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How to Switch Auto Insurance Companies

Jason Metz

Maybe you’re moving to a new state or your current auto insurance policy is about to expire. There are numerous life events such as getting married, an improvement in credit score, or a new job, that may precipitate a desire to switch your car insurance, but whatever the case may be, it never hurts to shop around and get quotes. However, should you decide to make a switch, here are a few things to keep in mind.


Confirm What Your Current Policy Includes

What coverages do you currently have? Are they necessary or do you need to consider purchasing more? If you’ve bought or leased a new auto, you may want to add collision and comprehensive. If you’re leasing a vehicle, some lessors require a certain amount of coverage, so you’ll want to be sure your new insurance carrier offers the same. The bottom line is you’ll want to consider your specific needs and make sure that you’re not paying less to buy less coverage than you’ll actually need.


Cancel Your Old Policy

Prior to switching your auto insurance, determine if there’s a cancellation/termination fee with your current provider. Often, carriers will charge these fees if you cancel before your policy is over. If the cancellation fee outweighs the financial benefits of switching carriers, and your lifestyle change doesn’t necessitate an immediate switch (such as moving to a state where your carrier doesn’t provide coverage), you may want to wait until your current policy expires before switching. Conversely, if you’ve paid your premium in full and cancel before the policy ends, you may be due a refund, so you’ll want to check on that as well. You may also request that your current carrier waives any cancellation fee or that your new carrier might offer to cover the cost as a way to entice new business.


Avoid the Coverage Gap

When switching auto insurance companies, make sure your new policy is in place and set to begin before canceling your current policy. If there’s a gap in coverage and you get into an accident, you may be considered uninsured and liable for any damages out-of-pocket. In a 2008 study conducted by the Insurance Institute for Highway Safety, they crash tested 20 compact vehicles at low-speeds (3 mph - 6 mph) and found that front bumper repair costs ranged from $588 to $4,078.

Additionally, if you’re uninsured, you may face fines or penalties depending on the state law. In Delaware, you’re subject of a fine not less than $1,500” for the first offense and possibly have your license suspended. In Minnesota, you’re subject to a fine of not less than $200.

There’s also the possibility that having a gap in your coverage could result in an increase in your premium. All of this can be avoided by planning ahead, knowing precisely (date & time) when your new coverage will take effect, and acting accordingly.


Print Out Your New ID Cards

So, you’ve made the switch and you’ve made sure there’s no coverage gap. Don’t forget to print out your new insurance ID cards (or download them to your smartphone if your new carrier & state allows for this as a sufficient proof of insurance). If you’re pulled over or in an accident and unable to provide valid proof of insurance, you may face fines or a not-so-fun day at traffic court, all of which could be easily avoided.

As with most things, preparation is key. Prior to your move, educate yourself on the particulars of your new state and its insurance requirements. Confirm the date of your new policy taking effect and your old policy canceling to avoid any gaps in coverage. Check to see if you’re due any refunds or if any cancellation fees can be waived or picked up by your new carrier. And last, make sure you’re able to produce proof of insurance. With a little bit of planning, you can avoid a lot of headache and protect yourself from being liable to damages, penalties, and fines.