Will it Negatively Impact Me If I Switch Car Insurance Companies?

Lucy Lazarony
November 3, 2020

Shopping around for car insurance is a great way to save money. There are so many insurers offering so many deals that it seems almost foolish to stick with one when there are better deals out there. You may pay a small cancellation fee but otherwise you are free to switch car insurance companies as you see fit. So if you see a better deal, go for it.

Reasons to Change Car Insurance Companies

The main reason for switching car insurance companies is to save money on car insurance premiums. Other reasons include changes in your personal situation, like moving out of an insurance company’s coverage area or getting married. Both are good reasons to reassess your insurance needs and find the best price for the insurance coverage that you want.

Or maybe you have had a bad experience with an insurance company’s customer service and you want to give them the boot. That is another reason to switch car insurance companies. There are also so many reasons to see what rates are available to you, like if you’re looking for superior coverage or if you decided to bundle your car insurance with a home or business policy for a great deal. Whatever your reasons are for being curious about changing insurers, it never hurts to compare car insurance rates.

How to Handle a Cancellation Fee

The good news is not all insurance companies charge cancellation fees. The ones that do may charge a fee of only $50. Others may charge a short rate fee, which is 10 percent of your remaining premium. So it makes sense to shop for a new policy when there is little of your current policy remaining. That way, your short rate fee won’t be as high. Another strategy is to keep your policy until the policy period ends and then choose not to renew. Some car insurance companies won’t charge a cancellation fee if you wait until the policy period ends to change insurance companies.

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Can I Switch Insurers After an Accident

Let’s say you get into an at-fault accident. Should you change insurance companies? You can shop around but it is best to stay put until your policy renews. Rates change at policy renewal and you won’t feel the effects of the accident on your rate until then. Also, you won’t be escaping a rate hike if you switch insurers either. Your accident will be on file. If you do switch before renewal, the new insurance company will factor the accident into your rate right away. Why pay a higher rate before you have to? Once your policy renews and your insurance company factors the accident into your new rate, you can compare that rate with other insurance companies and move to where the best deal is.

Can I Switch While I Have an Insurance Claim Open?

Wondering how changing insurance companies will affect an open insurance claim? It won’t. Your insurance company will pay the claim as agreed and you are free to move to a different auto insurance company. As mentioned earlier, you may be charged a cancellation fee but otherwise there is no negative impact for changing car insurance companies while your claim is being processed.

Can I Switch Insurers After a Traffic Violation?

Car insurance companies weigh traffic violations differently. So if you have a traffic violation or two, it will save you money to choose a car insurance company that is more lenient on the type of traffic violations that you’ve got. If you’ve just got the violations, you may want to wait until your policy renews to shop around. That way you will have an apples-to-apples comparison of what your current car insurance company will charge you for the violations and what a new company will charge.

Shopping Around for Insurance

When shopping around for a new car insurance company, you want to get several different insurance quotes. The more quotes you get the more possibilities for lower rates than you are paying now. SmartFinancial makes this easy to do. Just enter your zip code to get started. Next, answer a few, quick questions and you’ll be comparing auto insurance rates near you in no time. SmartFinancial has access to more than 200 insurance companies so you are bound to find the insurance coverage and the price that you want.

Low Rate, Less Coverage

Make sure that low insurance rate doesn’t mean less coverage. You want a lower rate for the coverage that you want, not a low rate with fewer protections. So use the declarations page of your current policy as a guide. Make note of the insurance coverage that you want, plus deductibles. You want to match your new policy with your old one. The only difference you are looking for is a lower price. And you should be able to find it. Insurance companies want your business and are willing to give you a good price. It just takes some shopping around.

Keep Continuous Coverage

Set your new insurance coverage to begin as soon as your old one ends. If you don’t, you’ll get a gap in your insurance coverage, exposing yourself to risk when driving during a coverage gap. And because your car insurance coverage hasn’t been continuous, you may pay more on a future insurance policy. Insurance companies don’t like to see gaps in coverage.

Cancel the Old Policy

Make sure to cancel your old policy, letting the insurance company know in writing if you can, that you are no longer a customer and you will no longer be needing this policy.

Get a Refund

Did you pay ahead on your old policy? You’re owed a refund from your old company. For example, if you paid for six months of your insurance policy and cancelled after three months, you would still have three months owed to you in a refund. The only catch is you may need to pay a cancellation fee if there is one. So you will get the refund less any cancellation fee from the old company.

Shop smart for your new car insurance and get the coverage you want at a lower rate. Watch out for cancellation fees. Factor in the cost of these fees when moving to a new insurance company with lower insurance rates. If you’re lucky, your insurance company doesn’t charge cancellation fees at all and you can enjoy savings from the first moment that you switch companies. Once you make the move, keep insurance rates low by being a safe driver. Follow the rules of the road and save money on your car insurance.

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