Who doesn't want to cut their car insurance premiums?
One way to land lower rates is to compare insurance companies and then switch to the one that offers the most affordable rates. So when should you switch and how should you switch to save you the most money possible while making sure your car still has the proper coverage?
When to switch
Receiving your renewal notice might be the reminder you need to consider switching your car insurance company, but you don't need to wait.
"It's also a good idea to shop around when you have a major change in your life, such as getting married or when your teens begin to drive," says Brandt Minnich, vice president of marketing at Mercury Insurance, based in Los Angeles.
For example, "Many parents expect to pay a little more when their kids begin driving, but they are often shocked when they see the actual cost," he says.
Switching in midstream
If you decide you want to cancel your insurance in the middle of your policy period, Minnich suggests obtaining your new coverage, and then once it kicks in, immediately contacting your current auto insurer to cancel that policy.
You'll typically need to request the cancellation in writing, and in many states, your insurer is required to report the cancellation to your state department of motor vehicles. That means you should have the proper insurance in place beforehand.
Once you cancel you should automatically receive a refund from your previous insurer if you've prepaid and are owed money, Minnich says, but you might be charged an early cancellation fee.
Don't let it lapse
If you switch at the end of the term, you need to make sure to cancel your old coverage, not just let it lapse.
If you don't cancel your policy, your insurer will continue to bill you. Eventually the company will cancel your policy because you didn't pay. You then could be reported to your state's DMV for not having insurance on your auto.
Don't pay twice
If you wait till the end of your policy term to switch, you'll want to have your new policy start on the same day your current policy expires.
"Many policies start at 12:01 a.m., so be sure you have coverage on any previous policy all the way until the new policy takes effect," says Justin Herndon, an Allstate Insurance Co. spokesman. "An accident can happen at any time, and you don't want a gap in coverage to exist."
Having a lapse in coverage, even if just for a few days, also will increase your insurance rates.
It can pay to switch
When you decide to change car insurance companies, check to see if the new company will give you a discount for switching insurers. But don't wait till the last minute to start shopping for a new policy, says Penny Gusner, Insure.com'sconsumer analyst. She suggests shopping about two weeks before your existing policy expires so you can qualify for a transfer discount.
At Allstate, you can receive an early signing discount if you sign up more than seven days before your new policy takes effect, Herndon says. You aren't paying for those extra days and won't have coverage through Allstate during that time.
Give me a break
You should check with your new insurer to see what other car insurance discounts you might be eligible for.
If you're transferring more than one vehicle to a new insurance company, you could get a multi-car discount, or you might get a discount for insuring your home and auto with the new company.
There also may be discounts for signing up for automatic payments or paying your premium in full.
Gain some, lose some
You might be gaining discounts with a new insurer, and losing ones you had with your old company.
Your current insurer might give you a loyalty discount for being a longtime customer, Herndon says.
"Consumers should keep in mind that they may lose such perks as accident forgiveness or vanishing deductible when they switch insurers, but in return may obtain lower rates and other perks," Gusner says.
While your new company may offer accident forgiveness and vanishing deductible, you might have to be a customer for several years to be eligible. But the savings you see from switching insurers "could possibly more than cover any surcharge you may receive if you are in an accident without having accident forgiveness," she says.
It pays to ask
While many companies will offer discounts if you switch several types of policies, such as your auto insurance and homeowners insurance, you need to double-check with your new insurer. "In some cases, an insured might have claims on one type of policy that could hurt the overall price when moved together with another product," Herndon says.
On the other hand, "That difference could also be helped with a move to another company," he says.
What's your record?
Your driving record might not be squeaky clean, but in most cases that shouldn't prevent you from changing auto insurers.
"Your ability to switch insurance companies most likely won't be impeded by infractions you may have on your record," Minnich says, but if you have a serious violation, such as a DUI, not all companies may be willing to offer you insurance.