- How much can you save by switching car insurance companies?
- Full coverage: Savings by state for comparing auto insurance quotes
- When to start shopping for new car insurance?
- Switching car insurance? Keep these things in mind
- Is it bad to switch auto insurance companies?
- Does switching car insurance affect credit?
- Can I change car insurance before renewal date?
- Let your insurer know you are shopping
- Consider how discounts compare among insurers
- Get the details before bundling your home and car insurance
- Your driving record may affect your eligibility for car insurance
- How to cancel your current car insurance policy?
- How to find the best car insurance company for you?
- Common mistakes to avoid when switching car insurance companies
- State car insurance rate comparison by company
- How to increase your car insurance savings
Switching car insurance companies can save you hundreds — if not more than a thousand dollars. However, swapping companies takes some work, so many people don’t bother getting quotes from other auto insurance companies.
We recently conducted a survey of 3,725 people about whether they would switch car insurance. We found that 59% of drivers would change insurance companies to save $250 or more a year. And over a third of drivers would switch to save $50 to $100 a year.
Here’s how much those surveyed would have to save on car insurance to switch:
- $50/year — 10%
- $100/year — 24%
- $250/year — 30%
- $500/year — 18%
- $1,000/year — 6%
- Over $1,000/year — 5%
Only 7% said they wouldn’t switch auto insurance companies regardless of the savings.
We found that younger and middle-aged people are especially interested in switching companies if they can find savings. Eighty-five percent of younger drivers and 86% of middle-aged drivers said they would change insurance companies for a savings of at least $100.
Only 2% of younger drivers and 5% of middle-aged drivers said they would never change car insurance companies regardless of savings. Older drivers appear more set in their ways, with 13% saying they would not switch carriers to save money.
There are ideal times to look for a new policy and pitfalls to avoid and ways to multiply the savings. Here is everything you need to know about how to switch car insurance.
How much can you save by switching car insurance companies?
Drivers can save an average of 178% or $1,647 for full coverage by shopping for car insurance to find potential savings.
Insurance companies have proprietary systems for assessing risk factors and determining premiums. The differences in their systems can result in dramatic premium swings.
Your job is to find the insurance company that likes your risk factors the best. Switching to a different insurer can result in major price differences.
Carinsurance.com looked at the rates for a 2019 Honda Accord with full coverage to identify the savings drivers can expect when you switch car insurance companies in all 50 states. Rates were fielded from up to six major insurers for nearly every ZIP code in each state.
The average savings is the dollar difference between the highest and lowest rates received from insurers, on average, for each state’s ZIP codes.
Drivers in some states may save even more by shopping around. We found that Michigan has the highest potential for savings by comparing the highest and lowest rates.
The places where drivers can save money the most by comparing auto insurance quotes are:
- Michigan – $4,837
- Kentucky – $2,805
- D.C. – $2,731
- Delaware – $2,718
- New Jersey – $2,579
States where drivers save the least still can save about $1,000 annually:
- Alaska – $972
- Nebraska – $974
- Missouri – $1,026
- Utah – $1,077
- Iowa – $1,114
Full coverage: Savings by state for comparing auto insurance quotes
The average state rate is comprised by averaging premiums for 2019 Honda Accord, male driver age 30, with policy limits of 100/300/100 ($100,000 for injury liability for one person, $300,000 for all injuries and $100,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. The average savings is the dollar difference between the highest and lowest rates received from insurers surveyed, on average, for each state’s ZIP codes. These hypothetical drivers have clean records and good credit. Average rates are for comparative purposes. Your own rate will depend on your personal factors and vehicle. Slight differences in some averages are due to rounding rates.
When to start shopping for new car insurance?
While a renewal notice may jog your memory to shop your car insurance, there are plenty of other life events that make it worthwhile to explore other insurance options.
Some life events that might spark a auto insurance company change include:
- Adding or dropping a driver
- Seeing your credit rating change
- Getting a ticket
- Getting into an accident
- Buying a house
- Getting married
- Getting divorced
- Buying a new car
In these cases, you should consider making a car insurance comparison to assess quotes.
“It’s always 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.
Adding a teen to your policy can easily double your premium, so it’s a great time to shop around for a better deal.
Let’s look into life changes that make shopping your car insurance a good idea.
Switching car insurance at renewal time
Renewal time is a great opportunity to shop your insurance coverage. In most cases, your current insurer will send you a reminder at renewal time.
If your rates are headed up at renewal time, you can find the best cheap car insurance for your situation by comparing quotes.
“Insurance companies use different algorithms to rate policies. One company may provide a better rate for a teenage driver than another, while another company rates elderly people better,” explains Daniel Shipman with Daniel Shipman Insurance in Texas.
Switching car insurance when you’re moving
If you’re moving to a new address, you need to notify your current insurer of the address change anyway, so you might as well shop your coverage.
“Every insurance policy takes into account your Zip Code and the likelihood that people living in that Zip Code will make a claim, so shopping around after you move is a great idea,” advises Seth Miller, director of sales at InsuraMatch.
You can find out more about how moving may affect your auto rates by using our “Will my insurance go up if I move?” tool.
If your new digs come with a high crime or claim rate, you can expect to pay higher auto insurance rates. On the other hand, a low-crime area may result in lower rates for you.
“One insurance company may have better rates in your new area than another, even if you only moved a few miles from your last residence,” says Miller.
If you’re going from an apartment to a house, let your insurer know. Homeowners often get better rates because insurers believe they get into fewer accidents and file fewer claims than renters.
In addition, consider placing your homeowners insurance with the same insurance company to receive a bundling discount that can range up to 25%.
Switching car insurance when you add or drop a driver
Changes in your driver lineup will usually result in a rate change, making it an ideal time to shop your policy. If the new driver is a teen, expect your rates to skyrocket, especially for a male driver.
On the other hand, if a young adult is moving off your policy, you’ll likely see a significant drop in rates.
Anytime someone moves into or out of your household and has access to your cars, you should notify your insurers because it could impact your rates.
Switching car insurance when you have a poor credit rating
Insurance companies usually charge drivers with poor credit higher premiums, except in the states where that practice is forbidden.
“The majority of insurance carriers consider credit scores and all but three states allow for credit-based rating. Credit scores are typically weighted very heavily in insurance rates.
If you’ve been tracking your score over time and have seen an improvement since the last time you compared quotes, it’s a great time to shop,” says R.J. Weiss, certified financial planner.
CarInsurance.com’s rate analysis shows that drivers with bad credit pay 71% more, on average, than those with good credit for auto insurance.
By comparing car insurance companies, drivers with bad credit can save $2,000, or $167 a month, on their yearly policy cost by comparing rates, according to data used to rank the worst states for drivers with bad credit.
Switching car insurance after a ticket
Your car insurance rates will likely increase if you’re convicted of a moving traffic violation.
CarInsurance.com’s analysis shows that a speeding ticket increases rates by an average of 22 to 30%, depending on how fast you’re driving. Failure to stop, tailgating, illegal turns or passing ding your rates by about 20% annually.
While you’ll likely pay a higher premium regardless of insurer after a ticket, insurance companies rate risk differently, so this is an excellent time to shop for new coverage. For example, you can save about $800 by comparing rates after a recent speeding ticket, according to CarInsurance.com’s research.
This is especially true for infractions beyond speeding or running a red light. A DUI, reckless driving or driving without a valid license can dramatically increase your insurance premium or even result in an outright cancellation. You may need to find a specialized insurance company to secure coverage after this type of ticket.
Switching car insurance after an accident
If you’re in an accident and make an insurance claim, your rates will increase unless your policy has accident forgiveness.
An accident will increase your rate by an average of 32%, or by about $450.
While a recent accident will usually result in a higher rate regardless of the insurer, shopping for cheap car insurance after an accident can minimize the increase.
CarInsurance.com data show that drivers with a recent accident can save about $1,100 by doing a auto insurance quote comparison, as that was the difference between the highest and lowest rate fielded from six major insurers.
Switching car insurance after getting married or divorced
You should notify your insurer if there’s a change in your marital status. Statistics show that married drivers are safer on the road, so if you’re tying the knot, expect a slight premium dip.
If the big life change is a divorce, you’ll need to shop your insurance as you need to get your spouse off your joint policy. Your rates could go up or down depending on many factors.
If your ex-spouse was a lousy driver with numerous tickets, you should have a much lower rate on your own. On the other hand, if your driving record is less than perfect, you could see an increase coming your way.
Switching car insurance when you buy a new car
You have to insure your new car, so you might as well take some time to shop all of your policies.
A new car can have a significant impact on your premium, especially if you’re going from a mini-van to a Ferrari. Insurers consider a vehicle’s safety rating, crash and theft statistics, as well as claim rates, when setting a premium. So, your new vehicle could end up being much more expensive to insure.
When shopping for a new car, always get a few insurance quotes before signing on the dotted line. You don’t want a big surprise (think huge insurance rate jump) when it’s time to insure your new car.
Switching car insurance when you add a teen driver
Your rate will increase, on average, by about 140% when you add a driver age 16 to your policy, according to CarInsurance.com’s rate analysis.
But some insurance companies are more forgiving than others, so you can still garner some savings. Adding a teen to your policy is a perfect time to get quotes from multiple companies.
Switching car insurance? Keep these things in mind
If you have decided to shop your insurance, you probably have a few questions about the process and what pitfalls you should avoid. Here is what you need to know about switching insurers.
Is it bad to switch auto insurance companies?
No, switching car insurance companies isn’t a negative as long as you find a company that will save you money and offers you sufficient coverage.
You also want to make sure switching companies doesn’t cause a lapse in coverage. Going without auto insurance for an extended time could result in you paying higher premiums once you get coverage again.
Does switching car insurance affect credit?
No, switching car insurance companies won’t hurt your credit. Comparing quotes doesn’t trigger a credit check like applying for a credit card, says Penny Gusner, senior consumer analyst for CarInsurance.com.
Those with bad credit usually pay more for car insurance than those with good credit. Insurers view a person’s credit history as a risk indicator. If someone has a poor credit score, insurance companies believe they may file more claims.
However, the simple act of getting auto insurance quotes won’t affect your credit.
Can I change car insurance before renewal date?
Yes, it’s possible to change car insurance companies even if you’re mid-policy.
Typically, all you need to cancel your auto insurance policy is to submit a signed cancellation request form. In some cases, it’s as easy as emailing your insurance agent that you wish to cancel your policies and the date you want the cancellation to take effect.
You may need to show proof of insurance policy with another company for your cancellation to go through.
Let your insurer know you are shopping
If it’s just price and not a bad claim or customer service experience that is prompting your switch, let your insurer know you will be shopping your coverage. Many insurance providers will work to keep your business. They may pull out some new discounts to help lower your premium.
If you already have new quotes, some insurers may match your new premium.
Not all car insurance companies are willing to do this and some may simply wish you the best. If you decide to move your insurance, in most cases, it’s best to move other policy types like homeowners insurance, too. That way, you can take advantage of bundling discounts, which can be significant.
Consider how discounts compare among insurers
You may gain discounts with a new insurer, but you may also lose ones with your old company.
“Your current insurer might give you a loyalty discount for being a longtime customer,” says Justin Herndon, an Allstate Insurance Co. spokesman.
“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.
Get the details before bundling your home and car insurance
While many companies 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, a customer 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.
The best advice is to run the numbers with bundling and without building to see which way results in a lower premium.
Your driving record may affect your eligibility for car insurance
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.
However, if you have a serious violation, such as a DUI, not all companies may be willing to offer you insurance.
How to cancel your current car insurance policy?
If you decide you want to cancel your insurance in the middle of your policy period, Minnich suggests obtaining your new coverage. Once it kicks in, immediately contact your current auto insurer to cancel that policy.
You’ll typically need to request the cancellation in writing.
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.
How to find the best car insurance company for you?
Finding the best cheap car insurance includes doing research on other things than price.
Before switching insurers, make sure you thoroughly check out any new insurance company you’re considering. The majority of state insurance offices keep track of customer complaints, so check with your state office before switching.
Read online reviews, such as our 2021 Best Car Insurance Companies customer satisfaction rankings, and check their financial strength with A.M. Best. You may want to keep shopping if you see the same issue come up over and over in reviews (poor claim or customer service).
It’s never a good idea to choose an insurance company solely on price. Always check reviews. An insurance policy is not a bargain if you struggle to get a claim paid or get someone on the phone after an accident.
Common mistakes to avoid when switching car insurance companies
Avoid these mistakes that can make switching insurance companies a financial nightmare.
Leaving a coverage gap
Never leave a coverage gap. You want to make sure your new policy is in place before you cancel your old policy.
A coverage gap leaves you unprotected if you’re in an accident between policies. In other words, you’ll pay for all repairs and medical bills yourself.
In addition, if you have a long-term gap in coverage, insurance companies will charge you more later. Insurers hate gaps in coverage. A lapse in coverage means you’ll wind up paying 9 to 13% more, on average, when you get your new policy, according to CarInsurance.com’s rate analysis.
If you wait until 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 Herndon. “An accident can happen at any time, and you don’t want a gap in coverage to exist.”
Not canceling your old policy
This happens more often than you would imagine and can have serious repercussions. You should notify your current insurer in writing that you are canceling your policy.
If you simply stop making payments or let your policy lapse, your insurer may not realize you’re canceling and treat it like a delinquent account. That can result in you being sent to a collection agency and your credit rating being dinged.
Most insurers require cancellation in writing, so make sure you cancel your policy properly and receive a confirmation of cancellation.
Missing the details of a new policy
It’s always easy to find a cheaper policy if it comes with less coverage or a higher deductible.
A super affordable quote may look great until you dig into the details. Always make sure you’re comparing the same coverage levels, deductibles and even features, such as accident forgiveness, when shopping for a new policy.
The best way to shop is to send your current declarations page to any insurer you are getting a quote from, which will ensure they match your current coverages.
Forgetting your refund
If you’re switching mid-policy, your current insurer may owe you a refund if you paid upfront. As an example, if you paid for a six-month policy and then decide to switch insurers after three months, your insurance company owes you a refund for three months of premiums, minus a cancellation fee if it applies.
Most insurers process refunds quickly and easily, but drivers sometimes have difficulty getting their refund. Always cancel your policy as soon as the new one takes effect and request a refund. Follow up quickly if the refund isn’t issued promptly.
Switch out your cards as well
It’s pretty easy to forget to switch out your insurance cards when you change insurers, but if you get pulled over without proof of current insurance, you could be looking at a fine. While you can most likely get the ticket dismissed if you go to court with your new cards, spending the day in traffic court isn’t a great way to spend the morning.
Most auto insurers make it easy to print your insurance ID cards and many have an app that allows you to keep all of your insurance details right on your phone.
Don’t forget to notify your lender or leasing company
If you have a loan or lease on your vehicle, you need to notify them as soon as you switch insurers.
Your lender will require that you carry insurance on your vehicle. If they get a notice from your old insurance company that you have dropped your coverage, they may start the process of repossessing your vehicle. In other cases, they may “force place” a new policy on your vehicle and bill you for it.
Contact your lender with the details of your new policy as soon as it goes into effect.
Take it easy
In the first 60 to 90 days of an insurance policy, the insurer has the right to drop your coverage with very few repercussions.
So, it’s best to drive extra careful and avoid any tickets or accidents in this time frame.
State car insurance rate comparison by company
Let’s take a look at the average policy costs for multiple car insurance companies in each state.
How to increase your car insurance savings
Here are a few ways to increase the savings even more when switching insurers.
Ask about discounts when you change insurers
Check with your new insurer to see what other car insurance discounts you might be eligible to receive.
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.
Change your deductible
Raising your car insurance deductible to lower your rates is one way to trim costs, and a good time to make this change is when you switch policies.
If you can double your deductible, expect to see some big savings but always choose a deductible you can easily afford in the event you have to make a claim.
Change your coverage
This is another great way to lower your premium, especially if your car is getting older. If you’re driving an older vehicle, you may be able to drop collision and comprehensive, which will lower your premium.
If you would replace a vehicle instead of having it repaired after an accident, it’s time to drop these coverages.
Switching car insurance takes time and getting quotes from multiple car insurers isn’t the funnest activity. However, by doing a little bit of work, you can save more than $1,000 each year on car insurance, which you can put toward your mortgage, a vacation or a new car.