When Is the Right Time to Change Your Car Insurance?

By Jennifer Brozic 07/09/2021 2:19pm

Car insurance: when is the right time to switch

Switching car insurance companies is simple, and it can save you hundreds of dollars on your premium each year. At a minimum, it probably makes sense to compare rates every year or two.

But sometimes it may not make sense to wait that long.

When Should You Switch Auto Policies?

Changing insurance companies when your policy is expiring is convenient. But sometimes, it might be better to make a move before the end of your policy term.

  • Your credit improved. In many states, credit-based insurance scores are one factor insurers can use to help them determine policy rates. If your credit is better now than it was the last time you paid your premium, you may be able to purchase comparable coverage for a lower price somewhere else.
  • You got married. It may not seem fair, but people who are married pay less per year for car insurance than people who are single. If you recently tied the knot, check out your options from other insurers.
  • You added or removed a driver or vehicle from your policy. Adding a driver or vehicle to your policy typically increases your premium, and removing a driver or vehicle usually decreases it. How much your rate changes depends on the insurer. If you find a lower price with a different company, switching car insurance might make sense.
  • You bought a house. In general, rates for homeowners are lower than rates for renters.
  • You moved out of a city. Insurance companies factor in the rates of theft, vandalism, and auto accidents where you live when deciding how much to charge for insurance. If your new home is in a less-risky neighborhood, you might want to get prices from different insurers to see if you can save.
  • You need specialty coverage. Not all insurers carry every type of coverage available. If your needs change, you may have to look elsewhere for insurance. For example, if you recently bought a classic or vintage automobile, and your current provider doesn’t offer classic car insurance, you’ll need to find a different company to insure your car. If you’ve cut back on your driving, you might want to check out pay-per-mile policies.
  • Your insurer increased your rates. There are many reasons why insurers raise rates, from natural disasters to at-fault auto accidents. If you’re not satisfied with the rate increase, it’s time to check around. Before you make any change, talk to your existing insurer to find out why the rates increased and if you’re getting all available discounts. If your premium increased because you filed a claim, it may be more difficult to get lower rates with a different insurer. But it’s worth checking because companies use different criteria to determine rates.

Tips for Changing Car Insurance Companies

Changing car insurance companies is easy. Check out these pointers.

  1. Shop around. Getting quotes from multiple providers will help ensure you get the lowest price possible. Plus, it’s important to find new coverage before canceling your existing policy so your coverage doesn’t lapse.
  2. Talk to your existing insurance company. It’s important to let your insurer know that you want to cancel your current policy. You might be able to cancel your policy over the phone. But some companies may require you to submit your request in writing. And they might charge a cancellation fee, depending on the insurer.
  3. Don’t cancel your existing policy, yet. It’s important that your new policy take effect before your old one is terminated. If your coverage lapses, you won’t be protected if you’re in an accident. And your new insurance company may increase your rates for not maintaining continuous coverage.
  4. Let your lender know. If you’re leasing your vehicle or have an auto loan, you might want to give your lender a heads up that you’re switching. Your existing insurer will send them a notice that your policy has been canceled.
  5. Get a letter of cancellation. Make sure you receive a cancellation letter from your previous insurer confirming that the policy is no longer effective. This will help protect you if something goes wrong.

RELATED STORIES: Why Do Car Insurance Companies Cancel Policies?

Pros and Cons of Making a Change

There are advantages and disadvantages to switching car insurance companies. You might find additional coverage options and discounts your current insurer doesn’t have. And you may be able to get comparable coverage for hundreds less than what you’re paying now.

But there are some downsides to switching. If you currently have a loyalty discount, you might lose it. And you may have to pay a cancellation fee if you change insurance companies. If you’re saving enough on the new policy to offset these costs, it probably makes sense to change insurers. But it’s worth doing the math before buying a new policy.

Can You Save Money by Changing?

Because rates can vary significantly between insurers, you might save by switching. But how much — if anything — you save depends on various factors such as your age, credit history, driving record, whether you’re married, and more.

Don’t forget to ask about discounts when you’re shopping around and compare quotes from multiple providers before switching. If you have more than one insurance policy, you may be able to save by moving all your policies to a single insurer to take advantage of multi-policy discounts.

While certain events such as tying the knot, buying a car or a house are good times to consider changing car insurance, you can do it at any time. And if you’ve used the same insurer for several years, it’s probably worth pricing policies from other companies to see if better options exist.