The Best Way to Change Car Insurance Companies
Switching car insurance companies can save you hundreds of dollars a year, and it won't cost you anything to shop around for cheaper rates.
You can switch your car insurance at any time, not only when your insurance policy is up for renewal. Even if you’ve paid for your car insurance yearly, you can still get a prorated refund if you cancel your policy midyear — although you may need to pay a small fee, depending on your current insurance company.
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How to switch your car insurance
Switching your car insurance can save you hundreds a year, and it takes only a couple of hours. Make sure your new policy starts the same day your old policy expires to avoid fees or legal trouble for having a lapse in coverage.
Steps to change car insurance
1. Compare multiple quotes to find your best rate
The first step to changing car insurance companies is shopping around for a new company, which you can do by getting free online quotes.
Take your time to find the best car insurance company that offers you the right mix of cheap rates, useful coverage options and dependable customer service. The more insurance companies you get quotes from the better.
Tip: Car insurance quotes don't last forever. If you get a quote from an insurance company, write down your reference number so you can come back to it later. And keep in mind that it may expire after 30 days, so don't delay too long when shopping around.
Find the cheapest companies in your area:
While you're collecting quotes, think carefully about whether you should change your coverage or if there are any new discounts that you may be eligible for. For example, maybe the value of your older vehicle has dropped enough that you can remove collision coverage, or your driving has improved and you qualify for a safe driver discount. Or maybe you're not driving as much and you could save money by switching to a pay-per-mile or telematics policy.
2. Contact your current car insurance company
After you've found your best rates for insurance, give your current insurance company a call before you commit to switching to the new company. See if your current company will match the quote you got from a competitor and ask in detail about the company's cancellation process.
You may need to give your insurance company advance notice to cancel your policy — sometimes as much as 30 days.
If you paid for the full six months or year in advance, you'll get a refund for whatever coverage you've paid for but haven't used. Cancel your old policy as soon as you can to get the biggest refund.
3. Start your new policy and cancel with your current company
Once you've decided to switch insurance companies, buy your new policy and confirm it's active. Then you can move forward with canceling your old insurance policy.
A few companies also charge a cancellation fee if you cancel before the end of your policy. Most of the largest insurance companies in the U.S. — including State Farm, Geico, Allstate and Farmers — don't penalize you for canceling a policy early. However, Progressive, unlike the other major companies, does charge a fee for canceling your policy early, and the fee varies by state. For example, Progressive's cancellation fee in New York is $50.
Car insurance policy cancellation fee by company
Company | Cancellation fee |
|---|---|
| Progressive | Varies by state |
| The General | 10% of remaining premium |
| Mercury | 10% of remaining premium |
| Esurance | 10% of remaining balance or $30-$50 flat fee |
| 21st Century | $50 |
Once you have your new proof of insurance, contact your previous insurance company to cancel your policy.
Even a brief gap in coverage can lead to fines and much higher insurance rates, so make sure you have a new policy before canceling your current one.
Driving without insurance can cause you to lose your license. Even if you aren't caught, gaps in coverage can eventually lead to a large increase in your insurance rates. It's much better to have a few days of overlapping coverage than to take the risk of being uninsured.
4. Notify your lender (if you have one)
If you have a lease or loan on your car, notify your lender or lease provider immediately after changing insurance companies. Most car leases and loans require you to have car insurance. If your loan company thinks you've canceled your insurance, it may repossess your car or buy a separate policy for you, called a force-placed policy.
Why should I switch car insurance companies?
The main benefit of switching car insurance is saving money on your rates. Even if you found the cheapest rate when you first signed up for insurance, the company that gave you the best quotes two years ago might not be the cheapest now.
If any life circumstances that impact your car insurance rates have changed, there's an even better chance you'll be able to find a better rate with another insurance company. For example, maybe you bought a new car, added a new person to your policy or moved.
The cheapest companies to switch to
Rank | Company | Minimum Liability Monthly rate |
|---|---|---|
| 1 | Erie | $16 |
| 2 | USAA | $19 |
| 3 | Farm Bureau | $21 |
| 4 | State Farm | $26 |
| 5 | American Family | $32 |
Find Cheap Auto Insurance Quotes in Your Area
Of course, a low monthly rate isn't the only thing to consider when choosing an insurance company. If you have had a bad customer service experience with your current provider or are interested in a benefit or perk that a different car insurance company offers, you might consider switching, too. Some examples include free roadside assistance or gap coverage for the lease or loan on a new car.
When should I switch to a new car insurance company?
You should shop for car insurance before your old policy is up for renewal or if there's been a major change in your life.
There's no downside to shopping around for a better price than you're currently getting on car insurance, so you can check for better rates as often as you want. But you're especially likely to find a big difference in price when you experience a life change that impacts how insurance companies calculate their rates.
You should check for a better deal on car insurance if you:
- Add or remove a driver, especially a teenager
- Buy a new car
- Get married or divorced
- Buy a home
- Improve your credit score
- Move to a different address or move to a different state
For example, while your current company might offer the best rates for single drivers, another insurance company might offer a better price to a married couple, so it can be a good idea to shop around after you get married.
You should also compare car insurance if it's been a few years since you were in an at-fault accident or had a ticket. If your rates went up because of an accident or speeding ticket in the last few years, it's worth checking back every year to see if you can get a lower rate. Your rates will gradually decrease over time, and your current company might not be the cheapest anymore.
Every car insurance company weighs traffic accidents and tickets differently. For example, one company might stop penalizing you for being at fault in an accident after five years, while others might do so after just three.
You can switch insurance companies even when you have an open claim
Switching insurance companies won't have any impact on an open insurance claim you have. Your current insurance company will still pay out the claim as it normally would, even if you cancel your policy. However, keep in mind that you'll have to deal with two car insurance companies simultaneously until the claim is paid out.
When not to switch insurance companies
Although switching insurance companies can end up saving you money on car insurance, there are sometimes good reasons to stick with your current insurance company. If you're considering a change, it may be useful to consider the advantages that you might be giving up by leaving your old insurance company.
If you've had a recent accident or ticket
While there's no time when you should outright avoid shopping for a better deal on car insurance, you're much less likely to save money by switching if you've been in an accident or got a ticket since your last policy renewal.
Getting in an accident or getting a ticket can raise your rates, but insurance companies generally only refigure your rates at renewal time.
So if you cause a crash today and your insurance policy won't renew for six months, that means you'll pay the same rates for the next six months. On the other hand, if you switch insurance companies right after you get in an accident, you'll pay higher rates right away.
If you have a loyalty or bundle discount
Many insurance companies try to hold on to customers by offering loyalty discounts for long-term customers. For instance, Amica offers progressively larger discounts to customers the longer they stick with the same insurance company, starting at two years.
Bundle discounts are another way insurance companies encourage people to stick with the same policy. Bundling your car and home insurance may be giving you major savings on both policies. For instance, State Farm offers up to 18% off your car insurance bill if you also have homeowners coverage.
If you qualify for accident forgiveness
Accident forgiveness can potentially save you thousands, making it a valuable benefit for long-term customers. Most companies only offer accident forgiveness after three or more years of continuous coverage, so switching companies may mean losing access to this feature for some time.
The nation's top five auto insurance companies require you to have an average of at least five years' worth of claim-free coverage before accident forgiveness is available. Geico and Allstate allow you to pay a fee for immediate accident forgiveness, but that comes with an added cost.
How to save money when you change car insurance companies
One challenge of switching car insurance companies is that you need to have your new policy in effect before you can cancel your old one. While you'll eventually be able to get a refund from your insurance company for the time your policies overlap, people without a lot of extra cash may find that this is a barrier to switching insurance companies, even if it saves money in the long run.
To save money while waiting for your refund, you should:
- Use a credit card to pay your bill, if you have one: There are two benefits to this. First, you won't have to pay your car insurance bill until your credit card bill is due, usually about a month later. Second, paying your current bill with a card means you'll get your refund on the same card, which is usually processed faster than a paper check. You might also get cash back or other benefits from your credit card.
- Cancel your old policy right after you switch: Car insurance companies can take anywhere from a few days to several weeks to process refunds after you cancel. The sooner you get the process started, the less time before you get your refund.
- Choose monthly installments: Most insurance companies let you choose whether to pay your insurance bill in one big chunk or smaller pieces over time. Paying all at once will save you some money, but if you need to break up the payment so you can afford to switch insurance companies, it's worth the trade-off.
- Save your insurance quote for later: Nearly every insurance company will let you save your quote for later. If you found a great quote but just don't have enough for a first payment right now, you can save it and come back later.
Frequently asked questions
How often should I switch car insurance?
You should search around for better car insurance rates when your current policy is about to be renewed, as well as any time you have a major life change, like getting married or moving to a new state.
Do I need to cancel my old car insurance before getting a new policy?
No, but you should have a new car insurance policy in effect before you cancel your current policy. Even a short lapse in coverage can raise your monthly rate or get you into legal trouble on the road.
Is there a penalty for canceling my car insurance in the middle of the policy?
No, most car insurance companies don't charge a fee for canceling your car insurance in the middle of your policy. Some companies, such as Progressive and The General, do charge a fee for canceling your insurance. The fee is typically either $50 or 10% of your remaining premiums.
Can I switch car insurance companies if I have an open claim?
Yes, you can switch car insurance companies even if you have an open claim with your current company. If you do switch insurance companies, your original company will still pay out your claim.
Is it difficult to switch car insurance companies?
No, switching car insurance is not difficult, although making sure you have a new policy in effect before canceling your current policy is important. Comparing quotes and finding your cheapest rates only takes a couple of hours, and you can switch your insurance the same day.
Methodology
To find the cheapest car insurance in the country, we gathered minimum liability car insurance quotes from 51 insurance companies across all 50 states and Washington, D.C., though not every insurance company is available in every state.
ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurance company filings and should be used for comparative purposes only — your own quotes may be different.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.