How To Switch Car Insurance Companies

By: Rob Sliver

It may be easier than you think!

There are many reasons why you may choose to move your auto
insurance coverage to another company. You might have changed
jobs and are eligible for a group discount through another
insurer, or maybe you're unhappy with the service that your
present company provides. Perhaps you've simply found another
company willing to offer you the same level of coverage for
considerably less money. Nowadays, many insurance companies
provide 24-hour rate information through their toll-free numbers
or websites, so investigating your options has never been
easier. Another valuable source of information is your state's
Department of Insurance.



Why switch to a new insurance carrier? Regularly review
your auto coverage to make sure that you're receiving the best
insurance value for your money. You'll discover that it pays to
shop around. In some states, premiums for identical policies
vary widely among different companies. The reasons for this
price variation can be very complicated, but they boil down to a
company's claims experience with policyholders in your coverage
group (e.g. people of similar age, number of accidents, type of
vehicle). For example, if a large number of people in your
coverage group files claims during a given year, your rates will
likely rise. When this happens, better discounts and lower
overall premiums may be available at other companies, although
some states strictly regulate the price of coverage. When you
decide to switch your auto insurance to another company, you'll
find that it's fairly easy to do so.



How to cancel your old policy Generally, all you need to
do to cancel your auto policy is to inform your insurance
company in writing, specifying the date you want the policy
canceled. In some states, your new agent must notify your
previous agent of the policy change. Some companies ask that you
send back the actual printed policy. Your insurance company will
send you a cancellation request form that you should sign and
return. Examine the form carefully to make sure that all
information regarding your policy is correct. If you do not
receive such a form within two weeks of sending your letter,
call your agent or the company immediately to check on the
status of your cancellation. Don't just walk away from your old
policy without formally canceling it. Otherwise, the insurance
company might assume you wished to continue your coverage, and
it might eventually terminate the policy for failure to pay
premiums and report your lack of coverage to your state's
Department of Motor Vehicles. This can hurt your credit rating
and your ability to get a new policy.



Be sure to get a new policy first Always have a new
policy in place before canceling your old auto insurance
coverage. You don't want to have a gap in protection for even
one day. Fortunately, there is little danger of this happening.
Most states require all drivers living within their borders to
carry a minimum level of auto insurance. So, most insurance
companies now require policyholders to present proof of new
coverage before they will cancel an active policy. You may need
to show your old carrier copies of a new insurance
identification card or the Declarations Page of your new policy.
Your new company will be able to time the onset of your new
policy to coincide with the cancellation of your old coverage.



When to switch policies The best time to switch auto
insurance carriers is just before your old policy is about to
renew. This will allow you to avoid paying for printing and
start-up expenses the company incurs as part of the policy
renewal process. You also avoid the inconvenience of figuring
out the amount of any unused premium that should be returned to
you.



A renewal notice will be sent to you approximately a month
before a new policy period begins, depending on the regulations
in your state. The notice will describe your coverage,
discounts, and the amount of premium you owe. Should you decide
to switch policies, you'll need to line up a new policy by the
time your current policy renews, although most states allow
about a month after renewal to switch. If you miss the deadline,
you may end up paying a cancellation penalty.



You don't have to wait until renewal All standard auto
insurance policies contain a provision giving you the right to
cancel your policy at any time, once proper notice is given to
the insurance company. You don't necessarily have to wait until
renewal time. Cancellation after a policy has renewed is most
convenient at the end of a payment cycle. That way, you're not
forced to deal with recovering the unused portion of your paid
premium. But if you choose to cancel in the middle of a cycle,
the company will prorate your latest premium payment up to the
cancellation date and return the remainder to you. However, a
special "short rate" (cancellation penalty) will be deducted to
pay the administrative costs of renewing the policy.



How long does it take to switch? When you switch
companies, your new agent or insurer can execute the change in
as little as one day. You'll need to provide a cancellation
date, your former agent's name, and the name of the insurer. It
would also be helpful to show your new agent a copy of the old
policy's specifications page in order to match the coverage.





Please note that this description/explanation is intended only
as a guideline.

For more information about auto insurance please go to: Insurance.com