February 5

[10 Steps] How To Switch Car Insurance


[10 Steps] How To Switch Car Insurance 

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quick highlights

Get your data together:  got your driver, vehicle, and insurance info in hand?

Don’t let price be your only buying decision factor

Only cancel your existing policy after you are settled with new car insurance. 

This step by step guide will help you to find success in saving some money on your car insurance.

Switch car insurance can be intimidating. 

 The entire process seems like it was designed to prevent you from switching.  

My best advice is to take small steps towards your goal.

It's normal to dread something as boring as insurance.  

Especially if you don’t know the lingo or even where to begin.

Car insurance isn't something that's usually on your mind. It’s often one of those things you “set and forget.”

You pay it month after month and hopefully never need to use it.

But what if your rates go up? Or you file a claim and discover the customer service isn't so helpful?

It might be time to consider switching car insurance.

Auto insurance companies often rope you in with ‘teaser rates’ where they give you a lower premium for being a new customer.  

They will raise your rates over time, in hopes you are too lazy to switch.  

 You might even put your car insurance on autopay and never look at the bill. 

Step 1:  Gather Your Information To Switch Car Insurance

All car insurance companies are going to ask you the same basic set of questions.  

So having all your info in one place is going to save a lot of time.

You will need to give the following info to all car insurance companies.

Some  of the info they request you will have memorized.  These items include where you live, what you do for work, and where you work.  

To switch the car insurance companies will also ask you some things you may need to find.  These include:

  • Car Info:  year, make, model, VIN.  (aka Vehicle Identification Number)
  • Driver Info:  Full names, dates of birth, and drivers license numbers of everyone on the policy.
  • Current Auto Insurance Info:  coverage limits and deductibles
  • Lease or loan Info:  name of your lender and address

Tips For Success

Dodo Tips

Agent Dan Says: 

Find your current policy’s declarations pages.  You will find most of the above information needed about your vehicle and policy on the dec page.   

Step 2: Consider Your Car Insurance Needs Before Changing

Before you can shop around for car insurance, consider what features you need from a car insurance policy.

Consider your coverage levels and ask yourself:

Am I paying too much for coverage I don’t need?

Or am I financially exposed from not having enough coverage?

Some policies have “bells and whistles” coverage, such as towing or rental car.  

You may never need these and the premium will add up over time. 

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Consider dropping Comprehensive and Collision Coverage

If you drive an older vehicle, you might not need collision and comprehensive insurance.

Older cars aren’t typically worth very much on the used car market.

If you carry comprehensive and collision coverage on an older car and its totaled, your insurance company is only going to offer you enough money to buy a similarly old car.

So if your car is only worth $3,000, they are going to give you that amount, minus whatever deductible you have on the coverage.

So if you are paying $500 a year for Comprehensive and Collision coverage and your car is worth $3,000, it wouldn’t take long before you spend more on insurance than you would get from a claim settlement.

That is why it may be a waste of money to insure your older car with comprehensive and collision coverage.

Consider your auto insurance policy deductible Before Switching 

A higher deductible can lower your car insurance rates and save you money when moving to a new company.

Car insurance companies usually give the best discount on a higher collision deductible.

I like using at least $1,000 deductible with Collision coverage.  But you could also go as high as $2,500.

Using a higher deductible with Comprehensive coverage is not going to save much money.  

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The difference between a $250 and a $1,000 Comprehensive deductible is usually $30 to $90 a year. 

That is not much of a savings for such a high deductible.

Switching Complications - Word of caution with higher deductibles

Make sure you have the ability to pay for that higher deductible if your car is wrecked.  

A $1,000 is a lot of money to come up with sometimes, so if you aren’t 100% sure you can handle a high deductible all the time, then just avoid them all together.

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Look Closely!

When comparing quotes, make sure the coverage is the same on both quotes.

Step 3: Shopping Around for Auto Insurance Quotes Before Changing

Get at least three quotes to know the range for premiums for the coverage you want.

A word of caution:

When you compare policies, make sure you’re comparing ‘apples to apples.’

Here’s what I mean…

Compare policies with the same coverage type, deductibles, coverage limits and options.

For example, don’t compare a policy with a $100,000 liability coverage to one with $10,000 liability coverage. 

The premiums may be lower for the $10,000 coverage option, but you will be underinsured.

Step 4: Shop for Home or Renters Insurance Too

Car and Home Insurance should be bundled whenever possible.  

Insurance companies will give you a significant bundled discount to switch to a new insurance company.

Sometimes they can discount your policy by as much as 15%!

Step 5: Research Car Insurance Companies

At this point in the process, you’ve gathered some quotes.

At this point, you have two options:

  • You can just go on your gut and buy the lowest priced policy.
  • You can invest 20 or 30 minutes doing online research on the car insurance companies who quoted you.

Its true that price and coverage options aren’t the only factors when considering how to switch car insurance.

Dodo Definitions

Insurance Term Explained:

Deductible:  This is the amount your car insurer will deduct from the settlement payment.  You can have a deductible on comprehensive and collision coverage.

Customer Service and Claims Handling

To read car insurance reviews online, check the Better Business Bureau and review sites like Trustpilot. 

When reading company reviews in online chat rooms, take the reviews with a grain of salt.  

Most people who post about their experience with an insurance company have been burned.

They had a bad experience so they posted a bad review.

All insurance companies are going to have bad reviews like these.  It's just the nature of the business.

On the other hand, people who have good experiences almost never post about it.

Tips For Success

Dodo Tips

Agent Dan Says: 

Try to find out who handles claims.  Some car insurers have their own employees adjust claims.  Other car insurers hire subcontractors, known as 3rd party claims administrators.   

Financial Stability Research

Find their A.M. Best and Standard & Poor’s ratings. 

That way, you’ll know if they’ll still be around to pay a claim if you need to file one.

In looking at the financial ratings, only go with a company who has an “A” or better for financial strength.

All the big household names, like All State, LIberty Mutual, or Farmers, have A ratings and are very financially stable.

You usually only have to research the financial solvency of smaller, regional insurance companies.

So if you are low on time and are only taking quotes from the big insurers, you can skip this step.

Dodo Teaching Numbers

Let's looks at a great example...

Based on a true customers experiences, names and some details changed to protect their identities and privacy. 

Walter and Janet had been with the same insurance company for 20 years.

They believed this was the best way to have a claim covered.

Little did they know, but they had been over paying by about $120 a month for the past 11 years.

That worked out to $15,840 in additional premium payments.  

After 20 years with the same company, their car was totaled in a freak accident.

A tree was blown over in a storm and totaled their car.

The claims adjuster came out and gave them a really low offer.  

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They had to fight it out and argue with him to get him to pay what their car was actually worth.

All the loyalty they had shown was apparently only going against them.

Don’t be like Walter and Janet.  Shop for car insurance every couple of years!

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Don't Be Too Cheap...

You meet your legal obligation to carry insurance with very low limits of coverage.  Going with really low limits is a really bad idea.  If the damages you cause exceed your coverage limits, you will have to pay out of pocket for the rest!

Step 6:  Talk to Your Current Car Insurance Provider Before Switching

Before you change auto insurance companies, talk to your current car insurer. 

Here’s why:

  • Ask about any fees or penalties you may incur for canceling your policy. Fortunately, most insurance companies let you cancel at any time. But ask anyway. And if you prepaid for a six-month policy and switch before it’s up, ask how the insurance company will issue your refund.
  • Your car insurance company may fight hard to keep you as a customer if you let them know you’re in the market for a better deal. They could meet or beat the rates other companies offer.

Step 7:  Get the Timing Right

Ideally, you should shop around for car insurance rates once a year. 

Think that’s too often?

At the very least, consider changing companies if:

  • You have a significant life change (adding a teenage driver)
  • Your premiums increased
  • You’re planning to move
  • You change cars or add a new vehicle to your policy
  • You experienced poor customer service
  • You plan to increase or reduce coverage

But remember:

Sometimes, you might want to wait to change car insurance carriers.

For instance, now might not be the right time if you recently received a speeding ticket, were in an accident or filed a claim.

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Don't Settle On Your First Quote. Compare Providers & Shop Around For the Best Rate in Under 2 Minutes.

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Step 8: Avoid a Coverage Gap

If you switch providers, make sure the new policy is effective when the old policy expires. 

Even just one day without insurance could put you on the hook for thousands of dollars in damage if you were in an auto accident.

You could also face legal consequences.

Plus your rates could skyrocket because a gap in coverage labels you as “high risk” in the eyes of car insurance companies. 

It is a really good idea to put your new policy in place, then call to cancel your old policy.

Auto insurance companies will generally cancel your old policy back to the date you picked up coverage somewhere else.

You will just need to provide the old company with your proof of having placed coverage with another company

Compare Policies

Action Item:  Have your new car insurance policy in place before cancelling the old policy.  This prevents any gaps in coverage. You can get started comparing quotes here. 

Step 9: Tell Your Lender or Leasing Company After Changing Insurance

If you financed your car, your lender requires you to carry car insurance. 

And if you change policies?

You’ve got to tell the lender about the new policy. 

Some leasing companies or lenders require you to carry a certain amount of insurance.

They have a financial stake in your car and want to make sure it’s covered by insurance.

It’s a good idea to contact your lender or have your new insurance company send proof of your new policy, so they know you have the proper coverage.

Step 10: Print Out the New Insurance Cards After Switching

Once your new policy is officially active, print your new insurance cards and replace the old insurance ID cards in your vehicle or wallet.

While many insurance companies have digital ID card options you can access on your phone, it’s always a good idea to have a physical copy of your card handy.

You never know if you’ll be stopped by the police or become involved in an accident in an area without cell service.

The Bottom Line: How to Switch Car Insurance

Take your time and check off the necessary steps when switching car insurance. 

If the process sounds scary, it's not.

Comparison quotes are quick, easy, and free!


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