If you’ve experienced any major life events since choosing your car insurance policy, it may be time for a new policy. Driving less because of the coronavirus pandemic, having kids, purchasing or selling a car, moving to a new state, or changes to your marital status are among the reasons you should look for a new policy that may save you money and support any lifestyle changes.
Switching car insurance companies is fairly painless, but finding the right policy takes some research and diligence. There are dozens of car insurance companies, and rates vary widely depending on your driving history, vehicle, location, and previous insurance coverage. Most insurers require a simple phone call to cancel your policy. While they might try to retain your business, most companies allow you to change your plan with little or no consequences.
Before You Switch
Find out if you’re getting the best deal possible with your old policy before switching car insurance companies. You also have to consider your amount of coverage. While shopping around, you may find that other policies are more affordable but offer less coverage than what you currently have.
If you have a pristine driving record and a good history with your insurance company, they may strive to keep you as a customer by offering lower rates or additional benefits. If you’re certain that you want to take your business elsewhere, be sure you understand what kinds of coverage you want and what’s legally required.
Reconsider Your Coverage Needs
Big life changes could mean you need more or less auto insurance coverage than you have currently. You may save money or find a better policy by reassessing your needs. For example, collision coverage and gap insurance are most beneficial if you have a new car, while liability and comprehensive insurance may be enough coverage for those with older vehicles. If you add less than 10,000 miles to your odometer each year, a pay-per-mile plan might work for you. If you signed your policy years ago when your car was new, it may be time to make some changes to your plan to reduce your coverage amounts or increase your deductible. If your policy covers inexperienced drivers or multiple people, you may feel more comfortable with additional coverage. Keep in mind that each state has its own requirements for auto insurance coverage.
Most auto insurers offer a wide variety of coverage. Check out our comprehensive guide on the different kinds of car insurance to decide how much coverage you need.
Ask Your Current Insurer for a Discount
If you’ve maintained your policy and made on-time payments for some time, your current insurer may be happy to offer you a special discount for renewing or keeping your policy. Tell your agent you’re researching competitors’ rates, and discuss any issues you have with your current policy. Insurers will often extend special discounts to long-time customers, especially those with clean driving records.
Some insurers make it easy to find discounts. Liberty Mutual customers of at least three years are eligible for a new rate, depending on the state. Geico offers reduced rates for up to 30 days if you aren’t using your vehicle because you sold it or put it in storage. You can find these savings easily by logging into your Geico account and checking the discounts section.
You can also get lower rates by bundling your car insurance with other kinds of coverage like rental or home insurance. If you or members of your household have multiple vehicles, you could save money by insuring them under the same policy. Members of clubs and associations, like AAA and wholesale stores, may also be eligible for reduced rates.
Has quarantining due to the COVID-19 significantly reduced or nearly eliminated your time spent behind the wheel? Have these circumstances affected your finances, making it difficult for you to pay your current car insurance rate? Just about every auto insurer is offering customers extra help at this time by offering discounts, payment relief, delayed payments, and suspending policy cancellations. Insurers have also established coronavirus refund programs, with most offering 15% to 25% refunds or credits on premium payments for April and May.
Do You Qualify for a Refund?
If you cancel your insurance policy, most insurers will give you a prorated refund for coverage you paid for ahead of time. For example, if you prepaid for a full year of coverage but canceled after three months, your provider would refund you the remaining nine months of payment. Most insurers will hand over your refund without protest, but there may be a cancellation fee. Consider putting your refund toward the premium on your new policy, as your new provider may offer you a discount for prepaying a larger amount.
Do Your Research
We have some great tools to help you find and compare car insurance companies and their rates. Start with our car insurance hub, where you can learn the ins and outs of car insurance, view the best companies, find out how much coverage you need, and get quotes. It includes comprehensive guides on the top car insurance companies, as well as information on insurance rates by state.
You can find auto insurance quotes by visiting most providers’ websites and plugging in the required information. Insurers estimate your quote based on personal details like your age, gender, location, and marital status, as well as the year, make, and model of your vehicle.
Other factors like your driving record, credit score, location, how long you’ve lived at your current residence, and whether you rent or own your home may be considered. You’re unlikely to find a low rate if you’re a high-risk driver with lapses in coverage. Insurers may also consider you a high-risk driver if you were found at-fault for an accident recently or have a history of traffic violations.
You can save time by using websites like ours that allow you to compare rates from multiple insurance companies. You can get rates from a handful of insurance providers, including Esurance, American Family, Allstate, Farmers, and State Farm.
To find the companies that offer the lowest insurance rates, read our guide on the cheapest car insurance companies.
Get the Details
As you narrow your options, be sure to check the details of coverage for each policy you review. While a new plan may be more affordable, it could offer fewer benefits than your old policy. Make sure you’re clear on what’s covered, as well as deductibles and additional benefits before switching providers.
The Cost of Canceling
A new policy may have a lower premium than your old policy and save you money in the long run, but terminating your car insurance sometimes carries a fee. Luckily, most major insurance companies – including Geico, State Farm, Allstate, and Travelers – have no termination fees and allow you to cancel at any time.
Cancelation fees are typically nominal, but in some cases, it may be cheaper to stick with your current provider if you have a high remaining premium. For example, you must pay 10% of the remaining premium when you cancel with some auto insurers, including The General and Mercury. If your policy’s remaining premium is $2,000, canceling with a 10% fee would cost you a couple hundred dollars. Esurance takes 10% of the remaining balance or a flat fee ranging from $30 to $50, while 21st Century has a $50 penalty for canceling. Termination fees vary by state with Progressive.
Keep these fees in mind if you anticipate any family changes, like a new teen driver or selling a car, that may impel you to switch insurance providers in the future.
It’s a good idea to ask your friends, family, and colleagues about their experiences with insurance providers. An attractive premium isn’t the only grounds for switching insurance companies, so talking to others who have first-hand experience with insurance companies can provide great insight on customer service, as well as the ease of processing claims or making policy changes. Those close to you may also recommend small or local insurance companies unfamiliar to you, and some may offer you lower rates than well-known companies, depending on your circumstances.
Check out our list of the best car insurance companies to find out what customers think of some of the nation's largest insurers.
Secure Coverage Before Canceling
It’s critical that you have your new policy set up and in effect before canceling your current coverage. Driving without auto insurance is illegal in most states and can have serious ramifications. A gap in your auto insurance puts you at risk for license suspension and state fines, and insurers may charge higher rates if you haven’t had coverage for more than 30 days.
Be sure to have all official documentation and proof of your new policy before canceling your old policy.
Your current provider may request information about your new policy, including policy number, provider, and effective date. Some states also require you to inform the Department of Motor Vehicles of any changes to your auto insurance.
How to Switch
Once you’ve canceled your old policy, adding a new one is generally an easy task. If you requested quotes online, you’ll likely hear back from insurers within hours, especially if you have a history of safe driving. Representatives may contact you by letter, phone, or email, and they may follow-up with you multiple times as you make your decision. They’ll typically offer quotes, ask questions about your previous policy, and answer any questions you have. Some companies, like Nationwide, help you to switch companies by providing a cancellation letter template that you can send to your fax or mail to your past insurer.
How to Cancel Your Old Policy
After you’ve researched and signed up for a new car insurance policy, you can end your policy with your outgoing insurer. With most auto insurers, all it takes is a call to customer service or your agent to terminate your policy. Some car insurance companies allow you to cancel your policy by letter, email, mobile app, or in person (for those with physical locations). However, speaking to you directly gives insurers the opportunity to retain your business by listening to your concerns, and in many cases, offering discounts if you decide to stick around. This is a good time to ask if you’ll receive a refund for prepaid coverage that you won’t use. If you have an open claim with your current policy, you’re still free to cancel, as long as the policy was active at the time of the accident.
For a smooth cancellation process, have all your policy information handy. You’ll likely be asked to provide your policy number, name, date of birth, and social security number. If you’ve sold or no longer own the vehicle under coverage, you may have to provide proof of the license plate forfeiture or a bill of sale. Some companies may also ask about your new provider, as well as your new policy and its effective date.
Below, we outline how to cancel your coverage with several of the top car insurance companies.
- State Farm allows you to cancel your policy by phone, mail, or in person. To cancel by mail, send a letter at least two weeks before your intended cancellation date. Include your policy number, name, the date and time you want to end your policy, as well as information on your new provider and policy. Visit your local State Farm to cancel your coverage in person.
- Geico requires you to call to cancel your policy. You will be prompted by an interactive automated voice, at which time you can ask to cancel your coverage, then state your policy number.
- Allstate requires you to call the main customer service number to cancel.
- Farmers recommends getting in touch with your personal agent by phone. If your agent is unavailable, contact the main customer service number.
- Progressive allows you to cancel your policy over the phone.
- Travelers asks you to call to cancel your policy and may request a cancellation letter.
- USAA lets you cancel your policy several ways: phone, email, letter, or through the USAA mobile app. You can also quickly and easily cancel in person, though there are few physical USAA locations.
- Nationwide asks you to cancel through your personal agent, and the website can help you find and contact them. If you don’t have an agent, you can contact the main customer service number.
- American Family says the best way to cancel is by contacting your agent directly, whom they can help you find with an online agent locator. You can also contact the 24-hour customer care center.
- Liberty Mutual requires you to cancel by phone.
- Esurance allows you to cancel your policy by calling their customer service number any day, during designated hours.
The Best Car Insurance Companies in 2020
Our Car Insurance Ranking
The Cheapest Car Insurance Companies in 2020
Average Annual Rates:
- USAA: $885
- Geico: $1,168
- State Farm: $1,234
- Travelers: $1,267
- Progressive: $1,373
- American Family: $1,391
- Farmers: $1,682
- Nationwide: $1,864
- Allstate: $1,880