You need car insurance. Without coverage, you’d be in violation of auto insurance requirements in most states. You’d also be risking major out-of-pocket losses. However, if you’re unhappy with your current company, can you switch car insurance at any time?
Although you can switch companies, you’ll need to proceed carefully to avoid cancellation fees and car insurance coverage gaps.
Why do people switch car insurance companies?
There are many different reasons for switching car insurance companies:
Reason #1: To save money on car insurance premiums.
Although insurance companies tend to rely on many of the same factors to make underwriting and pricing decisions – such as location and driving history – auto insurance carriers may weigh factors differently, causing rates to vary. You might want to switch if you find a better deal with a different auto insurance company.
Reason #2: To receive better customer service or claims service.
If you’re not receiving the customer service you deserve, you might want to switch to a new car insurance company that provides better service. This is an especially common reason for customers who filed a claim and were unhappy with the claim process.
Reason #3: To get more convenient policy features.
Some people decide to bundle their homeowners and auto coverage to streamline account management. Others switch to get access to certain features like mobile access via an insurance app, digital claims reporting or online bill pay.
Reason #4: To find a better fit.
If your needs change, the car insurance company you originally picked may no longer be a good fit. For example, if you had a bad driving record, you might have needed to choose an insurance company that was willing to cover you. Once you’ve improved your driving record, you might have more coverage options. Your needs might also change if you move to a new area or buy a new car.
Switching Car Insurance Companies After a Crash
If you’ve been in a car crash, you may be worried about your rates. Car insurance rates usually increase after an accident. If the accident was your fault and the damages were significant, you could be hit with a large rate increase.
If your premiums are increasing because of an accident, you might be wondering if you can avoid the increase by switching insurers. It’s possible you’ll be able to find a better rate elsewhere – but there’s no guarantee.
Insurance carriers will look at your driving history, which means they’ll be able to see whether you’ve been in a crash in the last three to five years. You won’t be able to “escape” a bad driving history by switching insurers. However, as some car insurance providers might raise your rates more than others, it’s possible you’ll be able to find a better deal by switching. You won’t know until you shop around.
Cancellation Fees for Switching Insurers
If you switch car insurance companies in the middle of a policy term, you may have to pay a cancellation fee.
Car insurance policies are usually for six months – when you receive your car insurance policy documents and proof of insurance, you’ll see the dates of coverage. Once the end of the term arrives, the insurance company will probably renew the policy automatically. The exceptions are when the insurer decides not to renew or when you’ve notified the insurer you’re cancelling your coverage.
You can cancel your policy before the end of the policy term. However, the insurance company may charge you a cancellation fee. You may decide it’s worth paying this cancellation fee to gain coverage that’s better for your needs. However, if the cancellation fee is high and you don’t need to switch immediately, you might decide it’s better to wait until the end of your policy term.
Avoiding a Gap in Your Coverage
When you switch auto insurance companies, the most important thing is to avoid a gap in your coverage. Even a short gap can be a big problem.
Under state law, drivers are required to maintain car insurance. When you cancel your policy, your car insurance company will probably be required to notify the state department of motor vehicles. If you don’t have other coverage in place, you may face fines and other penalties.
Even bigger problems can arise if you’re pulled over or suffer a crash. In Texas, if a police officer pulls you over and you don’t have insurance, you’ll likely receive a ticket and a fine of up to $350. If you are pulled over again, you could face a fine of up to $1,000 and your driver’s license may be suspended.
If you cause a crash and don’t have insurance, you could be held personally responsible for the associated costs.
Car insurance offers important protection, so you don’t want to go without it.
How to Switch Car Insurance Companies
If you’re thinking about switching to a new car insurance company, you need to proceed carefully to avoid both overpaying and leaving gaps in your coverage. Here are some important steps to follow:
Find out your current insurance company’s cancellation policy.
Specifically, find out if there’s a cancellation fee or if you need to give a certain amount of notice. This will help you plan your timeline for the switch. Don’t cancel your coverage yet – just do the research.
- Shop around for coverage – preferably with the help of an independent insurance agency. Request quotes from different insurance companies to see if they can offer you a better deal. If you work with an independent insurance agency, it checks rates with several car insurance carriers on your behalf, which is a huge timesaver. It can also provide you with guidance and unbiased advice to help you choose the best policy for your unique situation. On the other hand, if you choose to get coverage from an agency that only sells one brand of car insurance, your options are limited.
- Buy new insurance coverage before cancelling your existing policy.
Before you move on to the next step, wait for your new coverage to be finalized, receive proof of coverage, and make sure you know the effective date of your new policy.
- Contact your old insurance company to cancel your coverage.
Make sure the cancellation date is not before your new car insurance policy goes into effect – you don’t want a coverage gap. If you are working with an independent insurance agency, it may be able to assist you with the process.
Manage access and documentation.
Set up access to your new auto insurance account and mobile app. Find the insurance ID card and put it in your wallet. If your vehicle is financed, you may need to send proof of insurance to the lender.
Should you switch auto insurance coverage?
If you’re not happy with your current coverage and are thinking about switching car insurance companies, Higginbotham can help. We are an independent insurance broker with access to many auto insurance carriers. We’ll review your needs and help you find the best auto insurance policy for your needs. Learn more.