How to Switch Car Insurance: What to Do Before You Cancel

Fran Majidi
December 4, 2019

Have you made up your mind about really putting in the effort to stop wasting money in the new year? We know you want to save money in 2020 and we also know how you can do it. Below, you’ll find an FAQ on how to switch car insurance without a hitch.

Most people pay a couple of hundred dollars too much for car insurance because they are hesitant to make a change. If you’re in the same boat and have all sorts of unanswered questions about how to do it the right way, take a look below, before you compare car insurance rates. We’ve got you (and your questions) covered.

Do I Get My Money Back if I Switch Insurance?

The biggest reason people don’t switch insurance carriers is that they don’t want to deal with the mess of switching car insurance in the middle of a policy term. However, buying insurance isn’t like buying socks. You will get your money back even if you use it for several days. In most cases, you will get your money back, often in the form of a refund check, for the amount you did not use. It’s really that simple.

With that said, some car insurance policies apply a fine for cancelling before the end of your term, some $50, some your entire remainder. You may want to contact your current insurer to find out what happens if you cancel early. However, in most cases, you’re eligible for a partial refund.

The Truth About Car Insurance Loyalty Discounts

Yeah, it seems like a headache, paying twice and waiting for the unused portion from the first carrier, but isn’t it worth saving hundreds of dollars? Let’s face it, even though most insurance companies say they apply a loyalty discount for clients who stick around, it’s often not the case at all. Chances are that like most people, your rate climbs higher every six months or year, without you ever getting a ticket or having an accident!

The only loyalty you should have is to yourself. Consider telling your current carrier that you want a loyalty discount applied or else you’re jumping ship. But be prepared to follow through if the insurer disappoints you.

If they don’t give you a substantial price break, simply visit SmartFinancial and fill out a brief form. You’ll have a wide selection of companies to choose from and rates that will make you happy you left the company you were with. The best part is that they work with a network of agents, so you don’t have to pay any fees. Agents pay SmartFinancial to find people like you -- people looking to pay a car insurance rate they deserve.

Make Sure Your Policy Is Canceled

Most people have auto-renew with car insurance and chances are you do too. If so, you will automatically renew your old car insurance without even lifting a finger or giving consent. There’s nothing worse than thinking you’re canceled out of your policy and being held liable for it even though you bought coverage elsewhere. If you’re not careful, your former carrier may not send you a refund, claiming you never canceled. This scenario is nothing short of a nightmare, and you may get stuck paying both bills.

When you cancel with someone at customer service, make sure you get the confirmation number of the cancellation so you’re not held accountable later. All it takes is one person not doing their job that day for you not to get a refund!

What if I Have a Claim Open: Can I Still Switch My Insurance Company?

If you had an accident or some sort of loss with your car within the amount of time you were insured and if you filed a claim within a reasonable amount of time, you should still be honored a payout if it was a covered claim. You’re free to switch carriers at any time without worrying about that claim.

However, keep in mind that you should not wait a long time before filing the claim. The general rule is that you must file a claim within a reasonable amount of time and also report an accident right away. If you fail to do so, you’re not upholding your part of the contract and may not get paid out what you’re due.

What if There’s a Gap Between My Coverages?

Oh, that’s a big no, no! You never want to have a gap in coverage. A lapse in coverage can cause an insurer to raise your rate, because it’s so dangerous to go without car insurance, even for a single day. This is why it’s never a good idea to wait until your current policy expires.

Imagine if you have an accident on the one day you were covered by neither of the two insurance companies? You would not only be in trouble legally, but you’d be in over your head with financial obligations, including fines and possible lawsuits, which you’d have to pay for out-of-pocket. If you thought it couldn’t get even worse: Your rate would go up exponentially if you found yourself in this scenario. You’d be seen as a high-risk driver.

Is it Bad to Switch Insurance Companies Often?

No, it’s not bad to switch insurance companies often, as long as you’re not defaulting on making payments and getting dropped by insurers. In fact, you should switch car insurance whenever you have a major life event. For instance, if you get married, get a new car insurance quote. If you have a baby, get a car insurance quote. There are lots of other factors that change in one’s life that also affect their rating, like your address, your job, your field in which you work. Obviously, if you buy a new car or if your car has gotten older, you should compare car insurance quotes from a variety of insurers.

Get a Free Auto Insurance Quote Online Now.

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