How and When to Switch Car Insurance

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One expense most people don’t like to pay is car insurance. It’s one of those necessary bills that is required when it comes to driving. Finding the best rate is often the goal.

But finding new car insurance that is less expensive and offers better coverage can be challenging. How do you switch without interrupting your current policy? And one question is when it is important to switch.

How to Switch Car Insurance

When it comes to auto insurance, don’t set it and forget it. You should be reviewing your policy every year. It’s not just the cost you want to look at but also the coverage as well.

When shopping for insurance, you may find a great price; but when you dig deeper, the coverage is inadequate. You must compare both to your current policy.

To switch car insurance, follow these steps.

Compare Car Insurance Alternatives

Make sure you compare apples to apples. You don’t want to end up under or over insured. Elements you should look at are:

• coverage options
• liability limits
• deductibles

Once you’re comfortable that the new company has these elements at the level you need, start looking at reviews. How do they pay claims? What type of service do they give? Also look them up on the Better Business Bureau.

You can also check with the National Association of Insurance Commissioners.

Once you’ve done the research on the company, start looking at available discounts

Are There Discounts for Auto Insurance?

There are various discounts available. One is certainly going to meet your lifestyle. Some discounts include:

• military discount
• paid-in-full discount
• anti-theft device discount
• automatic payment discount
• student driver discount

Many rates are lowered if you bundle your insurance. You could bundle with renter’s or home insurance. Multi-car discounts are also available.

Once you’ve done all the research, checked the coverages and had the discounts applied, you’ll have your final rate. Compare all of these elements to your current policy. If you want to move on there are some details you should know.

Cancelling Old Policy

Don’t cancel your old policy until you’ve put your new policy into effect. And don’t stop paying for it until you cancel.

If you cancel your old insurance policy before the new one is in effect, you could have an accident without coverage. You then are completely liable.

It’s also illegal. A gap in insurance could result in:

• license suspension
• state fines
• higher rates from insurers

Ensure you have all the documentation from your new carrier in place before you cancel.

Your current insurance company may request information about the new policy. This includes the policy date, provider, and effective date.

Some states require the Department of Motor Vehicles be informed of the change.

You must inform your car loaner holder of the new insurance. Since the lender is listed on your old insurance policy, the company will inform the lender of the cancellation.

Failure to send the lender your new insurance may result in the lender putting a forced insurance policy on your monthly car payment.

Are You Refunded the Rest of the Old Company Premium?

Most insurers will give you a prorated refund for coverage if you have paid ahead of time. For example, if you paid for a full year and switched after six months, your old insurance carrier should refund you six months of premium.

Why Switch Car Insurance?

Sometimes an insurance carrier drops the ball. If you had a bad claims experience, you may want to switch insurance.

If you’re buying a new car, you may want to switch insurance. This is especially true if you want Gap insurance, and your company doesn’t offer it. Gap insurance pays the difference between what your car’s actual cash value (ACV) is and its replacement cost. Without Gap insurance, you’ll receive ACV. This may not be adequate.

You might have a life-changing event like moving or a new marriage.

Since many insurance companies determine some of the cost with your credit score, if it changes for the good, you might want to switch insurance carriers.

If you’re retiring and will not be putting all those commuting miles on your car, you might want to consider changing insurance companies. Some companies offer a non-traditional car insurance like pay-per-mile insurance. This could save you money if you don’t plan on using your car much.

Your teenager is driving. Different insurance companies price teen drivers differently. You might need to find one that’s more lenient or offers good student discounts.

Changing Car Insurance

It’s a good idea to review your insurance yearly. This is the perfect time to change. Don’t jump around every two or three months. This can hurt you, too.

Remember, one of the best ways to lower your insurance premiums is to bundle with your house. And you don’t want to be frequently changing home insurance companies.

Changing too often also means you’ll miss out on loyalty discounts.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.