If you're unhappy with your current car insurance provider, you may want to switch companies mid-policy. However, there are a few things to know before making this change.
Typically, you can cancel your car insurance at any time, though each company makes its own rules.
When you purchase a car insurance policy for your vehicle, your insurer will write policies for a term, usually defined as six months or a year. An insured driver can either renew at the term's completion or switch companies when the policy expires. While most insurers let you cancel coverage any time, you may be charged a fee for canceling early.
Keep reading to learn more about switching car insurance companies mid-policy and how to change companies.
Can I switch car insurance at any time?
There are various reasons why a driver would want to change car insurance companies, like high rates, poor service, or selling a vehicle.
So, is it possible to switch insurance companies before my policy’s expiration? The short answer is yes — you can switch your car insurance mid-policy. With enough notice, auto insurance companies will generally allow you to cancel your existing coverage at any time.
However, switching mid-policy may come at a cost, and you could potentially run into problems if you aren't familiar with the cancellation requirements.
You’ll also want to resolve any open claims before moving to another insurer to avoid fees or penalties. Contact a representative from your car insurance company if you need an update on a claim or want to know how much time it takes to resolve one.
Clearsurance-conducted research found that customers who shopped for a new car insurance company and switched saved an average of $390 on their annual rates.
It’s vital to know how to switch car insurance, save money, and avoid fees and hidden costs.
Do you have to pay cancellation costs?
Although some of the nation's largest auto insurance companies — such as State Farm, GEICO, Allstate, Progressive, and Farmers — don't charge a fee if you cancel mid-policy, other insurers may impose a cancellation fee.
It's important to talk to your insurance company to discuss the cancellation process and learn about any potential penalties for policy cancellations before the coverage period ends.
You'll also need to ensure there isn't a coverage lapse when you cancel your current policy and begin a new one. If you have a coverage lapse, insurers may label you a high-risk driver, raising your policy rates.
If you have unresolved claims or attempt to switch by outright canceling your policy, you might face hundreds of dollars worth of damage control.
You can switch car insurance any time, but is it wise? If you're still asking the question, "Can I switch my insurance at any time without penalty?" you may want to talk to your current auto insurer to get all the details before proceeding.
Are there hidden fees?
Many insurance companies promise you the lowest rates to entice you into switching policies.
While it may be true that some companies offer significantly lower rates for the same coverage, some insurers will offer you a lower rate, only to drastically reduce your coverage. Suppose you currently have collision, comprehensive, and liability coverage. In that case, you'd only want to compare rates with a company offering the same full coverage with the same policy limits and deductibles.
Rather than reduce coverage, ask about discounts that may apply to the new insurer. Giving up valuable coverage to save money may not end well, especially if you lose coverage that would help the most, such as collision or comprehensive.
Additionally, an insurance company may avoid mentioning hidden fees and other charges to make its rates appear lower than what you’re currently paying.
It may be helpful to talk with your current insurance company about your coverage options and needs. Then, find out if you can modify your existing policies to avoid changing auto insurance providers before your policies expire.
What are coverage gaps?
As we noted above, you can cancel car insurance at any time, but you need to be aware of coverage gaps.
For example, say you cancel your policy with your current provider before establishing a new auto policy. In that case, you potentially leave yourself vulnerable to severe legal and financial repercussions because of a coverage gap.
New insurers may also see you as a risk-taker if you go too long without coverage, causing higher rates.
Ensure your new insurance policy term starts on or before the day you cancel your current policy or before it expires. The goal is to maintain continuous coverage, so you have a seamless transition from your current insurer to the new provider. When you have coverage gaps, you also risk losing auto insurance discounts, such as loyalty discounts.
In addition, according to the Insurance Information Institute, driving without coverage can lead to fines, driver’s license suspension, and jail time.
By avoiding coverage lapses, you can save money and look good in the eyes of your new insurance carrier.
How do you switch car insurance companies?
When you decide to switch insurance companies, a few simple steps make the process easy.
When switching car insurance companies, be sure to:
- Examine your current policy. See when your policy ends and if there are cancellation fees.
- Shop around. Compare rates and coverages from multiple companies to find your best deal.
- Set up your new policy. Finish the sign-up process, and get your new policy ready to begin.
- Let your current insurance company know you’re leaving. Find out about any fees and see if your insurer owes you a refund.
- Change out your insurance cards. Carry your new insurance cards in your vehicle. You can also download a mobile app to your phone if your insurer uses one. Remember to give your lender updated insurance information if you have a car loan or lease.
If you're shopping for a new car insurance company, it's important to research the best options before choosing a company.
Clearsurance has rankings of the best car insurance companies according to customers, which you can filter by your state or ZIP code.
Once you've selected a few auto insurance companies you're interested in, you can read reviews on Clearsurance to learn about the experiences other customers have had with that insurer.
Switching Car Insurance Companies Mid-Policy: The Bottom Line
Most car insurance companies allow you to cancel your policy early, but your company may charge a cancellation fee.
Before switching insurers, find out if your company charges a fee for canceling before your term ends. It may be cheaper to wait until your policy ends before changing companies.
Make sure you have new coverage in place before your old policy ends. Otherwise, you’ll have a coverage gap leading to higher insurance rates.
Whether you switch auto insurance companies to find better rates or customer service, compare multiple companies before deciding which company is best for you.
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