Whatever the level of coverage your current policy offers, you’ve probably noticed that premiums are on the rise. In fact, the average monthly car insurance premium is expected to top $150 in 2023. Across the country, car insurance prices are up a whopping 29.5% since 2020.
As a result, many drivers are wondering how they can save money on car insurance. The good news is that cutting your premiums might be easier than you think. All you have to do is switch car insurance providers—and you don’t even have to wait until your old policy is up for renewal to do so.
In this guide, we’ll explain why and how to make the switch.
Why Should You Switch Car Insurance Providers?
There are a number of reasons why you might want to change car insurance providers.
The most common reason drivers switch is to save money. The vast majority of drivers pay lower premiums when they change car insurance providers, even for a policy with nearly identical coverage. If you have a safe driving history and good credit, you could save hundreds of dollars a year just by switching to a new insurer.
One of the main reasons for this is that your car has aged since you originally bought your policy. Since it’s less valuable now, it costs less to insure.
In addition, every car insurance provider has a different formula for calculating rates. You may find that another provider prioritizes your safe driving history over your fair credit and can offer you lower premiums as a result.
Every insurer also offers different discounts, like for safe driving, being a military veteran, or AAA membership. Which discounts you qualify for can significantly impact your premiums with different insurers.
Another reason to switch providers is when adding a new driver to your policy. This could happen if you get married and want to consolidate your policies or if you have a teenager who just got their license. Another provider might offer a much bigger multi-policy discount.
Other reasons to consider changing providers include:
- You bought a house and want to bundle auto and home insurance
- Your driving habits have changed and you no longer need as much coverage
- Your current insurer doesn’t offer the types or levels of coverage you want
- You had a bad customer service experience with your current provider
Whatever your reason for wanting to switch providers, it certainly doesn’t hurt to shop around and see what options are out there.
How to Switch Car Insurance Providers
You’ve decided to look for a new car insurance company. Now what?
The process of switching starts by figuring out what you want in your car insurance policy. Think about not only the reasons you’re switching but also which aspects of your current policy you like.
For example, you may need more or less coverage, want to increase or decrease your deductible, or want a simpler system for submitting claims.
With your desired policy in mind, you can begin shopping around. Most insurance companies have free quote tools that let you compare policy options and premiums. There are also online marketplaces where you can compare policies from multiple insurers in your area. If you want hands-on help finding a policy that fits your needs, consider using an insurance agent.
Most insurers enable you to purchase a policy online or over the phone. You’ll need to provide your new insurer with some financial and vehicle information. This usually includes your driver’s license number, your social security number, your bank account details, and your car’s vehicle identification number (VIN).
If you’ve leased your car or have an auto loan, you must notify your lienholder that you have a new policy. Usually, this process is quite simple—just send them a copy of your new policy document.
Canceling Your Old Policy
Once your new policy is activated, you can cancel your old policy. Always make sure that your new coverage has taken effect before you do this—you don’t want to be without car insurance, even just for a few days.
It’s a common myth that you have to wait until your old policy is up for renewal before you can cancel. In fact, you can change car insurance providers and cancel your old policy at any time. Most car insurance providers will give you a prorated refund for the remainder of your policy term.
Some providers charge a cancellation fee that comes out of your prorated refund. Contact your provider in advance to find out if there’s a fee and whether it can be waived.
Contacting your current provider before you switch is also good because it gives them a chance to try to keep you as a customer. Some insurance providers will match competitors’ quotes to retain good drivers.
Summary
Changing car insurance companies is one of the best ways to save money on your premiums. You can switch car insurance providers at any time and most drivers can get a prorated refund for their current policy if they switch before it’s time to renew.
When switching car insurance providers, shop around to find the best price on the coverage you need. It’s also a good opportunity to think about whether your coverage needs have changed since you bought your current policy.
