How to Switch Car Insurance Companies in 6 Easy Steps

Switching car insurance companies is easier than you might think. You can change from your current policy to a new policy at any time. Most insurers don’t charge a cancellation fee for a midterm cancellation, though it’s worth confirming before you make the switch.

This step-by-step guide explains how and when to switch auto insurance companies and why it makes sense to switch to a new company.

Key Takeaways:

• A rate increase, new car purchase, or recent move are a few reasons to shop for a new car insurance policy.
• You can switch insurance companies anytime, but some insurers might charge a cancellation fee if you switch before your policy renewal date.
• Avoid a coverage lapse by starting your new coverage on the same day your old policy ends.

How to Switch Your Car Insurance Company

Whether your coverage needs have changed or you’ve just found better rates, here are six easy steps to switch to a new car insurance company.

1. Determine how much coverage you need
2. Compare car insurance quotes
3. Contact your current insurer
4. Purchase your new policy
5. Cancel your old insurance policy
6. Secure proof of insurance

1. Determine how much coverage you need

Each state has different insurance requirements, so it’s a good idea to familiarize yourself with your state’s laws and regulations. If you’re financing a new vehicle, check with your lender to see if it has specific coverage requirements, such as a maximum deductible for comprehensive and collision coverage.

You should also consider your personal coverage needs and limits. For example, is there a new driver in the household? Getting married or adding a teen driver might mean you’re eligible for discounts such as a multi-car or good student discount. Since teens are more likely to get into accidents, getting higher liability limits or full coverage is a smart move.

When getting your quotes, insurers typically ask for the birth dates and driver’s license numbers of all household drivers. They’ll also ask for the make, model, and VIN for each vehicle you’re insuring. Being prepared with this information — plus your current car insurance policy details with your coverage types, limits, and deductibles — can make getting quotes easier.

2. Compare quotes and research companies

Many factors go into determining insurance rates. And, since each auto insurer weighs the factors differently, premiums will vary for every insurer — even if you compare the same insurance coverage.

For instance, when comparing full-coverage car insurance quotes for the same driver profile, American Family, Nationwide, and State Farm quoted an average monthly premium of $166, $250, and $139, respectively, according to Compare.com data. As you can see, prices vary wildly.

Plus, each insurer’s discount and program offering vary by company and location. This is why getting at least three quotes from different companies can help you find the company with the best rate.

Although price is important, it’s not the only factor to think about — customer service is also worth considering. So, think about researching each company to review customer complaints through the Better Business Bureau (BBB), AM Best, J.D. Power, and the National Association of Insurance Commissioners (NAIC).

Evaluating customer claims and shopping experiences makes finding the best car insurance companies easier.

3. Contact your current insurer

Once you find a new auto insurance company, it’s a good time to contact your current insurer. It’s worth seeing if it can match the lower rate from the new insurance company.

And although you can’t negotiate premiums, your insurer might have discounts or other ways to save that can lower the cost of your current coverage.

You should also ask your current insurer if there’s an early cancellation fee. If you’ve paid your policy in full, you might be entitled to a prorated refund, which is the unused premium amount left after canceling early. For instance, if you paid for six months but canceled after two, the current company should reimburse you for the remaining four months minus any cancellation fee.

4. Purchase your new policy

Get your new car insurance policy before you cancel your old one. Making sure the start date of your new insurance policy matches your old policy can prevent a gap in coverage.

If you wait until your policy expires to switch, you could end up paying higher rates for not having continuous coverage — and you risk getting into an accident without insurance that neither insurer will cover.

Some auto insurance companies — such as Allstate, Progressive, and Travelers — will give you a better deal if you get a quote online or sign up for your new policy early. You typically have to get the quote or sign with the new insurance company seven or more days before the new policy’s start date to take advantage of these extra savings.

5. Cancel your old insurance policy

With your new auto insurance policy in place, it’s time to cancel your previous policy. But check a few things first:

• Do you have any open claims with your current insurer?
• Do the effective date of the new policy and the cancelation date of the old car insurance policy match to prevent a coverage gap?
• Did you receive proof of insurance from the new insurer with the correct start date?
• Did your current insurance insurer issue a refund if you’re eligible for one?

Once you submit the cancellation request, get written confirmation and verify it has the correct date. This way, your old auto insurance policy won’t auto-renew, and you’ll have proof of the date you canceled the policy in case you need it later.

6. Swap out your new car insurance ID cards

The final step is one of the most important: swapping out your old insurance ID cards for your new ones. Most states require you to have proof of insurance — either a physical card or a digital ID card.

You can get your physical card by mail from your insurer or print it out yourself. Digital proof of insurance is acceptable in all states except New Mexico.

Keeping your physical ID card with your vehicle registration makes it easier to find. However, it may be easiest to find a digital version on your phone. You could receive a fine if you get into an accident or pulled over and can’t produce proof of insurance.

5 Reasons to Switch Car Insurance Companies

Here are five reasons to switch car insurance companies:

• Your current policy is coming up for renewal. Car insurance rates are rapidly increasing — comparing quotes can help you get cheaper rates. Around 42% of people shopping for a new insurer are doing so because of a rate increase, according to the 2023 J.D. Power U.S. Insurance Shopping Study.
• Your driving record is changing. A ticket or at-fault accident can cause your current insurance policy rates to increase, but you might get a lower rate with a different insurance company.
• You’re buying a new car. Your vehicle’s make and model is one of the factors insurers use to determine car insurance premiums. Shopping around can help you find the best deal, especially if you need better coverage.
• You’re moving. Auto insurance is state-specific, so you must get a new policy if you move to a new state. But shopping when your ZIP code changes might help you save, too.
• You had a bad claims experience. When you buy insurance, you’re also paying for your claims experience — and a bad claims experience is a good reason to shop for better service.

When to Change Insurance Companies

Here are some of the best times to compare insurance companies and switch if you can get a better deal:

• Your marital status changes
• Buying a new or used car
• Moving to a new state or different ZIP code
• Adding a newly licensed young driver to your policy
• Retiring, working from home, or another life transition changes your driving habits
• You experience a significant change in your credit score where it’s a rating factor
• Buying a home
• You purchase an antique or classic car, and your current insurer doesn’t offer specialty insurance

Can you switch insurance companies at any time?

Yes. You can switch insurance companies anytime, though you might be charged a cancellation fee. If the insurer charges a cancellation fee, waiting until your current policy ends might make sense before switching to a different insurer.

FAQs About Switching Car Insurance Companies

Switching car insurance companies doesn’t have to be complicated. We answered the most common questions about switching insurers to help you decide if it’s right for you.

Do you need to cancel your car insurance before switching companies?

Not necessarily. Getting your new coverage before you cancel your old policy is best.

Matching your new policy’s effective date with your previous cancellation date can prevent a coverage gap. Preventing a coverage gap means you can avoid a rate increase or an insurance claim that’s not covered if you get into an accident.

Can you switch insurance companies during an open claim?

It depends on the company. Some insurers will let you switch companies during an open claim, but you still need to stay in contact with your old insurer until the claim is closed. The claim won’t transfer to the new insurance company.

If the claim is from an at-fault accident, you should inform the new insurer so you don’t get a surprise rate increase later on.

Do car insurance companies refund premiums you already paid?

If you already prepaid your premiums and you cancel your car insurance midterm, you should get a refund for any unused money in the policy.

For example, if you paid in full for six months but canceled after three, you should get a refund for the remaining three months, minus any cancellation fee.

How do you transfer car insurance from one company to another?

Transferring car insurance is easy. After getting a quote, complete the application with the new insurer and purchase the policy.

Cancel your current insurance policy on the same date as the effective date of your new policy to avoid a lapse in coverage.

Can you change car insurance companies too often?

No. There’s no limit to how often you can switch car insurance companies. But keep in mind that you might lose loyalty or renewal credits or bundling discounts when you switch companies.

It’s a good idea to shop when you have a life event, like getting married or buying a new car, or when your policy comes up for renewal. This way, you’ll know you’re getting the cheapest premium for the best service and coverage.

Sources

1. J.D. Power, “2023 U.S. Insurance Shopping Study,” Accessed October 23, 2023.