Car Insurance: When and Why You Should Consider Switching Providers
It’s common to adopt a “set it and forget it” mindset when it comes to car insurance. After all, once you have coverage, why bother making changes or shopping around for a different provider? However, there are several instances when switching auto insurance can lead to lower premiums or better coverage that suits your needs. In this article, we’ll discuss six common reasons to reconsider your insurance and provide a guide on how to switch providers if you decide it’s time for a change.
Switching Auto Insurance for Cost Savings
If you’re looking to cut down on expenses, shopping for a new auto insurance policy can be a wise decision. According to a study by ValuePenguin, 26% of policyholders save $200 or more annually by switching to a new provider. By reaching out to multiple insurance companies and gathering quotes, you may be able to find a more affordable option.
For individuals seeking the cheapest car insurance, Geico is a recommended provider. Geico offers some of the lowest rates in addition to 16 different types of discounts. Alternatively, if you’re in need of minimum coverage, Auto-Owners Insurance is a viable option. Although it is only available in 26 states, the insurer offers highly affordable premiums.
Changes in Driving Habits
If your driving habits have undergone a significant change, such as transitioning from a daily commute to remote work, it may be worth considering a switch in auto coverage. For example, if you now drive significantly fewer miles annually, pay-per-mile insurance could be a suitable option. With pay-per-mile insurance, you pay a daily base rate along with a per-mile rate. To avoid fluctuating rates, consider providers like SmartMiles by Nationwide, which guarantees fixed rates for the term of their pay-per-mile policies.
On the other hand, if you’re driving more than before, your annual mileage will increase, likely resulting in higher insurance premiums. Shopping around for insurance can help you find coverage that offers the most savings in this scenario.
Life Events and Changes
Certain life events can also prompt a switch in auto insurance. For instance, if you get married, adding your spouse to your policy might lead to a discount. Additionally, insurance providers often require married couples to share their car insurance policies if they keep all their cars at the same residence.
Conversely, if you and your spouse divorce, both of you will need separate policies. In most states, divorce can also lead to increased premiums. Furthermore, if you have a teenage driver, adding them to your policy can be expensive due to their lack of driving experience. However, some insurance providers offer discounts for young drivers. State Farm, for example, provides a good student discount of up to 25% as well as a Drive Safe & Save app to encourage safe driving habits among teenagers.
Advantages for Seniors
Getting older often translates to lower premiums from certain insurance companies. As you accumulate more years of driving experience, insurance companies perceive you as less risky to insure. Therefore, it’s beneficial to request quotes from different providers to take advantage of potential savings targeted toward seniors.
Considering Customer Service
Unsatisfactory customer service can also be a driving factor in switching auto insurance providers. If your current insurer takes a long time to respond to your inquiries, investigate your claim slowly, or denies your claim without a valid reason, it might be time to consider alternatives. When shopping for your next car insurance provider, be sure to check ratings and reviews in addition to gathering quotes. While low premiums are crucial, it’s equally important to select an insurer that provides reliable support.
How to Switch Auto Insurance
Switching car insurance is a straightforward process. Here’s a step-by-step guide:
1. Gather several quotes: Research your options and collect quotes from different providers to find the coverage that best suits your needs.
2. Determine cancellation fees: Your current insurer may issue a refund for prepaid premiums if you terminate your policy early. However, early termination fees are common. If the refund and monthly savings don’t offset the fees, waiting until the term ends and not renewing might be the better choice.
3. Purchase a new policy: It’s advisable to purchase a new policy while your current one is still in effect. Aim for the new policy to commence on the same day your old policy expires to avoid a lapse in coverage.
4. Cancel your current policy: Once you’ve confirmed that your new policy is ready, cancel your old one. Keep in mind that your insurer may necessitate a 30-day notice for cancellation and request certain documents, like a cancellation form or letter.
By regularly shopping for car insurance, you can reduce your monthly expenses and ensure you always have the most suitable coverage for your needs and circumstances. While low premiums are important, prioritize ratings, reviews, and reliable customer support when selecting an insurance provider. Remember, switching providers is a simple process that can result in substantial savings and improved coverage.
(Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved, or otherwise endorsed by any third party.)
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At CNBC Select, we are committed to providing high-quality service journalism and comprehensive consumer advice to empower readers in making informed financial decisions. All our published content is created independently by our team of expert writers and editors, who possess extensive knowledge of insurance products. While CNBC Select earns commissions from affiliate partners on many offers and links, our commercial team has no influence on our content, and we uphold stringent journalistic standards and ethics. For more information on how we choose the best insurance, please refer to our methodology.
Source: [CNBC Select](https://www.cnbc.com/select/best-car-insurance-companies/)
