How to switch car insurance: Steps, tips and real experiences

With car insurance rates rising, many consumers are shopping for cheaper rates and switching their insurers.

But if you’re considering moving to a new insurance company, there are a few steps you should take. These include comparing auto insurance rates from at least three insurers to get the best deal, researching each company to ensure it can deliver the service you need, and canceling your old policy after you pick a new carrier.

There’s a good reason why auto insurance consumers are shopping around. Car insurance rates rose by 14% year over year in October, according to the U.S. Bureau of Labor Statistics. Nearly half of drivers say they are actively shopping around for car insurance, according to consumer insights company J.D. Power.

And policyholders are usually rewarded for their efforts. In a recent CarInsurance.com survey, almost half the people who changed insurance companies said they saved between 15% and 20%.

However, if you’re thinking of switching insurance companies, there are a few things you should know before you make your move.

Understanding the reasons for switching car insurance

Seeing a spike in your insurance is one reason to shop around, but there are other reasons why you might switch car insurance companies, including:

• You moved. If you’re moving to a new state, you may find that your current insurer doesn’t offer coverage there.
• You got married. Couples often combine car insurance policies. Your spouse’s insurance might be the better deal.
• You got divorced. When couples split, if they’re on the same policy, one will likely look to get their own policy.
• You retired or took a work-from-home job. You spend less time on the road without a regular commute, so you might want to switch to a low-mileage car insurance policy that reflects this reduced risk.
• Your child started driving. If your child recently passed a road test, your insurance is sure to increase. It’s a good time to look around to see if there’s a policy for you and your teen that might be cheaper than your current insurance.

How to switch car insurance: a step-by-step guide

If you’re looking for new car insurance, start with this step-by-step guide.

Talk to your current insurer

First, contact your current provider to ask how to lower your car insurance. Additional discounts may be available that could cut the cost of your premiums and make it worthwhile to stay.

Go shopping

If you still want to move on, make a short list of auto insurance companies to contact for a quote. You can always add more to the list, but experts recommend getting quotes from at least three insurers.

The insurance companies will need some details for accurate quotes. Have your personal information handy, including the vehicle information, the address where the vehicle is parked, driver’s license numbers for all drivers in the household, and vehicle identification numbers (VIN) for all vehicles. On all quotes you request, ensure coverage is the same or similar, with matching limits, so you can best compare pricing. Ask about any auto insurance discounts that may apply.

Do your research

Before signing on with another car insurance company, research it carefully. Price shouldn’t be your only consideration.

We recommend you review: J.D. Power’s 2023 Auto Insurance Study, which rates companies by customer satisfaction; AM Best ratings, which will give you an idea of the insurer’s financial stability; The National Association of Insurance Commissioners (NAIC)’s online database, which provides a look at complaints filed against insurance companies.

Purchase your new policy

After comparing quotes, purchase the best policy for your needs. Be sure to choose a start date that coincides with the end of your previous coverage so you do not go a day without insurance. If you have a financed or leased vehicle, notify your lender of the new policy.

You may receive a copy of your new policy information online or via the mail; either way, switch out your car insurance cards so you have the correct proof of insurance when driving.

Cancel your previous coverage

Once your new coverage is active, contact your current insurance provider to cancel coverage. Check for any fees or penalties resulting from canceling your policy early. Also, inquire about any refunds you may be due for premiums paid, as this could help absorb the cost of any early termination fees.

Remember to cancel any automatic payments you have scheduled and be sure to request a copy of your policy cancellation in writing for your records.

Related: How to cancel a car insurance policy?

Do people save when they switch? If so, how much?

Changing car insurance companies can be a great way to save money.

In the recent survey we cited earlier, a quarter of the people who switched insurance carriers said they saved 10% on their insurance, and almost a third said they saved 15%. An additional quarter said they saved even more – 20%.

Several consumers we contacted detailed how they saved money by switching.

Gigi Granda of Port Saint Lucie, Florida, said she had her insurance with Progressive, “and they wanted $400, even though I'd been with them a year and never had an accident. So I switched to Bristol West, and I'm paying $269 a month [for] full coverage.”

Changing insurers can often save you money, but sometimes not as much as you think.

Glenn Johnson of Reston, Virginia, was with USAA for many years. However, he says, “the rate kept creeping up to $571/month for three cars, no tickets, or accidents. I … switched to Travelers for $270/month with more coverage. Sadly, now Travelers has [crept] up to $400/month.”

Avoiding pitfalls: What to check before switching your car insurance

There are some cases when it may be better to stick with your current provider. Leaving your current provider may not make sense if your policy carries a large cancellation penalty. The fee could offset any savings you may get from a new policy, leaving you with little to no savings for switching auto insurance companies.

Additionally, if you have recently filed a claim, changing providers while your claim is in progress may cause complications. You also are likely to face higher insurance rates from a new provider if you have an accident on your record.

“Make sure both accidents and driving records are fully disclosed and checked before finalizing the new insurance,” says John Espenschied, agency owner of Insurance Brokers Group. “Surprises can lead to rate increases after the policy has been issued if incidents that affect pricing are discovered later.”

Josh Lavine, CEO of the independent insurance agency Capitol Benefits, offers a similar concern. “A big mistake that we see a lot is that people see an initial quote or proposal, cancel their current policy to change to the one that they have the quote from, and then later find out that the new insurance company did not run all of the necessary reports yet that include claim history, motor vehicle record, and others,” he says. “About a week into the new policy, the insurance company runs these reports, finds information that they weren’t expecting, and passes on an immediate huge rate increase.”

He recommends working with an independent agent who can run the reports and advise on the best car insurance company.

Maximizing savings and benefits without compromising on quality

If you’re looking to lower your rates, there are things you can do besides switching carriers, such as:

• Enrolling in a defensive driving course. Taking a defensive driving class can reduce your car insurance premiums by up to 20% with successful completion.
• Taking advantage of payment discounts. Whether signing up for auto-pay or paying for your premium upfront, you could save up to 5% off your policy with payment discounts.
• Asking about professional discounts. Some car insurance companies offer military car insurance discounts. There may also be discounts for law enforcement, first responders, healthcare workers and other professions.
• Driving more carefully. The cost of your insurance premiums is heavily affected by any traffic ticket violations you receive. Some violations, like reckless driving or a DUI, can cause your insurance premiums to skyrocket. So be sure to practice responsible driving and follow traffic laws.

Which companies do people switch from and to?

Some car insurance companies may be more attractive than others. Almost half of respondents in the CarInsurance.com survey chose a major provider when changing car insurance companies. More specifically, 31% of respondents said they switched to Allstate from their previous provider, while 22% switched to Progressive.

Geico, State Farm and USAA also rank high on the list.

Car insurance companies people switch to the most

When changing policies, there are some car insurance companies that customers frequently switch from. Although many respondents moved to Allstate, it was also the company people left the most, with Geico second and Progressive coming in third.

Car insurance companies people leave the most

The results indicate that a company can be an excellent pick for one driver while other drivers choose to leave that same company.

Switching car insurance with a family in mind: What you need to know

Insuring a household with multiple vehicles has some benefits. For instance, there is only one monthly payment to worry about.

It can also pay off with extra discounts. Most car insurance providers, such as Geico, State Farm, and Travelers, offer a multi-car discount.

Families may also have other insurance policies, such as homeowners insurance, renters insurance, or life insurance. You could save with a multi-policy discount when you bundle policies from the same provider.

Students in the family can also benefit from good student discounts based on the grades they receive in school.

Loyalty vs. savings: When staying with your car insurance company pays off (and when it doesn't)

Before you switch car insurance companies, ask your current provider what can be done to lower your rates and keep your business. Review your coverage annually and ask about any new discounts that may apply.

Loyalty discounts are common. These savings are a thank you that providers offer customers for staying with the company for a certain number of years. If you choose to switch, you’ll lose this discount, so make sure the savings are substantial enough to make up for it.

Expert tips for a smooth insurance switch

Can I switch car insurance at any time?

Lauren McKenzie, a senior agent at A Plus Insurance based in Sierra Vista, Arizona, says:

“Customers are able to switch their auto policies at any time during their policy term…. A few things to keep in mind are if the company has any short-term cancellation fees or if you may be missing out on any discounts by switching before the policy term is up. It is suggested customers contact their current [insurer] to determine what the process may look like and what to expect as far as fees or cancellation policies. Customers are able to set their current policy up for cancellation, choosing the cancellation date.”

Do I need to cancel my existing policy before making a switch?

John Espenschied, agency owner of Insurance Brokers Group says:

“You should not cancel your current policy before securing a new one. It's crucial to wait until the new policy is in force before canceling the previous one to prevent a lapse in coverage. Many companies allow you to backdate the cancellation to coincide with the start date of your new policy. Make sure to use the same effective and cancellation date, as all policies begin and end at 12:01 am. Starting a new policy on 03/15/2024 and canceling the old policy on 03/14/2024 creates a gap of coverage of 24 hours with no coverage.”

Sources

• S&P Global. “Largest US private auto insurers boost rates by double digits in 2023.” Accessed August 2024.
• J.D. Power. “Auto insurance shopping and switch rates reach new highs as premiums surge.” Accessed August 2024.
• CarInsurance.com. “Drivers switching car insurance carriers as inflation continues to rise.” Accessed August 2024.