How To Save Up To $600 By Switching Car Insurance Providers

Originally written by Ben Luthi and Samantha Hawrylack

I’ve learned that sticking with the same car insurance company for a long time isn’t always the best idea. Not only do insurance companies raise rates, but some of the factors that impact your car insurance rate change over time — such as where you live, how much you drive, and your driving record. You may be able to get a lower rate by switching your car insurance to a different provider.

If you’re wondering how to switch car insurance, or at least shopping around to see about getting a cheaper car insurance rate — here are six steps to help you.

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1. You haven't shopped around for a new policy lately

Shopping around is the best way you can save money on car insurance. Every insurance company focuses on different factors and offers different discounts that could affect your premiums. Inquire about all discounts and compare your options between insurance companies.

I suggest comparing rates from at least three or four insurance companies to maximize your savings. Some insurance websites even offer a comparison tool that will do some of that work for you.

FinanceBuzz’s auto insurance marketplace now offers a fast and free way to compare quotes from multiple insurers. You’ll get carriers competing for your business in a matter of minutes.

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2. Evaluate your current coverage before switching

Check your current insurance policy to see where your coverage stands. Look at each of the various types of car insurance that your policy includes. Do you have too much coverage based on what you need? Or is it possible you don’t have enough?

There’s no correct answer for how much coverage you need, so just ask yourself what type and amount of coverage would provide peace of mind. For example, if you don’t have enough liability coverage and you get in an accident, it could wreak havoc on your finances. However, if you have too much coverage, you pay for something you don’t need.

If you decide you have too little or too much coverage, you can switch it up with your current insurer. However, this is also a great time to shop around and see what options are available because you might save even more money.

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3. Check for early cancellation fees

Most auto insurance companies allow you to cancel your policy without incurring an early termination penalty or cancellation fee. Most companies also typically provide a refund of the unused portion of your insurance premium.

However, just like every company has different premiums and factors that affect them, some insurance companies may charge an early cancellation fee.

Don’t worry, you can still switch car insurance if your policy has an early cancellation fee, you just need to run the numbers and see if the savings outweigh the cost of changing policies. You never know when switching to a new provider may save you so much that it offsets the penalty from your old insurance company. If it doesn’t, you may need to wait until your old policy is up for renewal to make the switch.

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4. Switch to your new insurance company

The most important factor to remember when switching car insurance is never to have a gap in coverage. Even if you go just one day without a policy, insurance carriers may see that as a red flag and make it challenging for you to get affordable coverage in the future. Tip: Switch and save on auto insurance with this tool.

So before canceling your current coverage, make sure the new coverage is effective. As you set up your new policy, consider the following:

• Is there a pay-in-full discount? Some insurance companies offer a significant discount if you pay the full six month premium upfront rather than monthly. If you can afford to pay it, you can save a decent amount of money.
• Is there an automatic payment discount? Some insurance companies offer a discount if you set up auto pay versus making them yourself.

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5. Cancel your old insurance

Once you’re sure your new policy is in full effect, cancel your old policy. This doesn’t mean just stop auto pay or stop making payments. You must let the insurance company know you want to cancel your coverage, which is best to do in writing. If you don’t tell them, but just stop making payments, they could report you to the credit bureaus for non-payment.
Here are the steps to cancel your old insurance:

• Call your old insurance company and inform them you want to cancel
• Write down the confirmation number they provide
• Follow up the cancellation with a written confirmation
• Log into your old online account and remove your payment information to avoid accidental payments

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6. Print out your new policy insurance card

It’s imperative that you have proof of your new car insurance, should you get into an accident or are stopped by the police. Your new insurance company may mail you new ID cards, but you can usually print them or have a copy on your phone instantly.

It’s best to have a paper ID card in your car, but either a picture of the new ID card or access to it through the insurance company’s app can work in a pinch too.

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Bottom line

Car insurance can be a big expense for drivers, but there are ways to save money. Switching auto insurance providers can be one of the fastest and easiest ways to see big savings and you can switch in only a matter of minutes. You could save up to $600 without spending a lot of time and using the tips above.

FinanceBuzz can help you compare dozens of providers in under two minutes and have helped millions of customers find better rates.