Personal finance

How To Change Car Insurance In 5 Easy Steps | Personal finance

Andrea Agostini

Major life changes, such as getting married, buying a new car, or even moving to a new state, affect your auto insurance policy premium rates.

If your car insurance needs have changed, you may want to start shopping for a new policy to save money. In this article, we’ll explain how to switch car insurance in five easy steps and help you figure out when it’s best to make the switch.

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How to change car insurance

Changing car insurance is not that different from changing other insurance policies. You have to shop around, evaluate the benefits of coverage, buy the best policy, and cancel your previous insurance. Remember to call your company and speak to an agent to find out if they have cancellation fees.

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From comprehensive coverage — liability, property and casualty, and collision — to medical payments and gap coverage, understanding the different types of car insurance coverage is an essential first step. If you need a refresher on what type of coverage to prioritize, our guide to how to buy car insurance has everything you need to know.

When you’re ready to switch to a new strategy, here’s what to do:

1. Get quotes from multiple vendors

The first step when changing car insurance companies is to shop around. Get car insurance quotes from at least three companies and compare coverage options, deductibles and premiums.

Drivers who need an affordable policy can get better rates from companies featured in Money’s best cheap car insurance item. You may also want to consider providers that offer auto insurance discounts that apply to you and the vehicle you drive. For example, Farmers Insurance offers discounts for essential workers and veterans and Nationwide offers discounts for cars with anti-theft devices.

Likewise, car owners with poor credit can look into telematics insurance companieswho offer car insurance for bad credit prioritizing a good driving record over creditworthiness.

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2. Evaluate Reputation and Ease of Use

The next step is to find out more about the companies. Read customer reviews and ask friends and family about their experience with their current car insurance provider. You want new insurance coverage that makes it easier to manage your policy, file claims, track repairs and get reimbursed.

If you want to go the extra mile, check out the company’s financial rating from agencies such as AM Best – this will give you a good idea of ​​the provider’s financial ability to pay future claims.

Bonus services include car insurance appsinsurance discounts, multiple payment options, and 24-hour assistance with insurance claims.

3. Avoid a gap in coverage

Now that you have a list of companies and are ready to buy the new plan, there is only one thing left to do before switching insurers: protect yourself against a break in coverage. A continued lack of coverage not only leaves you unprotected, but may also cause insurers to raise future rates, as some insurance companies consider you an uninsured driver for that period.

You can avoid this by ensuring that the activation date of your new policy coincides with the last active date of your current car insurance. If you change companies in the middle of the insurance period, you can avoid the coverage gap by scheduling when you want the coverage to start.

4. Request a new policy

Once you know which company and which coverage is best for you, it’s time to buy a new plan.

Gather the following information to request a new policy:

  • Identity cards and social security number
  • Driving license
  • bank account information
  • Vehicle information – registration, make, model, VIN number
  • Personal information and proof of residence of secondary drivers

5. Cancel your old policy

You may need to speak to an agent or submit a formal written request to cancel your old policy. We recommend calling your current insurance company so an agent can walk you through the cancellation process. If you have paid premiums in advance, be sure to inquire about insurance reimbursements and any cancellation charges or penalties.

Once the cancellation is finalized, you should receive written confirmation from the insurer. Finally, check that any automatic payment or bill payment service is also cancelled.

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When to change car insurance

Consider switching auto insurance if you:

Move to a new zip code, city or state

Car insurance is regulated differently in each state, which means you’ll need to purchase a new policy once you arrive. Keep your old policy active until you arrive at the new location, as it is illegal to cross state lines uninsured.

To marry

As a married couple, a new car insurance policy translates to lower rates. Couples can take advantage of these savings even more with loyalty discounts, multi-car discounts, and bundles for renters and homeowners insurance.

Buy a new vehicle or add an additional car to the policy

An additional car on your policy will most likely increase insurance rates. New vehicles, in particular, will increase premiums, as they will be more valuable than your previous car.

See a significant change in your credit score

Your credit score can have a direct impact on your car insurance rates. If your credit score has increased significantly since you took out the policy, you might see a reduction in your premium with a new insurer.

See an increase in your car insurance premium

Your current insurer will not increase rates during the term of the policy, but it could happen at renewal. Although the typical culprits are major life changes, sometimes auto insurance rate increase due to factors beyond your control, such as an increase in reckless driving.

Add a teen driver to your policy

Insuring teenage drivers is expensive as they are considered high risk by car insurance companies. Offers such as “student discount vouchers” as well as multi-vehicle, mileage and groupage discounts can help offset the cost.

You want to increase or decrease coverage

There are situations where the current policy coverage no longer meets your insurance needs. For example, a lease buyout – dealerships typically require higher coverage when leasing a car, but the same policy may be too high for an auto loan.

Are close to policy renewal

Auto insurance policy terms expire every six months or once a year. To ensure it is still suitable for your lifestyle and budget, it is advisable to review the policy before renewing. Canceling close to renewal means you don’t have to face penalties.

Frequently Asked Questions

How to change car insurance for a new car?

Insurance companies offer a grace period anywhere between 7 to 30 days, during which they'd cover your new vehicle while you make arrangements to update the current policy or purchase a new one entirely.
You can transfer your current coverage to the new vehicle or purchase a new policy entirely. Regardless of what you choose to do, the car dealership will let you drive the vehicle off the lot as long as you provide proof of insurance.

Can I change auto insurance at any time?

Yes, you can switch car insurance anytime, near policy renewal or even mid-policy, and qualify for a refund on any premium payments made in advance. However, if you have an open claim, it might be better to wait until it's settled since the previous provider will still manage the claim.
If your current provider charges cancellation fees or refuses to refund unused premiums, we recommend that you calculate whether the savings of a new policy offset the cost of canceling prematurely.

How do I cancel my car insurance?

To cancel your car insurance coverage, get in touch with your insurance agent. You may be able to do it over the phone, but some providers require a mail-in or faxed cancellation document with your signature. We recommend you get the cancellation confirmed in writing and double-check that automatic payments are deactivated. 

How to change auto insurance in another state

Switch to a new provider once you're settled in your new state, as costs depend on the state, location and commuting distance. On the other hand, if you're happy with your current provider, call your agent to learn how to transfer the policy.
Remember to keep the current policy active until you reach your new home, as it's illegal to drive across state lines without insurance.

Overview of Money’s How to Change Car Insurance

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