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Switching car insurance companies is relatively painless and can save you money, or help you get stronger customer service or a policy better tailored to your needs.
You can switch car insurance companies at any time, even if you just renewed a policy with your current insurer.
While most insurers don’t penalize customers for switching, some may charge you a cancellation fee.
Shop around for auto insurance at least once a year to make sure you’re getting the best deal possible.
If you’ve ever bought auto insurance, you’ve probably considered changing car insurance companies at some point.
Although it’s likely not a top priority (let’s face it, insurance isn’t exactly glamorous), changing car insurance companies isn’t as daunting as it seems and it could even save you money. Yet, only 28% of Americans say they shop around for auto insurance regularly, according to a 2021 NerdWallet study.
But making up your mind to change car insurance companies is only half the battle. Here’s how to make the transition as smooth as possible.
How to switch car insurance companies
1. Compare auto insurers
Get quotes from at least three insurers if you’re considering switching car insurance companies. When comparing rates, review and match policy features — things like coverage types, limits and deductibles — to your current policy. Keep your declaration page handy when comparing rates. That's that one-to-two page document summarizing your policy and premium you’re paying.
When comparing companies, be on the lookout for perks or freebies that could pay off later. For example, Erie includes accident forgiveness in its auto insurance policies once you’ve been a customer for three years. NJM includes new car replacement, which pays for a brand new car of the same make and model if yours is totaled or stolen, minus the deductible.
2. Research the company before you switch
While price is important, don’t overlook other factors like customer complaints and coverage options when picking your new auto insurer. Otherwise, you might end up with a great rate but find yourself switching companies in another six months because of a frustrating claims experience. Check out our list of the best car insurance companies for auto insurers that put consumers first.
3. Contact your current auto insurer
If price is your main consideration for switching, talk to your current insurer to see if it’s willing to match your lower offer before you commit to changing car insurance. If it can’t provide a better rate, find out how you can cancel and request the policy end date in writing. In some cases, you might need to provide a written request to end your policy. Your new company may even help you “break up” with your current insurer by sending a cancellation letter on your behalf.
Take this opportunity to find out about any cancellation fees or possible refunds from your current insurer. Many companies allow you to cancel for free at any time, but some might charge a fee if you cancel mid-policy.
You may get a refund if you switch before your policy runs out. For instance, if you paid for a six-month policy but decide to switch after four months, your insurer should reimburse you for the remaining two months’ worth of coverage (minus any cancellation fee).
4. Avoid a coverage gap
Insurers charge significantly higher rates after a lapse in coverage, so make sure you have car insurance at all times. One way to do this is to set your new policy to begin the same day your old one officially ends.
Many insurers offer a discount for having continuous coverage, even if you’re switching companies. To qualify, some companies require you to sign up for a new policy seven days before the term ends, so keep this in mind when determining your start date.
5. Change your ID cards
Don’t forget to swap your old car insurance ID cards with fresh ones from your new insurer. Every state except for New Mexico and Washington, D.C., allows digital proof of insurance, and some insurers allow you to download a digital ID card on your phone. This makes it convenient to get your ID cards, but it also makes it an easy chore to put off. You might simply forget to print them if you opt for electronic documents stored online.
6. Let your leasing company or lender know about your switch
If you have a car loan or lease your vehicle, you may be required by your lender to have a certain amount of insurance coverage, including comprehensive and collision insurance. Because the lender or leasing company has a financial stake in your car, it will want to make sure the vehicle is covered by insurance. Naturally, then, it’s important for the lender to be updated with changes. Otherwise, it may think you don’t have the required insurance. Ask your new insurer to send proof of insurance to the lender or leasing company as well as to you.
When to switch car insurance companies
Aim to compare car insurance rates at least once a year to get the best deal. But you don’t need to wait until your policy ends to make the switch. You can change companies whenever you want: mid-policy, at the end of your term or even two days into your term.
You can even switch companies if you have an open insurance claim, but your current insurer will still be responsible for handling it.
Other common times you may want to change car insurance companies are when you’re:
Experiencing poor customer service.
Seeing a spike in your car insurance premium.
Planning to move.
Adding a new driver to your policy (for example, if you got married or want to add a teen driver).
Buying or adding a new car to your policy.
Seeing a drastic increase or decrease in your credit score — unless you’re in California, Hawaii, Maryland, Massachusetts or Michigan. Those states ban or limit car insurers from increasing rates depending on credit information.
Increasing or reducing coverage.
Even if none of these situations apply to you right now and you’re happy with your company, it’s worth taking the time to shop around. Some auto insurers use a practice called price optimization to charge loyal customers higher rates because they’re less likely to switch companies.
Keep in mind that your car insurance rate will stay the same during your entire policy. For example, even if you receive a speeding ticket, get into an accident or have another violation in the first month of a six-month term, your rate won’t increase until you renew.
Because of this, switching car insurance companies immediately after a traffic violation will likely result in higher rates. However, once you find out the cost of renewal with your current insurer, you can shop around to make sure you are getting the best price. NerdWallet recommends comparing rates one, three and five years after a violation.