Can You Change Car Insurance at Any Time?

Can You Change Car Insurance at Any Time?

You can change car insurance at any time, even before the end of the policy term. You may need to change your insurance provider after certain life events, like moving to a new state, buying a new car or removing a driver from your insurance. You may also consider switching to a new provider for lower premiums, better coverage or to bundle your renters or home insurance.

If you've prepaid for coverage, you may be due a refund. For example, if you cancel your policy four months into a six-month term, most insurers will issue a refund for the remaining two months. Refunds are typically sent using the same method you used to pay your premium, whether by check, direct deposit or credit card. You may not be due a refund, however, if you pay monthly and cancel at the end of the billing cycle.

Some insurance companies may charge a cancellation fee, which can reduce or eliminate the savings you get from switching. The fee may vary by provider, so check your policy or speak with your insurer before making the switch.

What to Consider Before Switching Car Insurance

Switching car insurance is more than simply choosing a new provider. It requires research and careful planning. Here are some things to keep in mind:

• Avoiding coverage gaps: Make sure your new insurance policy starts before you cancel your old policy. A lapse in coverage can leave you vulnerable if you need to file a claim. It can also lead to penalties or higher premiums in the future.
• Outstanding balances: Make sure you pay any outstanding balances before canceling your policy. If you owe money to your current insurer, unpaid balances could be sent to collections and negatively impact your credit score.
• Your driving record and claims history: Outstanding at-fault claims or recent tickets can affect your new costs or ability to get coverage with a new insurer. Review your claims history and understand how it may affect your rates. Resolve pending issues before switching.
• Your credit: Although this practice is restricted or banned in several states, some insurers may use a credit-based insurance score to help determine your premium. While these insurance scores are distinct from the consumer credit scores creditors use, they assess largely the same information (on-time payment history and outstanding debt, for example). You may face higher premiums if your credit score has dropped since your last premium evaluation.
• Coverage needs: Unless you're looking to cut coverage, make sure your new policy matches or beats your current coverage in terms of protection. When making a price comparison, features like liability, comprehensive or collision coverage should be similar between policies.
• Policy renewal timing: Switching at the end of your policy can help minimize fees and overlapping coverage. Your provider should send a renewal notice 30 to 60 days before the term ends, which gives you time to compare options and choose a new provider.
• Bundled policy discounts: Switching could impact your car insurance discounts if you bundle other types of insurance together. Explore bundling discounts with your new provider before changing car insurance providers.

How to Switch Car Insurance

When you change car insurance, it's important to coordinate canceling your old policy with activating your new one. This way you avoid coverage gaps and other complications.

1. Get quotes. Shop around and get quotes from multiple car insurance providers. Compare coverage options, deductibles and premium rates to find a policy that fits your needs and budget. Look for discounts to save money on your premiums.
2. Select a new policy. Choose a policy that offers the best value and meets your coverage requirements. Make sure the policy can start before your policy ends to avoid a gap in coverage.
3. Make your first payment. Your policy typically won't be active until you make your first payment. You don't have to pay the full annual premium upfront. Instead, you can typically choose between monthly, semiannual and annual payment options to fit your budget.
4. Get your new insurance ID cards. Get proof of insurance from your new provider so you can keep physical copies of your insurance ID in your vehicle. Your documents should be easily accessible for traffic stops and accidents.
5. Cancel your old policy. After your new policy is active, contact your previous insurer to cancel your old policy. You can request the cancellation date that matches the effective date of your new policy to avoid gaps or overlap. Don't simply stop paying—this can result in unpaid car insurance premiums, damage to your credit, or difficulty getting coverage in the future.
6. Notify relevant parties. If your vehicle is financed or leased, you may need to provide your lender with proof of new insurance. In some states, you may also have to update the DMV when you change your insurance policy.

The Bottom Line

Changing your car insurance could help you save money or get better coverage, but it requires careful planning. Remember to time the start and end dates of your policies to avoid coverage gaps and resolve any outstanding balances to protect your credit.

Before switching providers, you can use Experian's free car insurance comparison tool to get quotes from top car insurance companies. Comparing prices and coverage options is important to finding the best policy for your needs.