Switching Auto Insurance Providers? Here’s What You’ll Need To Know

There are plenty of reasons why you've decided to switch auto insurance providers. You may have found a better rate or found coverage options that better suit your current needs. If this is your first time changing providers, then there are a few things you should know about the process before you make the switch.

Know What You're Getting Into

When switching from one provider to another, you'll want to know how your new policy stacks up against the old one, especially when it comes to rates, coverage options, and overall service. Before you make the decision to switch, here are a few tips to keep in mind:

  • Make sure your new policy matches the coverage requirements of your state. Ideally, your new coverage should be the same or better than the coverage you previously had.
  • Check your liability limits. You should always make sure your new policy's liability limits are at or above your state's mandated amounts.
  • Check out the perks and discounts your new coverage offers. You may be able to benefit from discounts, coupons, and other perks not offered by your old auto insurance provider.
  • Make sure you're not sacrificing quality coverage for price. A cheap insurance policy may not have the same features or protections as a more expensive but higher-quality policy.

Mind the Coverage Gap

Having gaps in your auto insurance coverage can prove detrimental in more ways than one. Not only does it expose you to the legal and financial consequences of driving without auto insurance, but you could also face higher premiums when you finally switch to another provider.

For this reason, it's important to schedule your new coverage to become effective before your old coverage is scheduled to end. Some states may even require your new auto insurance coverage to come into effect before you're able to drop your old provider.

Watch Out for Cancellation Fees

It's not out of the ordinary to get hit with cancellation fees if you decide to cancel your current auto insurance coverage early, although the vast majority of auto insurance providers don't engage in this practice. If your provider charges cancellation fees, you may end up paying up to $50 or 10 percent of your remaining premium. It's a good idea to review the terms of your policy or directly contact your insurance provider to find out more information.  

One way you can avoid cancellation fees is by switching providers when your current term is near expiration. The effective start date of your new coverage should be no later than the day your old coverage is set to expire. Remember that some providers automatically renew expiring policies, so you'll want to let your old provider know that you won't be renewing your coverage.

Don't Forget to Let Your Lender or Leasing Company Know

With most auto lenders and leasing companies requiring mandatory insurance coverage as a condition of your lease or financing agreement, it's important to let those companies know when you're switching insurance providers. Once your new auto insurance policy is active, you should forward your new proof of insurance to your lender or leasing company. Some insurers will even pass on the appropriate paperwork on your behalf.

Avoid Claims During the First Few Months

Most insurance companies frown upon new customers who end up filing a claim within the first few months of their coverage. In some cases, it could be grounds for having your policy canceled or non-renewed. With a brand-new auto insurance policy, it's usually a good idea to be on your best behavior during the first two or three months of your coverage, although unavoidable accidents can still happen. 

To learn more about auto insurance, contact an agency like Able Insurance Agency.