Why, When, and How to Change Car Insurance Companies
Written by The Clearcover Team | 7 minute read
Did you know you can change car insurance companies at any time, even in the middle of your policy term or claim? And that changing your insurer can often save you money?
Both are true. In fact, one of the biggest ways to save money on car insurance is by changing car insurance providers. Often, you can get more coverage for a better price—and switching your auto insurance company is simpler than you think.
In this article, we’ll cover:
Why changing your car insurance company is a good idea
When it might be the right time to consider changing auto insurers
How to change car insurance, including how to get quotes
Changing car insurance companies should be straightforward and hassle-free (we’re in the digital age, after all!). And it can be an opportunity to upgrade your auto insurer, cutting your insurance costs while getting better coverage.
Why changing auto insurance companies is a smart idea
There are two main reasons changing car insurance companies is a smart idea:
To save money on your car insurance coverage.
While it can be easy to dismiss the prospect of saving on car insurance as a marketing ploy, it’s a real thing that happens for many car insurance shoppers.
For a better, more reliable insurance experience.
How you interact with your insurer—and how long it takes to file a claim—really does matter.
Let’s look at both of these factors in detail.
#1: Here’s why you can save money when you change car insurance
The auto insurance industry is constantly making improvements and adjustments to how they calculate insurance costs—and every company has its own algorithm—so you could end up with wildly different prices from different insurers. (That’s why car insurance price comparison sites are so popular.)
Other factors come into play as well. Many car insurance companies offer discounts to multiple-driver households, while others give preference to a single driver on the policy. Meanwhile, one company might advertise they give the best rates to new teen drivers, while another may not prefer to take on that risk. So when you have a life change, it’s a great time to shop for a new car insurance company—but you don’t have to wait for a life change to do so, and you can likely save money at any time by switching.
We recently completed a survey of 500 drivers on the topic of changing car insurance carriers. In our results, we found that close to 30% of those surveyed think they’re paying a fair rate for their car insurance^. But, according to WalletHub, drivers can actually save 10% to 40% (and sometimes even more) when they change car insurance companies!
#2: Changing car insurance can provide a better, more reliable insurance experience
If your current auto insurer seems to be a hassle to work with, it’s probably time to change car insurance. Whether it’s due to regularly increasing premiums, hard-to-understand coverage or lingo, the difficulty of filing a claim, or trouble getting your covered claims paid, an unreliable experience is a sign it’s time to shop around.
Or maybe your current car insurance company simply isn’t user-friendly and hasn’t kept up with the times. Some car insurance companies have streamlined their processes through newer, smarter technology—and even the use of artificial intelligence. And all of that can add up to a better experience, faster claims, and lower prices.
Is it bad to change car insurance companies?
No. Changing car insurance doesn’t harm your credit score either, which is a common misconception.
Many customers save money when changing car insurance, and while your current insurer might like you to think differently (so you don’t leave), changing car insurance companies doesn’t really have a downside to you, the customer.
(A quick disclaimer: A few car insurance companies do charge a small fee to end your policy early, but the vast majority of insurers won’t. Even if yours does charge a fee, the money you’ll save by switching usually makes the small cost worth it.)
When should you change your car insurance?
While you can change car insurance companies at any time for any reason, there are a couple of specific instances where you should start shopping for a new auto insurance policy.
Your current insurance company is too much of a hassle. In this case, you’ve probably experienced difficulty getting a covered claim paid or understanding your insurance. Working with a car insurance company should be straightforward, streamlined, and hassle-free. If there’s too much red tape and back-and-forth to get things done, it’s time to shop.
You’re moving (and especially if you’re moving out of state). A move can mean a change in your insurance costs or coverage, especially if you’re moving to a new state. It’s a great time to look for new car insurance that better fits your needs and will offer you coverage in your new state.
You’d like to see if you can save money by “unbundling” your household’s insurance coverages. In the insurance industry, “bundling” refers to when you have multiple insurance policies with one provider, such as using the same company for auto insurance, renters insurance, etc. And sometimes you can receive a discount for doing so. However, there may still be significant savings for you if you unbundle your insurance coverages and change car insurance companies—savings that may be greater than the discount you’re currently receiving.
You’ve experienced (or are about to experience) a big life change. If you’re getting married or divorced, expecting a baby, or are adding a new teen driver, make sure to shop around to confirm you’re getting the most coverage at the best price for your budget.
Your car insurance premiums are increasing. If your premiums are increasing, it’s time to look for new car insurance companies—even if you’ve had an at-fault accident in the past that has caused the increase in cost. (Past incidents are weighted differently by each car insurance company and your price can also fluctuate depending on how long ago they occurred.)
You purchased a new car. Adding a new (or a new-to-you) car can change your insurance costs. Ensure that you’re getting the best price for covering your new vehicle by getting new auto insurance quotes.
Your old policy is dusty and you haven’t shopped around in years. In our survey of 500 drivers, nearly 58% of responders stay with their insurance company for more than six years. While you might be the “set it and forget it” type of driver when it comes to car insurance, if you haven’t changed car insurance companies in years, it could mean you’re missing out on big savings. Many car insurance companies have made significant digital improvements that can save you money and stress—six years is a long time when it comes to tech. (Trust us—if you haven’t shopped for car insurance in half a decade, it’s time to take a look around.)
You’re looking to increase your coverage. If you’re looking to add additional coverage to your existing policy—say, you want to increase your liability coverage or you’d like to have a new car replacement add-on—make sure to search for the best price with new car insurance companies.
Can you change car insurance providers before your renewal date?
Yes! Even if you prepaid your car insurance premium(s), you can still change car insurance. Any unused coverage that you paid for in advance should be refunded to you by your former insurance company minus any nominal fees (if applicable).
Over 43% of the people we surveyed decided to change their car insurance simply because they didn’t want to pay any more than they should. So there’s no need to wait until your renewal date.
Can you change car insurance during a claim?
Yes, you can change car insurance companies at any time—even during the middle of an open claim. In fact, if you’re experiencing significant hassle with your current auto insurer during the claims process for a covered claim, this is usually an indicator that changing insurance is a good idea.
However, if you do change your car insurance company while a claim is open with your former insurer, know that you will be working with two insurers until that claim is resolved.
How to change car insurance companies
It’s easier than you think to change your car insurance company (and generally, it’s faster than you think, too!). Most drivers are able to change auto insurance by completing these three steps:
Shop for more car insurance coverage at a better price.
Talk with your current auto insurer and set an end date for your old policy.
Secure your new auto policy and make sure your old policy is canceled.
(We cover how to switch car insurance in-depth here: How to Switch Car Insurance Companies in 3 Simple Steps.)
When you decide to change car insurance, set your start date for your new policy so that you avoid any lapse in coverage. In fact, it’s better to have an overlap of coverage between your old car insurance company and your new one. Even a small gap without car insurance coverage goes on your official car insurance report and could affect you over time.
Getting car insurance quotes: Here’s how to shop for auto insurance
If you’re curious about how to get car insurance quotes, there are a couple of ways to shop around.
An online quote generator. Websites such as The Zebra, Insurify, and Quotable gather your information via questions on their site. They then generate car insurance quotes for you based on your location and the specifics you provide.
An independent insurance agent. An independent insurance agent is able to collect and compile quotes from multiple companies. They do not work directly for an insurance company as an employee, but rather make a commission on the policies they sell. They can help you compare car insurance companies and decide on what coverage would fit your needs the most.
A captive insurance agent. A “captive insurance agent” is simply insurance industry lingo for an agent who works directly as an employee for the company they provide quotes and coverage for. Captive agents are only able to provide you with quotes for the insurer they work with.
Directly from the car insurance company’s website. In our survey of 500 drivers, most people who responded simply go directly to the insurance company’s website to get car insurance quotes. (And with Clearcover you can get a quote in just a few minutes.)
Once you have gathered several quotes, check out our How to Switch Car Insurance Companies guide to learn how to compare quotes and how to choose the smartest car insurance for you.
So you’ve switched auto insurance companies—here’s what to do next
Once you’ve changed car insurance, there are a few remaining tasks you’ll need to complete. (Don’t worry. They’re all pretty simple.)
Update your insurance cards. Make sure you have updated auto insurance information on hand. This will probably mean getting the printer out of your closet, downloading and printing your insurance PDFs, and then putting your new paper cards in the glove box of your car. (Just like the old days!) (And if we can take a moment to brag: if you have Clearcover, you’ll have your car insurance card on your smartphone wherever you go. And it’s instantly updated for you.)
Update all the companies who need your car insurance policy information. If you have a leased car or a car loan, you’ll need to provide your new insurance information to your lender. To do this, just call your lender and make them aware of the change in policy (make sure you have your policy number handy). If you drive for your job and your employer also needs this information, make sure to update them as well.
Confirm you’ve received your refund from your old insurer (if applicable). If you’re expecting a refund of unused prepaid premiums from your prior car insurance company, make sure you’ve been reimbursed via check or direct deposit. (And if your old company was a hassle to work with, set a reminder on your phone to check in on your reimbursement.)
Make plans for the money you saved. Planning a future dream vacation? Saving for a house? Investing for the future? Itching for a new car? Put the money you saved from changing your car insurance company in a place that works for you. And don’t forget to celebrate your smart, money-saving decision to change your car insurance!
^We polled 500 U.S. drivers on their habits and values. The survey was conducted from May 29, 2020, to June 1, 2020.
