Risks of Changing Auto Insurance Companies

Motorists are unlikely to have any negative effects because switching car insurance companies can be done safely and without any penalties. It is always a good idea to shop around at each renewal and see if you can find better coverage, cheaper and more reliable vehicle insurer to replace the current one. These days carriers don’t even charge cancellation fees even if a policy is cancelled mid-term. And getting quotes doesn’t affect your credit score.

Yet, it may be sensible not to be hasty to change your auto insurer out of anger or without making sure you are better off in the end. Here are a few points to be mindful in the process;

(1). Changing mid-policy while you have an accident claim may not be beneficial. It may make sense to wait until renewal. The accident in record will be seen by other companies you apply for so you are likely to get expensive quotes, especially if it was an at fault claim. So, you may not want to start paying higher car insurance rates while you still have coverage. At the next renewal, you will probably receive a high quote from your current provider as well anyway that there won’t be a disadvantage to switch.

(2). Consider bundling benefits you may lose. If you are insuring your home and car with the same company, you may be saving money on both policies. In some high-risk areas, home insurance may be more expensive and harder to find and that may be why you bundled in the first place and got cheaper rates on both of them. Either consider bundling again with another company or see if you would save enough overall for keeping your bundled policies separate. Sometimes, one provider may be cheaper for auto and not for home and it may make sense to break the bundle anyway.

(3). You may lose loyalty discounts and benefits. Many vehicle insurance companies offer good discounts to customers who have been with them for 3 or 5 years. Also, companies like Progressive and GEICO offer free accident forgiveness coverage after 5 accident-free years with them. Check how long you have been with the company already and see if you are about to get any special discounts.

Saying all that, many auto insurers offer discounts for just switching to them too. The point is to make sure the benefits of switching outweigh staying with the current provider after all the discounts are taken into account. It is worth pointing out that many companies use loyalty discounts as baits to keep customers. After finding out that they have just been awarded a special loyalty discount, often policyholders feel privileged and don’t even bother checking prices with other companies.

Many companies are known to use loyalty discounts while they run price optimization practices to charge more to their long-standing customers on the assumption that they are unlikely to check prices. Motorists should always get alternative quotes and make a decision based on facts. There are many other car insurance companies offering great prices to compare terms and prices.

(4). Make sure you don’t have any lapse in coverage. You can set up your new policy to start the minute your old policy expires so you don’t have any lapse in coverage and you use up your existing coverage up to the minute. Just check to make sure it is done.

(5). Check cancellation fees if you are switching mid-policy. Many reputable vehicle insurers don’t charge for cancellations these days but it is best to check. Also, you should inform your current carrier in a timely manner that you are leaving because you may get a refund of your unused auto insurance premium. You are free to move at renewals.

Millions of motorists change car insurance every year without a hitch. Yet, you should dot the i’s and cross the t’s when you are replacing something as important as an auto policy. Once done, you can think about where you will spend your savings.