How to Switch Car Insurance

To save money on car insurance, carefully review your current policy, and compare quotes from multiple insurers. Shutterstock

The cost of living has been running high over the past few years. That means every penny counts. One way to save is to look at recurring expenses and whittle them down. Your car insurance is a large recurring expense that can’t disappear, but it can be lowered.

Shopping around is one of the first steps in switching car insurance, but it’s not the only one. Do your due diligence to ensure you have the best price while keeping your vehicle insured.

Examine Your Existing Policy

It seems like everything in life has “fine print,” and your insurance policy is no different. Read the fine print of your current policy.

Your insurance carrier may charge a cancellation fee if you terminate your policy before the expiration date. Therefore, it might be wise to wait before you switch.

In the United States, an auto insurance cancellation fee is usually a flat fee under $100. However, some carriers charge 10–15 percent of the remaining policy premium.

But mark the expiration date in your calendar because some carriers automatically renew policies. 

Check Reviews and Ratings

Before you talk to a company about a quote, ensure it has a good rating. A rating is an opinion about the company’s financial strengths. It lets you know how the company can withstand certain hardships. These would include:

• struggling economy
• increased claims
• financial hardships

Several organizations monitor an insurance company’s strength. A.M. Best is the most prevalent and most used by insurers. It scores from “A++” to “F”. It’s wise to choose in the “A” range.

Read reviews from other policyholders. Although reading about how much people saved is great, the real story is how the claims were paid. Insurance doesn’t mean as much if it’s not there when you need it.

What Coverage Do You Need or Want?

Look at the coverage you currently have. That means going back to your policy and reading it. Start with the deductibles. Are they high enough for your comfort? Do you have a rental car on your policy in case of an accident? What discounts are you receiving?

Once you’ve determined what you have, you’re ready to start shopping. But if you have needs that aren’t being met with your current policy, call your agent and find out how much they would cost to add to your policy. This way, you‘ll know exactly what you’d be paying, and you can efficiently compare it to other companies.

Compare Various Quotes

Many car insurance companies provide a quote online within minutes. And on the surface, a low quote may seem great to you. But there are several factors you need to consider.

What are the deductibles? If they’re not the same, then ask the new company for the correct deductibles and compare. Ask about any available discounts. For example, State Farm Insurance offers a 25 percent discount if your teen has good grades. The average discount rate is 12.5 percent, among other carriers. If you have teens, this is an important question.

What perks come with the competitor’s coverage? Are they the same or better than your current policy?

Purchase New Policy Before Canceling Old One 

If everything adds up, you’re ready to purchase your new policy. Ensure you buy the new one before the old one expires or you cancel it. You want to avoid a gap in coverage. 

Even a day gap can increase your insurance rates. That’s because you will be considered uninsured for a period. Having two car insurance policies for a day or two is better than having that gap.

So, if you’re waiting for that old policy to expire, put in your new one first, then cancel the old one. If you’re changing during the old one’s policy year, activate your new policy and then cancel the old one.

Proof of Insurance for You and Your Lender

You don’t want to be pulled over without your insurance card. Ensure you print it immediately and place it in your car. 

Most states will accept a digital ID card, so you can download your carrier’s app. But in case you don’t have cell service, keep a card in your glove compartment.

Your lender will need to be informed that you switched insurance immediately. Because the lender is listed on your insurance policy, the old insurer will notify them that you have canceled your auto insurance.

You’ll need to list the lender on your new policy. Once you let the insurance company know the lender, it will send the lender proof of insurance. It’s a good idea to call your lender to ensure it has everything it needs.

Switch Car Insurance to Save

There are many reasons to switch car insurance. If you’ve moved to another state, you may have to pay a higher premium. If your child is now driving, your premium could have skyrocketed. You might be married and now qualify for a bundle. 

Regardless of the reasons, exploring car insurance coverages and rates is fiscally wise and could save you.

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.