Can you change your car insurance plan mid-year?

Changing your insurance plan mid-year is possible as your insurance company cannot prevent you from switching companies. However, they may impose a fee for early cancellation.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2021

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Here's what you need to know...

  • Can you change your auto insurance plan? It is possible to switch insurers and policies mid-term?
  • Your current insurer cannot prevent you from switching to a different company, but they may impose a fee for early cancellation
  • If you plan on switching, make sure your new policy is active before you cancel your current policy
  • Use a comparison tool to quickly and easily find and purchase a new policy

Is it time to tell your car insurance company good-bye?

Switching car insurance can save you money and provide you with better customer service, but you may be hesitant to switch in the middle of your current car insurance policy period. Won’t insurers be upset if their customers are leaving mid-policy?

In reality, you shouldn’t be worried. It happens all the time; the world of coverage is a competitive place! You simply need to be mindful of any cancellation fees that might be written into your policy, and what needs to happen during the cancellation process itself. If there aren’t any, you’re free to shop around for a new auto policy.

Switching car insurance companies is as easy as finding a new policy via a comparison tool, purchasing that policy, and canceling your old policy after your new one is active.

Start comparison shopping today by using our FREE online quote tool! Enter your ZIP code above!

What are the reasons to switch car insurance companies mid-term?

The biggest reason people switch insurers is for lower rates, but there are other reasons you should consider.

  • Better rates – Car insurance companies each use different mathematical formulas to calculate risk. Different calculations mean that a different car insurance company could have your exact same policy for a cheaper rate.
  • Better coverage – Imagine getting better coverage for only a few more dollars each month. It could happen if you shop for a new policy by using a comparison tool, which allows you to quickly read through policies and look at their prices.
  • Better customer service – Researching other auto insurance companies could lead to you finding a company with better customer service.
  • Better discounts – There are a few new discounts available to drivers, including accident forgiveness and diminishing deductibles. Shopping for a new policy allows you to find an insurance company with better discounts and incentives for being a safe driver. No one can fault you for wanting to save potentially hundreds of dollars on your premium.

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How easy is it to switch providers?

Do you have to cancel car insurance when you switch? Since car insurance is required in almost every state, you can’t simply call your agent and cancel or stop paying your bill.

If you cancel or stop paying on your auto insurance policy, that could lead to a gap in your insurance coverage and significant penalties when you try to purchase another policy.

Instead, you should follow these steps to safely switch your car insurance.

  • Call your insurance agent – The first step to switching car insurance involves calling your current insurance company to find out if there are any fees for canceling early and to determine the proper way to cancel your policy. Some insurance companies require written notice or an in-person visit in order to cancel.
  • Locate a new policy – You can find a new policy that is comparable or better than your old policy by using an online comparison tool. Online comparison tools allow you to search the car insurance policies from multiple different carriers, allowing you to evaluate their prices and the benefits and drawbacks of each new policy. Since there are so many types of coverage options that exist, you’ll want to research them before jumping on one.
  • Read the fine print – Before you purchase a new policy, make sure you read the fine print. The fine print includes the coverage amounts and any exclusions. If you are getting a car insurance policy with a deductible, make sure you can always afford to pay said deductible.
  • Determine which policy would best benefit you – After reviewing all the policies and researching the individual insurance carriers, choose your new policy based on all the available information. Don′t simply choose the policy with the lowest premium.
  • Purchase your new policy – Before you cancel your old policy, you must purchase a new policy and determine when it becomes effective. After you are certain that your new policy is active, you can cancel your old policy. You never want to have a lapse in coverage, because that could lead to fines, and could also affect your driving record.
  • Cancel your old policy – Call, write, or visit your old insurance agent to cancel your old policy and make sure it is canceled. They should send you a letter in the mail after you cancel. You should also tell your agent that you found a new policy.

Switching car insurance policies mid-term is easy when you are fully informed and know the proper steps to take. If your worried that your current provider may give you grief, be honest with them about why you’re leaving. Chances are they’re not going to be as upset as you think. This sort of thing is a common occurrence.

In general, you want to have continuous coverage in order to avoid a lapse in your insurance policy, even if it is for a single day. Avoiding a lapse in your coverage may mean carrying both policies for a small period of time until you can confirm that you are covered.

However, that shouldn’t be a huge problem, especially if your new policy is saving you money!

If you are looking to ave money by finding affordable auto insurance rates, start comparison shopping by entering your ZIP code below!

References:

  1. https://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/I-ve-found-a-better-deal-on-auto-insurance-but-how-hard-is-it-to-switch-from-one-insurance-company-to-another
  2. https://www.thebalance.com/consider-switching-car-insurance-527528
  3. https://www.jdpower.com/cars/articles/finance-insurance/study-finds-customers-less-satisfied-auto-insurance-companies
  4. https://abcnews.go.com/Business/steps-switching-car-insurance/story?id=22397730
  5. https://wallethub.com/edu/switching-car-insurance/13553/

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