5 – Poor customer service

Poor customer service is a great reason to consider leaving your auto insurance policy. Ideally you won’t have to spend a lot of time dealing with your insurance provider, but when you do, you expect to be treated nicely. 

Perhaps they are unresponsive to your questions or they are disrespectful when you are trying to make a claim. Or, perhaps they make the claim filing process more of a headache than it needs to be and delay payments. 

6 – You are curious about a cheaper option

Perhaps nothing out of the ordinary has happened to raise questions about your policy. Instead you are just curious whether your rates could be lower or you could add extra benefits. 

Start by comparing vehicle insurance policies to see what is available. Even if you decide not to switch at this time, you know you have the option available to you when you decide the time is right.

FAQ Before Switching Auto Insurance Policies

Whatever your reason, switching auto insurance policies could save you hundreds annually. There are a few things you need to know before making the switch.

Can you change insurance providers mid-policy?

Yes, if you give your insurance provider enough notice time, they should allow you to cancel your policy at any time. However, there may be some costs associated with doing so. Cancellation policies vary across the industry, so it is best to contact your provider before making any change.

There is also a concern with a coverage gap. If your current policy ends before your new policy starts or before you have found a new policy altogether, you set yourself up for some legal risks. If you wait too long before finding a new policy, insurance providers might label you as high risk which could actually raise your rates. It is smart to ensure that your policies overlap to avoid any potential problems. 

Is the cheapest option always the best when comparing auto insurance policies?

Most insurance providers actively advertise their cheaper rates. However, these cheaper rates often come with less coverage. You might currently have collision, comprehensive, and liability coverage, but your new policy might leave one off or come with higher deductibles.

When comparing auto insurance providers, you want to make sure you are not just looking at the price tag. You want to compare quotes against policies similar to the one you already have. If you want to remove certain coverage or add certain benefits, you can then choose to do so. But, it is important to double check what your policy includes whenever changing providers. The cheapest option is not necessarily the best provider.

Sometimes there are also hidden fees or other charges associated with switching providers. Talk with the provider or an insurance agent to ensure there aren’t any additional fees that will raise the price tag.

How do I actually change my policy?

If you decide to switch mid-policy, the first thing you need to do is contact your current provider to see what you need to do. If you find that there are cancellation fees, you may decide to wait until your policy is up to make the switch. Otherwise, follow the procedure to make the change. 

If you wait until your current policy expires to make the change, then you just need to notify your current provider that you will not be renewing the policy.

In both situations, ensure you have another coverage option ready to go to avoid a coverage gap. It is also important to double check that your past policy is definitely cancelled. If possible, get written confirmation from your provider to keep yourself protected. 

When should I not switch my auto insurance policy?

Under most situations, changing your car insurance is okay. There are a few instances when it’s a bad idea to switch auto insurance companies:

1 – You have an open claim

If you were recently involved in an accident or your vehicle was otherwise damaged, you may have an open claim with your current provider. It is easier to wait until the claim is closed before switching policies. Otherwise, you may have to deal with two different providers to fulfill your claim. And, the new provider might use the claim to charge higher rates than they otherwise would. 

2 – There are cancellation fees

If you decide to look for a new auto insurance policy before your current policy expires, there may be cancellation fees. While these may not entirely deter you, some cancellation fees might be so high to make the switch more expensive than just finishing out the current term. 

3 – You prepaid your insurance policy

If you prepaid for the entire insurance policy, you may decide to just stick it out for the entire term. Prepaying, for some insurance providers, comes with a discount. 

But, if you decide to switch, talk with your insurance provider to ensure you are appropriately refunded for your policy. Most of the time this process is not troublesome, but make it a priority to avoid unnecessary complications.

Always Research Before Switching Car Insurance Companies

If and when you decide to switch auto insurance policies, make sure you do the proper research and communicate with your providers or agents. Switching can undoubtedly save you money in the long run, but it can come with some headaches. Knowing the right questions to ask and what problems to avoid can help ensure your switch is a seamless one.

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