Why shop around or switch insurers?
Most insurance agents recommend comparing car insurance prices every six months. Why?
Two reasons. First, the majority of policies renew every six months. And second, changing life circumstances could affect your insurance rating factors, potentially qualifying you for a better deal.
Fortunately, switching car insurance providers is pretty simple. In this quick read, you’ll learn how to change insurers so you can secure the best coverage at the most affordable rate.
Switching auto insurance companies in 4 easy steps
1. Compare insurance policies
Many insurance companies know their customers don't want to go through the trouble of shopping for a new auto insurance policy. This is why, on average, most companies raise their rates by 4 to 6% every year because their data shows that the threshold isn't high enough to warrant an immediate switch from their customers. Furthermore, if you've had an accident, added a driver or a car, you should expect your rates to be even higher.
Your first step in getting the best auto insurance coverage should be to see what other companies are offering.
2. Match your insurance coverage
As you start requesting car insurance quotes from other companies, it’s important to start thinking about what your current insurance policy covers and the coverage you’ll need going forward. Do you need collision, comprehensive, and uninsured/underinsured coverage? What’s your deductible? If you’ve just moved to a new state, what is the minimum level of insurance required by your state?
This information can be found on the declarations page of your current policy. You should always keep a copy of this page — also called a “dec page” — on hand at home. More specifically, you should have your current dec page directly in front of you when requesting auto insurance quotes. If you do not have one at home, request a hard copy via your current insurer or try to access your account online.
FYI, you need comprehensive and collision coverage if:
- Your vehicle has a loan or is leased
- Is worth more than $4,000
- You want to eventually resell the vehicle for a profit
3. Double-check your discounts
Make sure your current car insurance discounts and perks will carry over to your new insurer. Telematic and bundling discounts are typically the ones that will not automatically transfer — as a discount for having a clean driving record might.
Some insurance agents advise to you call your old company before switching — which you're encouraged to do for a few reasons.
First, ask if there are any cancellation fees, especially if you are in the middle of your policy term. Next, ask for a policy review. A policy review is basically a check-up on your current plan. You can speak with a company representative who can scan the policy for any discounts you have. Also, make sure that you aren’t being charged for tickets or accidents that should have by now fallen off your record.
If you're calling to "price match" with your new provider, however, you're out of luck. Because of the way insurance is regulated, car insurance companies do not negotiate — even if you've been a loyal customer for years. In the end, your current company might already be giving you every possible discount on your insurance premium. Still, it never hurts to ask.
4. If everything looks good, buy your new policy
You'll want to sign your new policy before canceling the old one so that you avoid any lapse in your coverage. Car insurance companies look closely for lapses in coverage, and you could be penalized for even the smallest of gaps. Another important consideration: driving without car insurance in the US is illegal in almost every circumstance.
Are the benefits of switching carriers worth it?
Ultimately, everyone has to make their own decision when it comes to switching car insurance carriers. Take a look at the below list of pros and cons to consider if it is the right move for you. Remember, you can always reevaluate things in another six months to a year if you aren't ready to change anything right now.
Frequently asked questions
Can you switch insurance at any time?
Yes, you can replace your car insurance provider whenever you choose. That means you could technically swap insurers on your second day of coverage or even while you have an open claim.
In addition, it’s common for drivers to switch once or twice per year. Rarely, you’ll find insurance companies that charge cancellation fees. Still, you can always ask about that before ending your policy.
How frequently does it make sense to change your policy?
The short answer is every six months. Generally, you’ll want to compare rates whenever a significant change might alter your rates. It may be a good idea to see what the market offers after you:
- Add or remove a driver from your policy
- Adjust how much you drive (e.g., retirement or working from home)
- Approach your renewal date (30 days before is an opportune time to start your search)
- Buy a new car
- Purchase a new home
- Get married
- Improve your credit score (credit does not affect rates in California, Hawaii or Massachusetts)
- Move to a new ZIP code
- Notice an increase in premiums
- Experience poor customer service
When is switching car insurance a bad idea?
You can switch at any time, but it’s not always advantageous. For example, you may want to stick with your current insurer when you have:
- Accident forgiveness. Accident forgiveness prevents your car insurance company from raising your rates after an at-fault accident.
- Bundled policies. Bundling is available to drivers who have multiple policies with the same company, such as car and home insurance.
- A loyalty discount. Once you reach a predetermined period, your insurance company may give you a discount for your loyalty. For example, Allstate, Farmers, Geico, Nationwide and USAA offer loyalty discounts.
- Recent ticket or been in an****accident. If you receive a ticket or cause an accident, your premiums under your current policy won’t increase until renewal. However, if you switch insurers, the incident will show up on your driving record, raising your rates with the new company immediately.
What information is needed?
- Driver’s license. Insurers require your driver’s license to review your record, and those with clean records pay the least.
- Social security number. It’s normal for insurance providers to ask for this because they use it to check credit, claims history and other info linked to your background.
- Vehicle Identification Number (VIN). The VIN is the unique ID for your vehicle and allows the insurer to set the rates based on the car you’ll be driving.
- Form of payment. You want your routing and account numbers or credit card. There will likely be a discount for signing up for automatic payments.
Your insurance company may request proof that you qualify for specific discounts, such as a:
- Completion certificate for a defensive driving or safe driving course
- Deed or proof of homeownership
- Military ID
- Proof of membership to an organization (like alumni association, credit union, professional association, etc.)
- Report card or transcript
Can you switch car insurance companies with an open claim?
Yes, you are allowed to switch auto insurance companies with an open claim. As long as the incident occurred while you were covered by your previous insurance company, the insurer will still pay out your claim.
Insurance companies don’t penalize you for switching your car insurance with an open claim. Stay in contact with your previous insurer until the claim is settled. Keep in mind some claims can have an impact on your rates.
How do I get the best rates?
If you’re looking for the best car insurance rates, comparing different companies is a no-brainer. Whether you plan on switching car insurance companies mid-policy or waiting until your current policy ends, getting the best coverage doesn’t have to be complicated. When researching, make sure you look at things like customer satisfaction and J.D. Power rankings so you feel confident in your decision.