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Switching to a new car insurance company can help you save a lot of money if your policy is up for renewal. It usually only takes around an hour to shop around, set up a policy with a new insurer, and then cancel your old policy.
You can even set up your new policy to start right when your current one ends to avoid a gap in coverage, which would risk causing you financial or legal issues. We’ll show you exactly how to switch car insurance companies and what to think about so you can be confident in your car insurance decision.
It’s not hard to switch your car insurance company, but it’s important to follow the steps in the right order to avoid a detrimental lapse in coverage. Follow the steps below to easily switch.
Step 1: Decide what coverage you need
Most people need to buy a certain minimum level of coverage because most states set a legal mandate for the minimum insurance required to drive in that state. If you finance or lease your car, your lender may also require you to buy a certain minimum level of coverage.
Beyond those requirements, you choose how much coverage you want to buy to meet your insurance needs. You can decide how much additional coverage to buybeyond liability coverage, if any, by taking a look at your financial situation, driver risk status, and comfort level. Understanding this information about yourself will help guide you toward certain insurers.
If you drive for Uber or Lyft, for example, you might want to consider rideshare coverage, which not all insurance companies offer. Speak with a financial advisor or an insurance agent about any questions you have about your coverage needs.
Step 2: Check for potential cancellation penalties
Before you invest too much time in switching car insurance companies, check whether you’ll face any financial penalties for switching insurers.
You won’t face any early cancellation fees if you wait until the end of your policy period. By switching before your policy ends, you may receive a penalty from your insurance company.
To find out if your existing insurer charges a fee for auto insurance policy cancellation — and if so, the penalty amount — you need to read your contract. If you can’t find a copy or if the contract is unclear, reach out to your insurer directly and ask.
Even if there is a fee, you may still have reason to switch insurance companies. You’ll need to weigh the cost of the fee against any potential savings. Consider waiting until your policy is up to switch companies so that you can avoid any early cancellation fees, unless the need to switch is urgent.
Step 3: Compare quotes from multiple insurers
Block out an hour or so to compare quotes from as many insurance companies that meet your coverage needs as you can. The more companies you check with, the better your odds of finding the best car insurance company for you.
A few helpful shortcuts will make the process easier. If you need the help, an auto insurance broker can do some legwork for you in shopping around, although they may only work with a limited number of companies. Online quote-comparison shopping expedites the process and allows you to shop around conveniently. Make sure you use a reliable site like Insurify, rather than a lead-generation site that will spam you.
Step 4: Purchase and avoid a lapse in coverage
Once you find the best car insurance company for you, go ahead and purchase a policy. You can choose the policy to start at a future date if you like, which is handy if you want to set up your new policy to start right as your old one ends.
It’s especially important to buy a new car insurance policy before your old policy ends or you cancel it. If you do it the other way around — cancel your current policy, then buy a new policy — you could get in legal trouble since most states require you to have current insurance.
Beyond legal trouble, having a gap in coverage leaves you financially vulnerable. If you get into an accident, you could face serious out-of-pocket costs. Even if you have no plans to drive your car, vandalism or a severe weather event could damage your vehicle.
Step 5: Cancel your old insurance policy
Once you’ve purchased your new policy, you can cancel your policy with your old insurer. Remember the date your new policy starts — and make sure to set your cancellation date to avoid any coverage gaps.
Depending on your insurer, you may be able to complete this online, at a local office, or over the phone.
Step 6: Swap your insurance ID cards
Before you forget, remove any old insurance ID cards you have. Your new insurer will mail you new insurance cards.
Depending on your new insurer, you may also be able to print out new insurance ID cards in the meantime or even access them through your insurer’s app.
Reasons for switching your auto insurance
If you’re like most people, saving money on your policy serves as the primary reason to switch insurance companies. A few scenarios make this an especially important point to consider.
Car insurance companies take your ZIP code into account when setting your rates, and each company uses a different formula. If you’ve moved to a new state or region, that’s a prime time to shop around and see if any other insurers offer cheaper coverage for your new location.
Your premiums increase
Car insurance companies are always tinkering with their pricing formulas, and your situation is also always changing. Those two things combined mean that the price you’re paying now for car insurance isn’t always guaranteed, and sometimes your rates might go up.
If your premiums do go up, that can serve as another reminder to shop around for rates. You don’t know that you could get cheaper insurance elsewhere unless you go shopping for new quotes.
You need to add a car or driver
Similarly, adding a new car or a new driver, like your teenager, to your insurance is another time when your rates may go up. Some car insurance companies are known for offering better rates for teenage drivers than others.
Each car insurance company prices its policies differently depending on the type of car, its safety features, and the age of the driver.
It’s time to renew
The best time to switch insurance companies is when it comes time to renew your vehicle insurance policy. If you cancel at that point, you won’t face any cancellation fees. It’s also an easy reminder to shop around for rates to see if you could pay less with another company.
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Reasons you shouldn’t switch your auto insurance
Most people don’t switch insurers often enough, staying content with one company when there’s a good chance they could pay less elsewhere. But you might want to rethink your plans to switch and stay with your current insurer in the following scenarios.
You have an open claim
You can switch car insurance companies if you have an open claim with your current insurer, but most people caution against it. If you do that, you’ll have to deal with two separate car insurance companies until you can resolve the claim.
Having an open claim also makes it tougher to shop around since some insurance companies won’t offer you a policy in that scenario.
You recently got into a car accident
If you recently caused a car accident or got a ticket, it can take a little while for it to show up on your driving record. If you purchase a new policy before the incident appears on your record, your insurer won’t give you an accurate quote initially and will need to increase your premium.
You have a substantial loyalty discount
It’s pretty common for auto insurance companies to offer a loyalty discount if you stay with them, and this discount sometimes even extends to children whose parents favored a certain insurance company.
USAA, for example, offers a discount of up to 10% off your premium, including to children of parents with a USAA policy. If you’re earning a big discount off your premium like that, you might have a hard time finding a lower rate elsewhere. But it never hurts to look and keep your options open.
You’ll face expensive cancellation fees
It’s always recommended that you check your contract or contact your insurer before you cancel your policy early. Not all companies charge early cancellation fees, but some do. It’s important to factor these costs into any savings you might get from switching.
How much does it cost to switch your car insurance?
If you wait until your current car insurance policy ends before switching, you won’t have any costs beyond the premium for your new policy.
However, if you switch your car insurance before your policy period ends, you may have to pay cancellation fees depending on your contract with your current insurance company. Not every insurer charges cancellation fees, but some do, and these fees can vary.
Some car insurers charge a set fee, such as $50, while others charge a percentage of your remaining premium (10%, for example), and some may charge a certain number of months’ worth of your premium.
Switching auto insurance FAQs
Find answers to commonly asked questions about switching your auto insurance company.
Can you switch your insurance company with an open claim?
Yes, you can switch insurance companies even if you have an open claim, but it’ll make your life more complicated because you’ll be dealing with two car insurance companies at once. Not all insurers allow you to switch with open claims, and your rates may increase.
Is it possible to transfer car insurance to a new vehicle owner?
No, it’s not possible to transfer car insurance to a new vehicle’s owner. Car insurers offer policies based on the characteristics of the car itself and the person driving it. Because the driver is changing, they’ll need to get their own car insurance policy.
Can you have two cars insured by separate auto insurers?
Yes, but you’ll lose out on any multi-car discounts that your insurer might offer. Forgoing that discount might be worth it in some cases, like if you have a collector car or another vehicle that you don’t drive much and that can be covered with cheaper options elsewhere.
How often is too often when switching auto insurers?
No steadfast rules exist for how often is too often to switch insurers. But remember that you’ll lose out on loyalty discounts that your insurer might offer when you switch. Only you can determine whether the discounts are worth any savings you get from switching insurers.
Can you switch auto insurers with a leased vehicle?
Yes, you can switch auto insurers if you’re leasing your car. You may need to add your lessor as an additional insured party so that it’ll get any updates on policy changes you make.
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Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.
Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).
Liability-only premium averages correspond to policies with the following coverage limits:
Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
Property damage limits between $10,000 and $50,000
No additional coverage
Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to:
Comprehensive coverage with a $1,000 deductible
Collision coverage with a $1,000 deductible
Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.
Lindsay VanSomeren is a freelance personal finance writer living in Suquamish, WA. Her work has appeared with FICO, Credit Karma, The Balance, and more. She enjoys helping people learn how to manage their money better so they can live the life they want.