Is It a Bad Idea to Switch Your Car Insurance?

Nowadays, it seems like everything that has to do with cars costs more money. Car parts getting more expensive, the price of gas is skyrocketing by the day, and you may have noticed that your car insurance has gone up as well. In that case, is it a good idea to switch your car insurance carrier?

Switching your car insurance provider could save you money

A picture of a car insurance policy letter
A picture of a car insurance policy. | Unsplash

In short, yes, it’s a good idea to shop around for different car insurance rates. Different carriers will have different rates for your specific car, your age, driving record, etc. So it’s a good idea to call around and check out what other car insurance companies have to offer. According to Market Watch, shopping for different car insurance rates can not only lead to money saved every month, but it also won’t hurt your credit.

The best part is that you can switch car insurance carriers in the middle of your insurance term without any cancellation penalties or other fees. Also, switching your car insurance won’t affect how insurance companies see you as a customer, either. You’re allowed to shop and switch every year if needed. However, don’t cancel your current car insurance policy before finding a new one. The lapse in coverage can lead to penalties or even a damaged driving record.

How to switch your car insurance

A driver casually drives his Honda CR-V
A driver casually drives his Honda CR-V. | Unsplash

If you’re thinking about switching your car insurance carrier, then it’s recommended that you shop around at least once a year to find the best rate. Once you find another insurance company and rate that works for you, switching is a fairly straightforward process.

Here are some easy steps to follow according to Value Penguin:

  • Shop around: The first step is to shop around for a better rate. When doing so, it’s important to take your time and find the right combination of a low premium cost, useful coverage options, and attentive customer service. That last part is important because you’ll want to make sure that you can get ahold of someone in case the worst happens or if you need to find out a simple answer to a question. Remember to check out three to five different insurance companies before pulling the trigger on a new policy. Also, remember to ask for any available discounts and call your current insurance company before switching to see if they can match rates.
  • Cancel your current policy: Once you have found a new insurance provider, contact your current insurance carrier and cancel your policy. You should get a refund for any of the coverage you have not used.
  • Notify your lender: If the car that you’re driving is leased or financed, then you should notify your lender that you switched insurance carriers. Since every car lender requires you to have car insurance, they may repossess your car or provide you with a separate policy if they think your insurance was canceled.

Why would you want to switch auto insurance companies?

A driver rests his hand on the steering wheel.
A driver rests his hand on the steering wheel. | Unsplash

The main reason that you would want to switch auto insurance companies is to save money on your premium. Another reason to switch is if a life situation changes. For example, if you bought a new car or added another driver to your policy, then it makes sense to shop around for a lower rate elsewhere. 

Even if you’re not looking to switch carriers, as mentioned before, it could save you a lot of money every year by checking different rates on an annual basis. Worst case, you can keep your current policy.