UPDATED: Mar 13, 2020
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Americans have plenty of choices when it comes to car insurance. That makes it easy to switch to a new provider if you’re unhappy.
But should you really change your auto insurance company after every renewal period? Are there downsides to changing your car insurance every 6 months? Today, we’re going to explain the pros and cons of frequently switching between car insurance providers.
Why It’s Not a Good Idea to Switch Car Insurance Companies Every 6 Months
First, let’s talk about the negatives. There are absolutely some downsides to switching car insurance companies every six months. Some experts recommend it, while others do not.
Insurance Companies Reward Longevity: Insurance companies love long-term customers. That’s why they tend to give better rates to long-term customers. If you stick with the same insurance company and agent over years, then you may find better rates than you would get by making the switch.
Cancellation Fees: You might be able to switch car insurance companies every six months. However, don’t expect to do so penalty free. Some insurance companies have cancellation fees, for example. If you purchased a 12 month policy and you’re canceling after 6 months, then you may be stuck with cancellation fees. However, if your policy is just six months long, then you should be able to cancel without penalty.
Gaps in Coverage: You might think you’re thrifty by switching car insurance companies. Unfortunately, you’re leaving dangerous gaps in your coverage. Some people switch insurance companies and mess up the timing: they cancel their old policy before they get a new policy. If you get into an accident during this gap, then you’ll be forced to pay out of pocket. The cost savings you get from making the switch might be wiped out by a single accident during a gap in coverage.
Small Cost Savings May Not Be Worth the Headache: You might save $25 a year by switching to a new car insurance provider. To get those savings, you might need to spend hours on the phone. You might need to collect paperwork, shred old documents, deal with your old insurance company, speak with your new insurance company. That’s a lot of hassle and overhead. If the cost savings are small, then making the switch may not be worth it.
Insurance Companies Can Sometimes Drop Claims Within your First 90 Days of Coverage: There’s one final reason why switching car insurance companies every 6 months may be a bad idea. Insurance companies treat new customers with suspicion. If you get into an accident or file a claim within your first 90 days of coverage, then your insurance company may be able to drop you as a client without remorse. Generally speaking, insurance companies treat their long-term customers much better than their short-term customers.
Reasons to Consider Switching Car Insurance Companies Every 6 Months
On the other side of the argument, there are some genuine advantages to switching car insurance companies every 6 months.
You Can Save Money: This is the first and most obvious reason to switch car insurance companies frequently. You can save a lot of money. Sometimes, a car insurance company will offer substantially discounted rates to attract new customers. In other cases, your current insurance company might raise rates after a single collision, while another insurance company is more forgiving about a single claim.
Switch and Save Discounts: Some car insurance companies in America offer discounts for switching to a new provider. You may be able to “game the system” by switching car insurance companies every 6 months. You get the discount, then switch providers when your discount expires. Switch and save discounts can be significant.
Because You Can: Auto insurance is a free market. It’s fueled by competition between insurance companies. More competition means more options and better prices for customers. If you’re unsatisfied with your current insurance company, then you’re free to switch to a better provider.
Everyone likes a good deal. It’s important to be thrifty when it comes to car insurance. However, don’t get too caught up chasing a good deal. There are some cost-saving advantages to switching car insurance providers every 6 months. However, unless the cost savings are significant, switching car insurance providers every 6 months is unlikely to be worth the hassle.
Nevertheless, it’s always a good idea to explore your options. Compare car insurance providers today and see if it’s worth it to make the switch.