How to Switch Car Insurance Companies

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One of the best ways to ensure you are getting the best insurance value for your payments is to perform a review of your coverage. You may discover that shopping around and comparing rates can save you a significant amount of money. 

Premiums charged for identical coverage in most states vary significantly from one insurer to another. There are many factors that are considered when developing the rate which is used for an auto insurance policy. 

This will include your age, driving record, model of car, the area you are living, and many more. If premiums are increasing for one company, then there may be discounts and a better savings if you switch car insurance.

Why Switch

Switching auto insurance companies can be done for many reasons. People may be unhappy if they are receiving poor service or another company may offer a cheaper price with better coverage. One way to find out if other companies offer better options is to compare quotes. 

This can easily be done when you use the Internet or visit a local independent insurance agent. One thing to keep in mind is that changing to a new insurance company is typically an easy process.

Get A New Policy First

A new auto insurance policy is needed before canceling your old policy. This is important as canceling an old policy before a new policy is effective can mean a gap in coverage. 

If there is a gap in coverage, then any accidents will not be covered. You can receive a ticket for not having proper insurance and be assessed a higher rate that will negate any savings.

When To Switch

A consumer should shop for a new policy about four weeks before the old policy renews. There is often a renewal notice sent to a consumer about one month before the renewal date. 

You can use this renewal to compare discounts, coverage levels, and premium amount. This information is crucial to see if there are better policy options offered by another insurance company.

No Need To Wait

Consumers do not need to wait until their renewal to switch car insurance. A consumer can cancel their policy at any time by giving the insurance company proper notice. This can be done using the phone or in writing. 

One thing to keep in mind is canceling a policy before the renewal is often a better choice if saving money is necessary. Any payments that have already been made will be prorated and returned to the consumer. This will typically be in the form of a check. However, waiting until the renewal will be a good way to ensure no problems occur.

Any Fees

Most insurance companies that have a national reputation will not charge any fees for canceling before policy renewal. However, there may be some companies that may apply a cancellation penalty. 

If there are any penalties that apply do not negate the savings offered by a new policy. One thing you will need to keep in mind is reviewing your current policy before switching car insurance. 

There may be various benefits that apply the longer a policy is in force. This will include future renewal discounts, forgiving any accidents, and even a bonus check for not having an accident for three or more years.

Canceling Your Old Policy

Informing your auto insurance company in writing is the best way to cancel a policy. You will have the option to set the cancellation date and the reason you want to cancel. A bill of sale might be needed if a car has been sold. 

This is only necessary if an insurance company is being asked to backdate the policy being canceled. You generally do not need to prove their car has been sold when switching unless there is a cancellation mid-way through the policy term.

Confirming a New Policy

Most auto insurance companies need to confirm a new policy is in force before canceling. This is often a result of laws in many states that require drivers to have a policy in force. Many states have laws that require drivers to have an insurance policy to legally drive their vehicle. 

One reason companies need to ask for a new policy is to help states keep track of any uninsured drivers. However, this may not be the case, depending on the specific regulations in an individual state.

Confirm the Cancellation

You need to make sure your old policy is actually canceled when getting a new policy. Car insurance is continuous and means it does not expire. You will need to formally cancel an old policy to keep it from renewing. 

Insurance companies will continue to send a bill or withdraw premium payments if you have automatic payments set up. The best thing to do is send a letter or call to cancel an old policy once your new policy has been purchased.

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