How to Switch Your Car Insurance Company: A Step-by-Step Guide

There are many reasons why you may want to switch your car insurance company. Whether you are adding a new driver or your premium recently increased, it is critical to review your insurance coverage options to protect your finances. 

Fortunately, it is easy to change insurers, and with attention to a couple of important details, you can avoid some common mistakes like lapses in coverage. Follow these six steps to switch your car insurance policy to the best choice for you. 


Step 1: Evaluate Your Insurance

The first step in changing your car insurance is evaluating your insurance and determining a reason to change. Many life changes should prompt you to shop around and compare rates. Here are a couple of examples:


Adding a car or driver

Your premium will likely increase when you add a new car or driver to your policy. Adding a vehicle requires costly coverage expansion, but some insurers offer loyalty discounts for insuring multiple vehicles under one policy. If your insurance company does not do this, consider checking out other options.



When you move and get a new zip code, your car insurance premium is liable to increase. This is the perfect time to switch car insurance companies if you can find a less expensive option.


Changing credit score

Your credit score has a significant influence on your car insurance premiums, according to Value Penguin. If you have recently improved your credit score from one category to the next, like from near-prime to prime, you should shop around for less expensive coverage. 

While other factors like driving record and location matter, changes in your credit score could earn you a lower premium.


Step 2: Understand Coverage Options

An important part of switching companies is understanding the various coverage options available. While the more coverage you opt-in for results in higher premiums, too little coverage can leave you exposed to expensive bills in the case of an accident. 


Liability coverage

Most states have legally required components of car insurance, including liability and uninsured driver insurance. Liability insurance pays for when you cause property damage, vehicle damage, or physical injury to another driver. You can determine the limits and deductibles of your liability coverage. Higher limits increase your premium, but higher deductibles lower your premium payment. 


Uninsured driver coverage

Uninsured driver insurance protects you from having to pay for your own property damage, vehicle damage, and personal injury when an uninsured driver causes an accident. 

Underinsured driver insurance protects you when an underinsured driver cannot cover the costs they caused you. It also protects you in hit-and-run cases. 


Collision and comprehensive coverage

Collision and comprehensive coverage are not legally required, but they provide coverage for all other damage that can happen to your car, from fires to animal collisions. Paying for these coverage options is a good idea if you can afford it, as they will replace a totaled car. 

If your car insurance is too expensive and you want to switch, start evaluating your coverage options. You can save money with less coverage with your current company, or you might be able to get the same coverage for less with another company.


Step 3: Compare Car Insurance Quotes

Auto insurance premiums are calculated using many factors, and since insurance companies weigh factors differently, you may save money by comparing multiple insurance quotes. The Insurance Information Institute recommends comparing quotes from three different insurance companies.  

Beyond the price, you should consider each company’s customer service reputation. Ask friends and family if they have good experiences with your next potential insurer. If you are in an accident, you will have to deal with this company, so it is important to feel comfortable with them. 

Ask potential insurers if they offer safe driver discounts, group discounts, or student discounts. When multiple companies’ premiums are identical, the discounts and extra services they offer may be the deciding factor.


Consider independent insurance agents

Insurance companies supply the insurance policy, and insurance agents connect customers like you to insurance companies offering the policy. State Farm is an example of an insurance company that employs captive insurance agents. A captive agent can only sell insurance policies from their host company. 

Independent insurance agents sell insurance policies from multiple participating insurance companies. They compare multiple companies’ quotes for you and give you numerous coverage options to choose from. It is worth including both captive and independent agents in your insurance quote comparison. 


Step 4: Avoid a Lapse in Coverage

Once you choose the best insurance option for you, make sure you avoid a lapse in insurance coverage. A lapse occurs when your previous insurer ends their coverage before your new insurer begins theirs. Not only is it financially risky and illegal to drive during a lapse in coverage, but it also increases your premium.

According to Value Penguin, a month’s lapse in coverage typically results in a 35% increase in premium payments.  Shorter lapses increase premiums but not to the same extent. 

To avoid a lapse in coverage, your new insurer should match the start of your new policy to the end of your old policy. This ensures you have continuous coverage and avoids penalties for lapsed coverage. 


Step 5: Cancel Your Old Policy

This step may seem intuitive, but it is important to cancel your old insurance policy. No one wants to see an old insurance bill on their monthly American Express or Visa card statement.

End your automatic payments and tell your old insurer that you have switched insurance providers. You can even request a written termination from them to ensure you cover all your bases. 


Step 6: Acquire New Proof of Insurance

Once you are officially on the new insurance policy, you need to swap out your old proof of insurance with the new documents. Many companies will mail you an insurance ID card, or you can print them at home. 

Pay attention to the expiration dates on these documents, and always have up-to-date proof of insurance in your car. You need it if you are pulled over or get into an accident. 


Reevaluate Once a Year

Continue to protect your finances by re-evaluating your insurance policy every year. Your life may have changed, and the company’s calculations could change, resulting in a higher premium than you originally signed up for. 

As long as you understand insurance coverages, compare multiple insurance companies’ quotes, search for discounts, and avoid lapses in coverage, you can always find the best car insurance policy for you.

At Finance is us, we help you make informed decisions about your money. Whether you need advice on car insurance, investing, or a mortgage, we are here for you. Contact us today for more information about our products and services.


Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services. 

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