Why More Drivers Are Switching Car Insurance Companies

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Written by Paige Cerulli Edited by Quiana Darden Reviewed by Amanda Clear

Updated December 20, 2022

In the past, many drivers only chose to shop for car insurance when necessary. You might look for a different policy when you buy a new car; your current insurance company increases its rates, or you move to a new state. As a result, drivers would only switch car insurance companies occasionally. 

That is, until now. Changing trends reveal that drivers are starting to approach their car insurance differently. Rather than continuing with the same policy for years and years, drivers are taking a more active stance on their insurance. This involves making sure that their policies truly work for their needs. 

More Drivers Are Switching Car Insurance Companies

According to the J.D. Power Quarterly Shopping List Report, 2021 saw significant changes in how drivers approach their car insurance. In quarter one of 2021, just 3.2% of drivers switched car insurance, and those numbers climbed to 3.4% in quarter two. They remained steady at 3.5% throughout the last half of the year.

The report revealed surprising information about drivers shopping for car insurance. In most of 2020, higher-risk drivers were less likely to shop for a new car insurance policy than lower-risk drivers. But in the spring of 2021, that trend reversed. Higher-risk drivers began searching for new insurance more than lower-risk drivers. That trend continued through the third quarter of 2021. 

Additionally, 49% of drivers opted to use a telematics option in 2021. That trend may be because higher-risk drivers were looking for ways to save money on insurance. Still, it may be because more insurance companies are offering these telematics options. 

With telematics, drivers can use an app on their phones or install a device in their vehicle for a certain period. That app or device tracks their driving habits. It provides the insurance company with data about how safely the driver operates their vehicle. Insurance companies use that data to calculate premium rates or offer good drivers discounts. 

As technology evolves and more insurance companies embrace telematics, we may see drivers switching insurance companies more often.

In addition to monitoring driving habits, some car insurance companies offer pay-per-mile options to help drivers who only occasionally use their vehicles save money. 

When it Makes Sense to Switch Car Insurance Companies

There are many situations when it’s a good idea to shop around for a new car insurance company: 

• Premium increases: Every insurance company will periodically increase premiums, but you may be able to find the same coverage for less with another company. 
• Relocation: Your insurance rates could change if you move out of state or from rural to urban areas. Some insurance companies only offer coverage in certain states, so if you’re moving, you might have to change insurance companies to maintain your coverage.
• Policy changes: Changes to your policy, like adding on a new vehicle or another driver, can increase your premiums. You might even find you can make the necessary without paying more. 
• Accidents or traffic violations: If you’ve recently been in an at-fault car accident or gotten a ticket for a traffic violation, your rates are likely to increase. This is also true if you have a DUI. When this happens, it’s a good idea to shop around for a lower rate. 
• Life changes: Life changes like getting married or divorced or adding a new driver to your policy can increase your premiums or qualify you for lower rates. Shopping around after a significant life change is a good practice. 
• Driving changes: If you’ve retired, started working from home, or gotten a job with a shorter commute, you might be able to save money with a different insurance company. This is particularly true if your current insurer doesn’t offer a usage-based insurance rate. Switching to a company offering per-mile rates could lead to significant annual savings.
• Annual policy renewals: Even if you’re content with your current insurance, it never hurts to shop around, and it’s a good idea to do so annually. Consider shopping for new insurance a month before your annual policy renews. Doing so allows you to start a new policy just before your old one expires.

Pros and Cons of Switching Car Insurance Companies

It’s essential to understand the pros and cons that come along with switching car insurance companies.

Advantages of Changing Your Car Insurance Company

• Money savings: When shopping for car insurance, you could save money simply by changing insurance companies. Getting quotes from other insurers could reveal you can get the same coverage with another company for less, making your insurance more affordable. 
• Additional discounts: Car insurance companies offer different discounts. If you switch to a new insurer, you might be eligible for other discounts that can save you money. 
• Better coverage: If your current insurance company’s coverage options don’t meet your needs, you may be able to find better, more comprehensive policies elsewhere. This increased coverage gives you better protection and could save you money if you ever need to file a claim. 
• Improved customer experience: If you switch to an insurance company known for its quality customer service, you may be happier with this insurer. This can also be true if you’re looking for an insurance company with an app or online services you can’t get through your current insurer. Changing companies can be a great way to improve your overall experience each time you need to interact with the company. 

Disadvantages of Changing Your Car Insurance Company

• Cancellation fees: Your current car insurance company might charge a cancellation fee if you cancel your policy before it expires. If you’re thinking of switching companies, contact your current insurer to ask about cancellation fees you need to be prepared to pay. 
• Loss of discounts: If you have loyalty or multi-policy discounts with your current insurance company, you may lose those discounts when you switch insurers. For example, if you switch only your car insurance to a new company, your homeowner’s or renter’s insurance policy could increase because you lose that multi-policy discount. If you’re thinking of switching companies, it’s a good idea to look for one where you can transfer all of your policies. In doing so, you’ll be eligible for a multi-policy discount again.
• Potential for a lapse in coverage: If you cancel your existing policy before a new one takes effect, you could have a lapse in your insurance coverage. A lapse in coverage can increase your rates with a new insurance company. This situation can be avoided by ensuring that your insurance cancellation date and the start date for your new policy overlap, so you’re never without coverage. 

How to Find a New Car Insurance Company

If you think it might be time to find a new car insurance company, it’s best to start by shopping around. 

It costs you nothing but a few minutes of your time, and you don’t have to commit to changing your policy if you don’t find a better match. 

Paige Cerulli Auto Insurance Writer

Paige has written extensively on automotive topics. She frequently covers autonomous driving and electric vehicle topics, writes about car insurance and auto loans, covers car and trailer towing safety, and has written content for automotive dealerships.