When Should You Switch Auto Insurers?

This article has been reviewed by licensed insurance industry expert Moshe Fishman on 5/30/2023.

There is no magic timing to switching auto insurers, but some people look for a new insurer when renewal time comes around. Other reasons can include price and customer satisfaction.

There may also be life changes that will affect your policy. Whatever the reason, today’s shoppers are also looking for convenience and value to get a better deal. And why not? You shop around for other things in life, why not insurance?

As far as timing, you can always switch your auto insurance carrier, even after being involved in an accident. However, you will still have to follow through on any outstanding claims with your previous insurance company.

If you do decide to change insurers, you will not be able to file a claim for your accident under your new policy. So, although you can shop around and switch for a new auto insurer at any time, it’s not always an ideal situation to do so at the time of the accident. 

You may have other reasons that prompt you to want to make the switch, like the cost. But price isn’t the only reason people switch. A bad customer experience can also play a huge role in wanting to move to a new insurance company.

However, whatever your reasons, waiting until your policy renews may not always be the best option. According to Kelly Blue Book, you may be better off making your move sooner, prior to renewal time. 

What this article covers: 

• Reasons people choose to change their auto insurer
• Advantages to switching car insurance companies
• What to consider when changing auto insurance carriers
• The penalties when making the switch
• Steps to switch to a new car insurance company

 What you should know:

• You can switch your auto insurance company at any time but it’s best to start shopping before your current policy term ends.
• People change their car insurers for varying reasons, but price and customer satisfaction are at the top of the list.
• It’s best to weigh the pros and cons of changing to a new company including cost, discounts, and customer satisfaction.
• Switching to a new car insurance company doesn’t always guarantee better rates and you may lose discounts that are available with your current insurer.
• Be sure to tell your current company to cancel your insurance policy and request a confirmation of your cancellation.
• Keep your current policy active and don’t cancel your car insurance until you’ve purchased a new, active policy.
• If you do switch, make sure to obtain proof of insurance from your new insurance company.

What are some of the reasons people switch insurance?

When it comes to auto insurance, rising rates and experiencing bad service are just two of the reasons people want to make a switch. But each person’s situation is different and their reasons to change will vary. Here are a few of the most common:

• Price - Price is a big deal for shoppers when looking for car insurance. According to J.D. Power, “price is going to be a bigger factor” as a result of a shift in consumer shopping due to an increase in costs and other considerations. And those looking for better pricing now have access to greater tools to help them seek out ways to save.

If you are moving to a new state, be prepared for a difference in premiums since there are huge variances among states. These differences are due to state laws, claim rates, number of uninsured motorists, and natural disaster frequency. According to Statista, “Michigan had the most expensive car insurance premiums at 5,740 U.S. dollars for minimum coverage as of June 2021.”

• Customer satisfaction - But there is another motivating factor that pushes people to change their insurance carrier—customer satisfaction, which can also include the price consideration. In fact, J.D. Power’s 2020 U.S. Insurance Shopping Study showed that customers are 8x more likely to switch insurance companies due to a bad experience as opposed to those who have not received a poor customer experience.

And the J.D. Power 2021 U.S. Auto Insurance Study, shows that customer service satisfaction is flat following four years of improvement. So, like many industries, people look for and expect good customer service. 

• Renewal time – Many people who are looking to switch their auto insurance carrier, wait until the end of their current policy term. However, you don’t have to wait until renewal time to start the process of comparing costs of other insurers.
• Shopping convenience and value - Smart shoppers can now compare quotes online quickly and easily within minutes to see what different carriers will charge for coverage. The convenience of comparing quotes and online shopping provides a marketplace of options to choose from to help consumers make a better decision.
• Claims experience - Wanting a good customer experience is especially true when a driver makes a claim due to an auto accident. Getting into a crash is stressful enough, so if you also receive a poor customer experience with your insured, you may feel that you no longer want to work with them. But you will need to continue working with them until your claim is closed.
• After an accident - If you have an open claim due to an accident, you can still switch. But if you do, you will have two insurance carriers and need to work with both. This is because your previous company will still need to handle your claim and defend you in a lawsuit, if necessary, in an at-fault accident. And this is the case regardless of whether you switch companies. 
• Personal reasons – Life happens, and you can expect changes as you go. For example, you may enter into a new age category. Maybe you bought a new car, moved, got married, need to add your teenager to your policy, have improved your credit score, or retired. These are all good reasons to check for competitive rates.
• Bundle insurance (home and auto) – You may decide to take advantage of bundling your car and home to reap a potential discount. If you have each insurance type with a different insurer, you would need to move both to the insurance company that offers the benefit.

What are the advantages of switching auto insurers?

Switching insurers is not a new phenomenon. Add the convenience of comparing insurance carriers and shopping online, and it’s not surprising that the trend to shop around has seen an increase. 

There are many reasons why drivers decide to look at other insurance offerings. Life changes, for example, can happen at any time which warrants looking for a new policy and rate that’s best for you. The reality is that many variables can affect your premium and any potential savings. Here are some of the possible benefits:

Better rates – Auto insurers set their own pricing based on certain variables. These factors (changing variables) are the reason many experts recommend that you compare prices every six months before your policy term ends. Doing so could possibly get you reduced rates (up to 20% in some cases) and better meet your needs. 

Better coverage – But equally important is getting the right coverage for your situation. You may find better coverages and discounts are available with a new insurer. The whole concept behind insurance is having protection when you need it most. Getting it right means choosing the company you feel has your specific needs in mind. 

Better customer experience – If your current insurer doesn’t satisfy your standard of customer service, it may be time to compare companies. You deserve a better customer experience for the premiums you pay. 

Discounts – When comparing rates of different auto insurance carriers, you should also inquire about any available discounts that might be available to you. 

What should you consider before changing car insurance companies?

Before switching carriers, there are some things you should consider. For example, you’ll want to take into account any savings that you currently receive by bundling your home and auto coverage. Moving only your auto policy would eliminate that discount. 

You’ll also want to take into consideration other savings that you might be receiving with your current insurer, like loyalty discounts (2%-5%), accident forgiveness, or vanishing deductibles. In addition, not all discounts that you currently receive may be available with the new insurer.

If your goal is to switch companies because of raised premiums as a result of an accident, you might be surprised. Your current car insurance company may actually be your best bet. This is due to the fact that companies have their own process of weighing your risk factors. 

Wait until renewal time following an accident. Most states don’t allow changing premiums midway through your policy even though your insurer is aware of your accident. Your rates are likely to go up when your policy term ends, which is a good time to shop around. You may find a company that doesn’t consider your accident as severely when figuring your rates. 

Are there any penalties or fees for canceling your auto insurance?

With your written notice, most insurance companies will give you the right to cancel at any time during your policy term. However, some insurers do charge a cancellation fee for doing so before your policy ends. This penalty may be a flat fee or as much as 10% of any remaining policy premiums.

You should receive a pro-rated refund for any remaining prepaid premiums that were unused if you cancel your policy midterm. You’ll want to factor in the cancellation fee to see if canceling before your policy ends makes financial sense.

It’s a good idea to get a written confirmation of your cancellation so your policy won’t renew automatically and billing will stop.

Also, be sure you have a new auto policy in effect before canceling your old one. This is to ensure you are covered without any lapses in insurance. A lapse of coverage can make you a higher risk, raise your rates, and is against the law in some states, where you can't drive without insurance. 

What are the steps to switch auto insurance carriers?

Changing to a new carrier is not difficult. In addition, doing so does not hurt your insurability if you do it right. Here are a few easy steps to follow:

1. Avoid lapse of coverage – Start by keeping your current policy active. You don’t want to have a lapse in insurance that would lead you vulnerable to financial hardship if you were to cause an accident. In addition, it is against the law in most states to drive without liability coverage. The result could be a suspension of your license and/or fines.
2. Let the shopping begin – Take advantage of the convenient online tools that let you compare rates quickly. When getting multiple quotes from different companies, you want to be sure and compare the same coverage options to determine the best pricing.
3. Do some research – Learn more about insurance companies through online review sites and check with the Better Business Bureau to help you decide. You can also check on a company’s details using the National Association of Insurance Commissioners NAIC lookup tool. 
4. Purchase the new policy – Once you’ve carefully compared companies, coverages, discounts, and pricing, buy your new coverage. Ensure that it’s active before canceling your current policy. It’s okay to have two policies that are active at the same time and overlap a couple of days to avoid a lapse of coverage.
5. Alert your current insurer – Be sure to let your current car insurance company know of your intentions as they may require your cancellation in writing. In addition, depending on the terms of your policy and how much time is left, you may have to pay a cancellation fee and/or be due a prorated refund. Follow their instructions to cancel your policy.
6. Request a cancellation letter – Cancel your policy and ask for written confirmation of your cancellation to avoid future billing. Ask your previous insurer for a confirmation of your cancellation in writing to be sure you will not be responsible for a mistaken automatic renewal.
7. Talk to your loan company – If you are financing your vehicle, you may give them a courtesy call regarding your cancellation. Your previous insurance company will notify them of cancellation as well. 
8. Print proof of insurance – Don’t forget to print out your insurance ID cards and put them in your vehicle to show your proof of insurance. Nearly all states require liability insurance, and this document will give the relevant details. However, comp/collision and policy limits are typically not included in your printout.

Finding the right insurance company shouldn’t be difficult. If you are looking to change your auto insurer, start your search today.