Can You Change Car Insurance Companies Mid-Policy?

So you found a cheaper car insurance policy from a different provider. You’re wondering if you can switch to a new company in the middle of your existing policy.

Are you allowed to switch to a new car insurance company mid-policy? Will you pay cancellation fees for canceling your policy and switching to a new insurance company? Today, we’re explaining your options if you want to switch to a new car insurance company mid-policy.

Start by Comparing and Confirming Rates

You see commercials on TV every day explaining the benefits of changing rates. Insurance companies try to convince drivers they can save money by switching policies.switch car insurer mid policy

Sometimes, this is true. Some insurance companies might offer significantly lower rates for equal coverage. Some companies specialize in serving specific demographics. Others might reward you for bundling your insurance policies – like your home insurance and car insurance – together.

The first step is to compare rates, then confirm the price you can expect to pay. Some insurers will lure in customers with promises of cheap rates, only to significantly reduce your coverage. Others will avoid mentioning hidden fees and other surcharges – like a monthly premium you’ll need to pay if you’re paying for car insurance month-to-month instead of annually or semi-annually. This can make the new policy seem cheaper than your old policy – when in reality, the two policies are closer in price than they first appear.

Once you confirm an insurance rate and you’re confident it’s a better deal than your current insurance plan, then you can move onto the next step.

Contact your Current Insurance Company

The next step is to call your current insurance company. Tell them you’re thinking about switching to a new company.

Most insurance companies in the United States are very competitive with one another. They offer similar rates, similar coverage, and similar options. If you tell your insurance company you received a better rate at a new insurance company, then they may adjust your premium.

This is particularly true if you’ve had any life changes that would affect your rate – like if you’re married or recently purchased home insurance. Your current insurance company might not be aware of these changes until you tell them.

In any case, it’s typically easier to stick with your current insurance company than to switch to a new one.

Research the Potential Costs of Making the Switch

If you’re committed to switching to a new insurance company, then make sure you research the potential costs of making the switch. Costs could include all of the following:

Cancellation Fees

If you cancel your car insurance contract early, then you may be able to get a refund on your policy (or avoid future monthly payments). However, you will most likely pay a cancellation fee. Talk to your current insurer to see what kind of cancellation fees you can expect to pay – if any. Your cancellation fee could wipe out any savings from your new insurance policy.

Coverage Gaps

If you cancel your old auto insurance policy and buy a new policy, then you could be left with a gap in coverage. There might be a period of a few days or weeks where you’re uncovered. That means you’re legally unable to drive on the roads. If you do choose to drive while uninsured, then you’re exposed to major financial risk if an accident does occur. If you’re caught driving without insurance, then you could also pay higher premiums due to the fact that you’re a high risk driver.

Some states actually forbid you from having a gap in your insurance coverage. In certain states, you need to activate your new insurance policy before your old one can be canceled.

Consider Letting your Current Insurance Plan Expire

Ultimately, many drivers will be happy to let their current insurance plan expire before switching to a new one. Most drivers have 6 or 12-month insurance contracts, which means you shouldn’t have to wait long to make the switch.

If you wait to let your current insurance expire, then you can avoid cancellation fees while still getting cheaper rates within a few months.

However, if the cancellation fee is small and your potential savings are large, then it may be in your best interest to cancel your policy immediately and make the switch.

Conclusion

You can usually cancel car insurance mid-policy with minimal hassle. However, you’ll typically pay a cancellation fee. You might also have a gap in insurance coverage – which means you risk driving uninsured until your new policy is activated. Fortunately, with a bit of research, you can avoid these problems while upgrading to a significantly better – or cheaper – insurance policy.

Compare quotes today to see if a better car insurance policy is available to you.

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