How to Handle Car Insurance Policies When Moving Out of State

If you have to change car insurance when you move, be sure to (1) arrange new coverage ahead of time, (2) wait to cancel until your renewal period, and (3) compare quotes online.

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Reviewed byJoel Ohman
Founder, CFP®

UPDATED: May 8, 2020

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Here's what you need to know...

  • No matter where you are moving, if you drive a vehicle, you should not cancel the insurance on that vehicle before the move
  • Most states have fines for driving without insurance; some even have jail time as a punishment
  • When you move to a new state, ensure that your auto insurance is valid in that state
  • When looking for an insurance company in your new state, you will need to know your new ZIP code to obtain an accurate quote

You should cancel your car insurance policy if you move out of state only after you have obtained new coverage in your new state. No matter where you are moving, if you drive a vehicle, you should not cancel the insurance on that vehicle before the move.

Many people think that if they are moving out of a specific state with specific laws that they can just cancel their policy until they get to their new place of residence. Read through this article to learn why this isn’t a wise decision and what you can do to ensure that your insurance transition from one state to another is a smooth one.

To find the best auto insurance policy for your new state, enter your ZIP code to compare car insurance quotes for FREE!

Why You Shouldn’t Just Cancel the Policy

Every registered vehicle in the U.S. is required to have some sort of insurance coverage, no matter where you live or where you happen to be moving.

When you move from one state to another, your risk of having an auto accident doesn’t decrease simply because you are moving.

In addition, most states have fines for driving without insurance; some even have jail time as a punishment.

Not only is driving without auto insurance illegal, it can also create serious financial difficulty for you if you cause an auto accident. If you have an accident in a tort state, then you can be sued for the losses.

If you have an accident in a no-fault state, you can be heavily fined for driving without insurance. You will also face a license and registration suspension.

In some states, if you are in an accident caused by another person and you don’t have the required insurance, the other insurance company can refuse to cover your losses. You simply don’t want to take that risk.

Lastly, if you are leasing or financing a vehicle, the lender will require that you always carry auto insurance on your vehicle; it’s in your contract that you will maintain coverage. If you cancel your insurance, then your lender can take away your vehicle.

It is more likely, however, that your lender will take out an insurance policy for you, and it will be much more expensive than any insurance policy that you would purchase on your own.

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What to Do When You Move to a New State

When you move to a new state, there is a lot you need to do. One of those things will be to ensure that your auto insurance is valid in that state. Most states have a specific amount of time, usually up to 90 days, for you to register your vehicle in that state.

You can purchase auto insurance in a new state before you register your vehicle, but you have to switch over your registration to that state at or near the same time.

Some states will give you 30 days, but you need to understand that once you change your insurance to another state other than where you are registered, then this registered state will be informed that you dropped your insurance.

Although it may seem odd, the simple fact is that if your vehicle is registered in Florida, then Florida will require that you have insurance in that state, which applies everywhere. The upside is that no matter where you live, your auto insurance will cover you in the event of an accident.

If, however, you live in the same place for several months and are well past your deadline for changing your state of registration, then your insurance company can refuse to cover your vehicle if you have an auto accident.

When you register your vehicle, you have to show proof of insurance.

At that time, your insurance should be your state of residence. You will not be able to register your vehicle if you don’t provide proof of insurance.

However, every state has different rules about this process. Some states will allow you to register your vehicle as long as you have insurance from somewhere and then give you a form to fill out when you have switched your insurance over to in-state insurance coverage.

If you don’t send in the form within the specified period, then your license and registration can be suspended, and you may face heavy fines as well.

Will I need to cancel my car insurance policy if I’m attending college out of state?

One of the largest groups of people affected by the inter-state question is students attending college at an out-of-state institution. As a general rule, students are not considered permanent residents of the state where they are attending college unless they remain there for a certain period after graduation.

As long as they’re still in school, they are considered temporary residents and can continue driving on the insurance from their home state.

Using Texas residency requirements as an example, if you’re a student who comes to Texas for studying at a college or university, you’re considered a temporary resident unless you have lived in the state for 12 or more consecutive months prior to your college enrollment.

As a temporary resident, your vehicle registration and insurance are valid in Texas, even though they are from your home state.

When you establish residency as outlined in the Texas regulations, you will be required to switch your registration and insurance to comply with Texas law. If your insurance company is not licensed to do business in Texas, you will have to cancel your policy and get a new one from a company that is.

Do I need to cancel my car insurance policy if I’m a snowbird?

There are plenty of drivers who live in cold-climate states but flock to warmer states during the winter months. These drivers are typically called “snowbirds.” Whether such drivers need to get a new insurance policy will be determined by their residency status and whether their provider is licensed in both states.

As a typical rule, snowbirds are considered temporary residents unless they exceed a certain time limit in their warm weather state.

Those time limits will vary from one state to the next according to their regulations. You’ll need to check with the Department of Motor Vehicles in your warm weather state to determine what your status will be during your visit.

If that state has a limit of 90 days or less, you may be required to get a temporary insurance policy to cover any amount of time when that limit is exceeded. In all likelihood, however, it’s probably not going to be an issue for most drivers.

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Changing Your Car Insurance to Your New State

You may have two options depending on who you are using for auto insurance. If your insurance company offers coverage all around the country, then you may be able to simply call them and ask them to give you a quote for the state you are moving to.

Every state is different regarding what they require from drivers, so the amount you pay might be different from what you were paying before.

For example, in Florida, a comprehensive policy for a minivan might cost $79 a month, but in North Carolina, it might be as much as $129 a month for the same coverage.

This variance is based on a number of factors. A new quote will include the risks or lack of risks that you will face in the area that you move to. Things like how many insurance claims there are in an area, how many accidents occurred, the average cost of an accident, and so on will be part of the determining factors.

Your insurance company may simply be charging you too much for your coverage, or they may be right on target; however, you aren’t going to know if you don’t take the time to compare prices.

Finding the Best Car Insurance for You

An insurance company must be licensed to sell insurance in your state, so if your current insurance company is not licensed where you live, then you are going to have to find a new insurance company. Thankfully, this process is easy!

Because an insurance quote is based on a specific area within a state, you will need to know your new ZIP code to obtain an accurate quote. If you aren’t sure, then you may want to get quotes using several ZIP codes for a range of places you are considering living in.

Don’t worry; you don’t have to fill out forms over and over again; once you have filled out your information, you can make whatever adjustments you need to see different options for your insurance quote. Because it’s free, you don’t have to worry about limiting the amount of searches you do.

When you use our quote tool to find insurance, you are paving the way toward saving money. Quote tools allow you to see what insurance competitors are charging for the same coverage, allowing you to make an educated choice about your auto insurance.

Also, you will only get quotes from reputable companies that are financially stable, making it even easier to choose the right company. Don’t get stuck with out-of-state coverage, and don’t pay too much for what you buy.

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