Motorists may need to make changes to policies for many reasons because life isn’t a standstill. When this happen they usually have two ways of applying them to vehicle insurance. The first one is to alter the existing coverage and keep it until at least the renewal. And the second option is to switch to a carrier that can offer a better deal under new circumstances.
The first option would be the easiest but why wait if you have got to go at the end. These things aren’t always clear-cut and both choices would have advantages and shortcomings in most cases. This post will consider what would happen in various scenarios and try to figure out a direct to increase value for money.
Making Changes to Existing Auto Insurance Mid-Term
You can modify nearly all auto policies to suit your needs. You can add or remove drivers, replace vehicles, move addresses and so on. Each time there could be either additional premium to pay or a refund. You can settle the difference and carry on. All it takes is one phone call or you can do it online these days.
There is no need to cancel anything and buy another, either with the current or different company. However, it may be wise to switch vehicle insurers if the additional charges are unreasonably high and you can find better coverage at cheaper prices elsewhere. This could be the case when a family minivan is replaced with a sports car or a teen driver is added to a policy. Some of them may not like these high-risk changes. That is why you may need to look for cheaper quotes.
It is just a simple failed negotiation and now you need to walk away. Sometimes they have got to push the rates up to reflect the exposure and occasionally it may be their way of showing the door by pricing you out. Nobody likes to overstay his or her welcome. They would certainly have their reasons why they offered you higher premiums this time. But that shouldn’t be your concern, especially if you can find a lower quote for the same coverage.
We will look at various scenarios below to demonstrate the possible options you may have in different circumstances.
1. Adding a Teenager to Automobile Insurance
This usually moves you up into high-risk category with many of them. And the fact is that large number of companies shuns riskier customers and charge extortionate rates, if the applicant insists to stay. According to a 2010 study done for Nationwide, adding a teen driver between the ages of 15 and 19 to insurance increased premiums on average $800 a year. If you think that is high wait until seeing the next one. A 2011 study carried out by carinsurance.com found that the rates can go up around $2,000 on average by just adding a young driver to a policy. This is mainly due to high average vehicle insurance rates for teenagers that can dwarf the prices offered to mature motorists.
Considering the average premium expenditure is $841 in the US, the increase can double or triple costs. It is hard to stomach such a hike. That is why it may be in your best interest to get alternative quotes without waiting for renewal. You may be better served by high risk companies that are known to offer lower rates for such applicants. You can only benefit from checking prices mid-term either way. It is great if you get a nice present from an alternative source. Otherwise, you may not feel as bad about the earlier surprise.
2. Effects of Replacing a Sedan with a Sports Car
You may have been enjoying low premiums for a while with a sensible family sedan. You may be in for a big surprise if you just replaced it with a sports car or SUV. It doesn’t have to be a racing car to double or triple costs. Quite a few sports models can make such a difference. If this happens you should follow the above tips and compare quotes from different companies without waiting for renewal. Each reacts differently to various automobile models.
3. Moving to a Big City from a Small Town
There could be several other changes that can inflate costs beyond imagination. Zip code is another significant factor that always catches people by surprise. For example, moving from a sleepy little town to a metropolis would do that any time. Then, you know what to do.
Can You Switch Car Insurance Mid Policy?
After the above revelations, you may want to know what happens to the money you already paid if you are not happy. You are hardly ever stuck. Nearly all policies can be cancelled with minimum fuss and loss. Usually they calculate premium refunds on a pro-rota basis that only charges for time on risk. In other words, you would get back the unused portion if you paid in full. Otherwise they calculate the premium until the last day you were with them and charge you whatever outstanding. In some cases there could be minimal cancellation fee.
That is why motorists shouldn’t worry about canceling auto insurance policies mid-term and concentrate on getting the maximum discounts wherever they can after recent change of circumstances. Many motorists are known to go for a monthly automobile insurance payment plan just in case they may need to switch to another carrier. This makes sense but it isn’t a necessary precaution since there is no problem with getting the money back. You might as well enjoy a little discount and avoid fees and interest by paying in full.
The US policyholders appear to be loyal or to be resisting change. About 40% of them never get alternative quotes. But this may be an extremely costly mistake or oversight as you can save hundreds of dollars. Many of them find various justifications for not shopping around. For example, many people prefer the names they know to newcomers because that makes them feel safe. However, this doesn’t make the new one worse than the current. In fact, the cheaper prices usually offered by top brands that should take away any worries you may have.