How to change car insurance carriers?

Written by Gary Bangstad and Andrew Freiburghouse on November 28, 2011 & Posted in Auto Insurance

Whether you are at the beginning, middle or end of your current car insurance policy, you may want to change providers. But it's important to handle the switch to a new insurance company the right way. Otherwise, you could accidently end up with a lapse in coverage.

When to switch?

Shop around for lower car insurance rates in the weeks leading up to the end of your current car insurance policy. That way, you can easily change over your coverage to a new carrier at the end of your policy period without fear of cancellation fees.

However, it's OK to check rates even if you've recently renewed your policy or are in the middle of a policy term. Normally, you can make a change in auto insurance providers at anytime during your policy period.

If you want to make the change less than 60 days after the inception of your current policy, you'll likely have to show proof of new auto insurance coverage to cancel out your old policy. Many states require this as a way to keep drivers from starting a policy for registration purposes and then canceling out the policy.

Making the switch

It's easy to change car insurance companies. Requesting the cancellation of your policy normally can be done with a call to your agent or even online. However, some insurance companies (and state laws) require your request to be in writing.

Look at your auto insurer's website for details on cancellation requirements. Find out if you'll be charged a cancellation fee, and if so, how much.

When contacting your auto insurance company to cancel, remember to ask about the return of any unused portion of your premium. Your refund usually will be prorated according to your cancellation date.

One important part of switching car insurance companies is to make sure the new car insurance policy is in place before canceling your current one. This may involve an overlap of policies of a day or two.

Do not cancel out your previous policy until you have proof the new policy is in force. Otherwise, you may end up with a lapse that leaves you unprotected for accidents. A short lapse of even one day may also cause your state to deem you "uninsured" and assess you penalties.

About the Author

Gary P. Bangstad, Ed. D. is a freelance writer in the area of business and insurance. Previously, he worked for Midwest Financial Planning LTD, selling insurance and investment products. He has also taught music at the university level.

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.


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