Navigating the Switch: A Detailed Guide To Changing Car Insurance Providers
If comparing car insurance costs isn't part of your money routine, it's time to consider starting. The cost of car insurance rose a whopping 26% this year. Americans now pay an average of $2,543 annually — 3.4% of the median household income.
The good news is car insurers know people shop around, and many offer competitive quotes to lure new subscribers. If you've been considering changing car insurance providers, here's what you need to know.
Changing Car Insurance: When Is It Time?
You don't need a reason to change car insurers, but there are some circumstances when it's a must.
You're Relocating
Car insurance costs vary by state, town, and even neighborhood. Locations with higher crime rates tend to mean higher insurance premiums for residents simply because the risk of damage is higher. Consider shopping around for quotes whenever you move, even if the two neighborhoods seem equally safe.
You Were in an Accident
Being in a car accident can cause your insurance company to raise your rates. The increase will usually be higher if you were at fault or the accident caused severe damage. While a new company would still use your driving history to set your rates, you might save by switching to a company with a lower price baseline.
You Need To Add or Remove a Driver
If someone lives with you and frequently drives your car, they should be on your insurance policy. Additional driver insurance may increase your premium in some cases, but it may also reduce what you pay. If the added driver has a lower risk profile, having them on your policy could lower costs.
There are also times when you need to remove someone from your policy. Maybe an adult child moved out permanently, or an older family member can no longer drive safely. Removing them from the policy will likely change your rate, so it's a great time to shop around.
Get quotes from several insurers for your new driver group. You might find a better rate with another company because they handle additional drivers differently.
It's Been 12 Months
It's worth shopping around for car insurance every time your policy renews. For most policyholders, that works out to every six to 12 months. Annual rate increases are standard in car insurance, so plan to check rates every year at a minimum.
How Much Can You Save?
Recent research shows that changing to a new carrier can save you between 10% and 20% on your car insurance. That's a significant savings over the median 6% or 7% discount for policy renewals.
According to data we've collected on premiums from top carriers, a simple switch can save you up to $138 a month. You can save even more if you qualify for one of your new carrier's discount programs.
As you shop around, look at the discounts each provider offers. Common options include:
- Paperless discounts: For choosing to receive paperwork electronically
- Safety discounts: For cars with features like anti-lock brakes or airbags
- Multi-policy discounts: For bundling your policy with other types of insurance
- Good driver discounts: For individuals with clean driving records
Some providers offer additional "safe driver" savings if you let them track your driving. Programs usually involve downloading an app or installing a mechanical device you send back for analysis.
If your current insurer doesn't offer this type of program, switching to one that does can save you more — assuming you drive safely.
“ Recent research shows that changing to a new carrier can save you between 10% and 20% on your car insurance.”
Potential Costs of Switching
Changing car insurance providers can leave you at a loss if you don't do your homework first. You might receive an attractive quote, then find out too late that the quoted policy offers a different level of coverage. If something happens, you might have to pay more out-of-pocket than you can afford, so always check coverage in detail before signing on to a new policy.
You also want to check your current insurer's cancellation fee policy. Some companies charge a fee if you cancel your policy before renewal, and the cost might be more than you'd save. If that's the case, consider waiting.
What To Do Before Changing Car Insurance Providers
Don't sign on with the first company that promises savings. Like any money move, switching car insurance is something to approach methodically.
Check Your Coverage
A provider switch is the perfect time to reconsider your coverage. Maybe your car is getting old, and you decide to drop your collision coverage. Or, you may have a new car and want more coverage. Review your policy and choose the options that suit your current needs.
Talk to Your Insurer
Unfortunately, you can't negotiate a better rate by calling your insurer and telling them you're considering switching. States regulate car insurance rates, so insurers have minimal flexibility.
However, you can call your insurer or agent and ask about your eligibility for any discount programs. In addition to driving-related discounts, many insurers have membership-based discounts for company employees, university alums, and so on.
Get Several Quotes
Requesting a quote won't cost you money or hurt your credit score, so it's worth looking at multiple companies. Review each quote in detail, including premiums, deductibles, and coverage options. Be sure coverage options are comparable — you don't want to compare a policy with a $500 deductible and minimum allowable coverage to a $1,000 deductible plan with all the bells and whistles.
Car Insurance Comparison Tips
A lower premium might be why you shop around, but it's not the only factor in your decision. Here's how to find the best offer for your needs.
Look at Claims Processes
While you want the best deal from a car insurance policy, value is about more than just cost. Bargain-basement rates won't help you if the insurer makes it challenging to file a claim. Find information on how each company handles the claims process, including how you file and how communicative they are.
Check Ratings and Reviews
Before you settle on an insurance provider, find out what others say about it. Look at the insurer's website and third-party review sites like Google and Trustpilot. In-depth reviews on sites like Marketwatch will also give you some critical insight.
Always place online reviews in context. Consumers may be more likely to go to sites like Trustpilot if they have complaints, while the company website will feature the most positive testimonials.
Talking to friends and family can be particularly helpful. You'd be surprised how much input you get by asking people's opinions of their insurers.
How To Switch Car Insurance Safely
Your new provider will walk you through the steps of signing up. You should only cancel your old policy once you've received confirmation that your new policy is active. Otherwise, you'll have a coverage gap, which is legally an insurance lapse. Lapses can affect your future rates, and you might face state fines or penalties.
When it's safe to cancel your old policy, ask your insurer for the paperwork. Complete all required steps and verify the cancellation went through.