Is Now A Good Time To Switch Car Insurance Companies?

car insurance quotes and my credit score

Is there a better time to switch car insurance companies?

There is no bad time to switch car insurance companies if you find better rates.

Auto insurance policies allow the flexibility to cancel or change companies at any time. But, watch out for short rates, which are basically a penalty for canceling a car insurance policy early.

  But -

Most insurance companies have gotten away from the practice of short rating the policy premium if you decide to cancel before the renewal date.

Sometimes changing car insurance companies prior to the renewal is necessary.

Examples might be adding a young driver to the car insurance policy, and depending on the insurance carrier, may raise your car insurance premium substantially.

You may also have received a renewal notice stating that your upcoming renewal premium will raise substantially because of a ticket or an accident. 

This is going to be the best time to shop around in many cases to find more affordable auto insurance. In the last example, maybe you've moved to a new state, city or town.

Moving a few blocks in different zip codes can have a substantial difference in car insurance premiums.

Should I switch car insurance companies
getting insurance quotes from other companies

Is it bad to switch car insurance companies?

No, it's not a problem to switch insurance companies. In many cases, it can be a positive experience, especially if you've been with the same car insurance company for many years.

We've had customers with the same car insurance agent for 20-plus years and haven't spoken to their agent in that same time period.

You might be surprised at the savings and service today provided by other insurance agents, by other car insurance companies, especially if you like the latest technology.

Switching car insurance companies to save money

How much can I save by switching auto insurance companies

Anytime there's been some type of financial change in your life would be a good time to check for lower auto insurance rates.

One thing you wanna check for besides lower rates is your coverages. Make sure your liability limits are sufficiently based on your current net worth or annual income. Having sufficient liability insurance is just as important, if not more so, than the cost of insurance.

State minimum liability limits can put you at potential financial risk versus the small savings of a cheap auto insurance policy. Make sure when shopping car insurance rates that you also compare companies apples to apples with the same liability coverages.

The next thing you want to consider when shopping for lower car insurance rates is the cost of collision and comprehensive insurance coverage. Collision insurance on your car insurance policy will provide the repairs or replacement of your vehicle if you're involved in an accident. The comprehensive coverage will cover things like hail damage, vandalism, flood, and theft of your vehicle.

Car insurance rates can vary greatly from company to company, but also by coverages you choose. So, make sure when you're asking for quotes from a local car insurance agent or broker, there you're getting the same quote for the coverages you have now or better. 

How can I save money without switching car insurance companies?

Mortgage Life Insurance protection

There are many options to reduce your car insurance premium without changing insurance carriers.

Some examples found at wrote an article on 101 ways to save on auto insurance rates today include.

  • Consider adding your property insurance with your car insurance for a multi-policy discount
  • Use a car insurance tracking device to monitor hard braking and fast acceleration
  • Ask about employment discounts, or mature driver discounts or other safety-related driving school courses you've completed
  • Adjust your deductibles, higher to the lower total premium
  • Ask your agent or insurance broker about re shopping your car insurance midterm
  • Do you have any student drivers that may qualify for a good student discount with a B plus average or better?
  • What type of vehicle are you driving? The make and model of the vehicle you drive can have a large impact on the cost of your car insurance.
  • Add a boat, motorcycle, RV or other recreational policies to gain additional discounts
  • Have you recently turned age 30, 50 you may now qualify for better rates?
  • Consider going paperless. Electronic billing is less expensive than a direct bill.
  • Pay in full: Many companies will give 10% or higher discount for paying full
  • Avoid turning in small claims which can raise car insurance rates
  • How much do you drive? If you drive less than 9000 miles per year, you may qualify for a low mileage discount.

What's the best way to find lower car insurance rates?

is switching car insurance the best way to save money

Because car insurance rates will vary greatly between one car insurance company and another, it's important to get at least three to five quotes.

One of the simplest ways to obtain these quotes quickly is to work with a local or an online car insurance broker.

Car insurance brokers represent multiple insurance companies. This also simplifies giving your information need it for a car insurance quote one time. Insurance brokers represent multiple car insurance companies and give you the rates over the phone or online, depending on your preference.

Canceling car insurance before the renewal date

You may have decided to check for lower car insurance rates before the renewal of your current policy.  If you've decided to move your auto insurance from one carrier to the next, you'll need to cancel your current policy.

You'll need to provide in writing the request to cancel the current coverage with an effective date. There are a few different ways you can do that you can send an email specifying the policy number and the effective date you wish to cancel. You can also send a fax or contact the carrier directly.

In many cases, your new insurance agent or broker can assist you with completing or providing a ready-made form to send to the previous insurance company.

But, remember that the responsibility is yours as you are the owner of the policy.

If you've recently made a payment and her canceling prior to the next payment due date or renewal period of paid in full, you will receive a refund for any unused car insurance premium. Typically, the refund is sent within 5 to 7 business days back to the method in which you paid.

What happens if I switch car insurance companies too often?

There's not a problem with switching car insurance companies at any time. As mentioned above, some carriers may charge a short rate. You want to check with your insurance policy or with the company directly to find out if there is any cancellation fee when moving prior to the renewal.

The only concern you may have when switching to a new insurance company is if you have a claim within the first policy. You are more likely to be canceled as a new insurance customer if you have a claim not long after taking out a new policy with the carrier. But, that's not to say someone who's been with the same insurance company for over 30 years can't be canceled as well.

The important thing is that you periodically check the insurance rates to make sure you are getting a competitive rate based on the coverages you have. We recommend at least every two years is a good idea unless you've seen a significant rate increase over 10% at your next renewal.

Even a small savings of 100 to $300 a year equals thousands of dollars over the next 10 or 20 years.  Most drivers will drive their entire life and never have an accident, but you never want to find out you didn't have the right insurance when you do have that accident.

Does getting a car insurance quote affect my credit score?

Car insurance companies today and for the last 20 years have used credit as of means of determining risk. If you have a poor credit score, you will pay higher car insurance rates because the perceived risk with your personal finances is an indication of your potential driving habits.

This may be an opportunity if your credit has improved in recent years from when you initially took the car insurance policy to ask if you could be re-scored. Conversely, you may find that your car insurance rates have been increased even though you've had no tickets or accidents recently, but your credit has declined.

Credit used by car insurance companies is what they call a soft hit on your credit. This is also known as a soft inquiry as opposed to a hard inquiry like a credit card or a personal loan, such as a mortgage.

Soft inquiries or not used against you when determining your credit score, it's just an indication of your ability in history to pay outstanding debts. If you are planning on buying a new car, it would be a good idea to shop around based on the make and model vehicle you're planning on buying to inquire about insurance rates before you take out a car insurance loan. The reason we recommend this is because your credit may be affected when the finance company shops for more affordable interest rates. Because you have hard inquiries now on your credit report, it may impact your credit for car insurance.

Do I still owe money if I cancel my car insurance policy?

You may still have an outstanding balance due if you cancel the policy at the time of renewal or next payment due date. Make sure that the policy is canceled on the same date as the effective date of your new policy. All car insurance policies begin and end at 12:01 AM.

Just by switching car insurance companies doesn't believe you of any outstanding monies owed to the previous carrier.

Hopefully, making the move to a new car insurance company is not only providing the same, if not better, coverages but saving you money.

What is the best way to Compare Car Insurance for best rates?

how to compare insurance rates if I want to switch car insurance companies

The easiest way to compare rates and coverages for car insurance is to use a car insurance broker. You can get multiple quotes at one time from national insurance carriers.

Buying car insurance from an online insurance broker makes the process very simple and because you're buying from national companies, you can be assured of quality coverage as if you are buying from a local insurance agent but without the hassle of meeting with three to five insurance agents.

There are two types of agencies that provide quotes from car insurance companies. The first being a traditional local captive insurance agent. A captive car insurance agent is typically an Allstate, State Farm, farmers, or other insurance brands that sell only one company.  The second being an independent insurance agent or a car insurance broker. These independent agents or insurance brokers represent multiple companies and work for you and not the insurance company.

Because insurance brokers represent you, the consumer, they have no bias towards any one company and are more likely to have multiple selections that fit your needs at an affordable price.

How much money should I save before changing car insurance companies?

Auto Insurance Agent

The decision to change your car insurance company may come down to a few different factors. The first being cost and the second service for most people. But we've had many customers move purely because of the service they've received at the previous auto insurance company or agent.

The amount of money that you need to save before you decide to make a change depends on you as an individual. Some people will change if they can save a dollar and others we've seen that would make a change when they were saving $1000 a year. That's why we recommend getting three to five quotes to see what the high and the low car insurance rates look like and then you can make adjustments to the coverages and deductibles if the premiums are still too high.

It comes down to personal preference and relationship you have with your insurance agent or broker and the company they are representing as much as the amount of money you might be able to save. As mentioned in this article, the amount of money saved depends on your expectations when shopping for lower car insurance premiums.

Frequent Questions About Switching Car Insurance Companies

switching car insurance after accident

You have the option to change car insurance companies at any time.  If you are involved in an accident the insurance company that you have at the date and time of the incident would be the company to handle the claim.   

switching car insurance mid policy

Your car insurance policy does allow you to change carriers at any point in time.  You may want to check before cancelling a current car insurance policy to see if they will "short rate" the cancellation.  In years past companies will charge a penalty for cancelling coverage before the renewal date.  Most all states have passed laws prohibiting these charges, but you'll want to check before changing companies in your state.


transfer of car insurance

You are able to transfer car insurance when you are selling one vehicle and buying a new vehicle under the same policy.  What is not allowed is to transfer a policy to someone else, even a family member.  An example might be someone buys your vehicle and asks if you can transfer the coverage to them.  The reason is this is not acceptable is each person has to be underwritten or "qualified" by the insurance company to determine the premium.  Someone might have a lot of tickets and accidents and would love to have the cost of insurance the same as what you are paying with a clean driving record.


how to transfer car insurance to another state

Because each state has their own laws and regulations regarding insurance you will need to establish a new car insurance policy. Basically you are requalifying for insurance in the new state you will be living.  Rates can very greatly between one state and another as well as coverages you'll be required to have.   Most car insurance agents are license in one maybe two states (if they bored another state) so you'll need to contact a new agent.  Car Insurance Brokers can be licensed in multiple states and represent many companies.  For online quotes on car insurance in your current state or a new state click HERE for quotes.


does switching car insurance affect credit

Most states allow the use of credit to determine the cost of car insurance.  The type of credit used is considered a soft hit on your credit or an informational score.  This type of report does not affect your credit, but uses your history to determine potential risk.  Poor credit is a red flag for potential claims and car insurance companies will rate up the cost of your coverage.  You can also request a re-score at the next renewal if you believe your credit has improved.  

We also recommend comparing car insurance rates now for companies that may be lower even with less than perfect credit.  Check HERE for online quotes from several of the top insurance companies.



There is no bad time to start shopping for lower or better car insurance.  You'll want to consider packaging or bundling other types of insurance such is home, condo, renters or other items like boats, motorcycle, RVs, etc.  This will give you the optimal discounts along with others that we've mentioned in this article to help reduce your overall insurance and, more specifically, your car insurance premiums.

About the Author

John Espenschied is a long-time veteran of the insurance industry. He has worked in various positions within the industry for over 20 years, and for the past 15 years, he has been the owner and operator of Insurance Brokers Group, an independent insurance agency. John loves advising people on the insurance that meets their needs and goals, whether it be for personal or commercial purposes.

John is married to Melissa, and they have three children together, as well as three grandchildren. In his spare time, John enjoys golfing and playing in the golf league, biking to their local brewery along the Missouri river, and going on motorcycle rides when the weather is nice.

John Espenschied

You may also like