UPDATED: Mar 13, 2020
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So you’ve been involved in an at-fault accident and you’re wondering whether or not you can switch insurance policies.
Can you switch car insurance after an accident where you were at-fault? Or do you need to stick with your old insurance company? Today, we’re answering all of the questions you’ve sent us about switching car insurance after an at-fault accident.
Yes, You Can Switch Car Insurance Companies At Any Time
Your old insurance company will still be the company dealing with the accident, and you’ll still have to cooperate if there’s a lawsuit – say, if the other driver sues your insurance company for damages beyond your policy limits.
If you switch to a new car insurance company, then your car will be covered under that new insurance policy moving forward.
Typically, you can switch to a new car insurance company without penalties. The only exception is if you pay monthly insurance premiums. In that case, you may have to pay outstanding financing charges, although the company may still refund part of your monthly premiums.
Overall, you can cancel your car insurance at any time without facing major penalties – including after an at-fault accident.
Is It a Good Time to Switch to a New Car Insurance Company?
We’ve established that you can switch to a new car insurance company after an accident where you were not at-fault. However, is it a smart idea to switch to a new car insurance company now? Is now the right time to make a switch?
Typically, you’d want to change insurance companies after an at-fault accident if you’re facing substantially higher insurance premiums.
Your insurance company might not offer accident forgiveness, for example, in which case you might be paying 50% or 80% higher insurance prices after an at-fault incident. You might find a new insurance company offering cheaper rates even with your at-fault collision. In this situation, it likely makes the most financial sense to switch to a new insurance company – assuming you can switch without penalties.
It May Not Be In Your Best Interest to Switch Insurance Companies After an At-Fault Collision
There’s never a bad time to shop around for car insurance policies. In fact, the days and weeks following an at-fault accident are some of the best times to shop for new car insurance. You can see what other options are out there, then choose a quote from a superior car insurance company.
However, don’t expect to save a lot of money when switching to a new car insurance company after an at-fault collision. Typically, you’ll pay higher car insurance rates from every insurance company after a single at-fault collision.
Generally speaking, you’re not going to save a lot of money by switching insurance companies after an at-fault collision. That means it’s not necessarily a good idea to switch insurance companies.
Avoid Committing Insurance Fraud
Sometimes, drivers try to get sneaky with their new car insurance policy. If you’ve recently been involved in an at-fault collision, then you might try to immediately switch to a new car insurance company before the accident appears on your vehicle’s permanent record (with your state’s DMV).
If you’re switching insurance companies for this reason, then you’re deliberately misleading your new insurance company. You’re most likely committing insurance fraud. Even if you’re able to receive a policy from your new insurance company, that policy may be void if you need to make a claim.
In other words, if you’re trying to switch insurance policies because you think the new insurer doesn’t know about your accident, then this is a bad idea.
Conclusion: Most Insurance Companies Let You Cancel Anytime
Ultimately, most car insurance companies in the United States allow you to cancel your policy at any time. You can cancel your policy after an at-fault collision without facing major penalties. Most insurance companies will refund part of your premiums, minus any financing costs. Your old insurance company will deal with the accident, and your new insurance company will continue to protect your car going forward.
Generally speaking, however, it’s not in your best interests to switch insurance companies after an at-fault collision. You’re going to pay higher rates for car insurance at every company after a single at-fault collision. Unless you can find a really good deal – say, with a company that offers accident forgiveness – it’s unlikely that you’ll save enormous amounts of money by switching to a new car insurance company after an at-fault collision (although you should still consider comparing quotes).