How to Switch Auto Insurance Companies

You may wonder if it's bad to switch auto insurance companies. The only risk of changing insurance companies is in letting coverage lapse. You can change car insurance before your renewal date or at any time as long as you ensure there is no lapse in coverage. Switching car insurance companies is common and comparing auto insurance rates from time to time is a great way to insure that you're paying the cheapest car insurance rates available. Changing car insurance companies to find the best car insurance rates is permitted at any time during your car insurance policy.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent Rachael Brennan

UPDATED: Jul 19, 2021

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No insurance company likes to see their customers leave them for another provider. Even a large, national company that services millions of drivers each and every day will do what it can to retain as much business as possible.

However, trends in the auto insurance industry are constantly shifting and changing. The policy you bought two years ago from the company that offered you the best price may now be 20 percent more expensive than their strongest competitor.

But it’s not like your insurance company is going to tell you this.

It’s your job to stay on top of what car insurance companies are offering in your area, and do what you have to do to get the most affordable premiums — even if that means comparing auto insurance companies and saying goodbye to a provider you’ve been with for years.

Once you’ve done your homework, you may need to switch auto insurance companies to ensure you’re getting the best rates. If you’re thinking about switching car insurance companies or just want to see your options, use our FREE quote tool to compare insurance rates now!

How to Switch Auto Insurance Companies

If you do find a better price and decide to switch, there are some rules you need to follow in order to make sure the process happens smoothly.

Otherwise, you may end up with some serious financial penalties. Or worse — you could lose your coverage altogether!

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First Rule: Mind the Gap (the Coverage Gap, That Is)

The biggest risk many people face when switching auto insurance companies is losing their car insurance coverage between the time their old policy ends and their new coverage starts. This is known as a gap in coverage, and it can last a little as a few days or as long as several months.

But even if your coverage lapse is for a single day, it will drastically affect your car insurance rates when you finally get your coverage reinstated.

Car Insurance Rates: Penalties for Gaps in CoverageLegend: Currently Insured Gap In Coverage AllstateAlliedState AutoState FarmEsurance 102030405060708090100110120130140$114$148$99$113$77$112$44$81$46$66

Second Rule: Be Respectful, and Give Them Notice

Like most things in life – especially where the money is concerned – you need to give your car insurance company advanced notice before you cancel your policy.

The standard rule of thumb is about a month or 30 days. Who knows, you might get lucky; they may offer you some discounts or some other perks in order to keep your business.

As long as you haven’t already put any money down or signed any paperwork with the company you are thinking about switching to, this can save you a lot of money on your current policy.

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Third Rule: Follow Through With Your Policy Cancellation

So you have to talk to your current auto insurance provider, made arrangements to cancel your policy, and you’ve already signed up with your new car insurance agency. But then, all of a sudden, you get an expensive bill in the mail from your former provider. What gives?

Sometimes, the cancellation process doesn’t always happen as smoothly or as automatically as making a single phone call and requesting a cancellation.

Sometimes these negotiations have to be followed up on, and you have to make sure you leave a paper trail so that you aren’t financially liable for any fees associated with an improper policy cancellation.

After all, you can never be too careful.

There are a few other things you need to keep in mind when you are switching car insurance companies. For starters, some providers will charge you a fee for leaving before your next policy renewal. Many companies, such as Progressive or Esurance, will charge a $50 flat fee.

Other companies will make it much more expensive for you. For example, The General and Mercury will charge you 10 percent of your remaining premium. And depending on how much you’re currently paying for a 6-month policy, that can get very expensive, very quickly.

Luckily, if you pay your premium in full at the start of your policy, you can only avoid this fee, but you can get the unused balance of your pay premium refunded. So if you are thinking about switching, it pays to fork over the cash in advance to your current provider for you finalize the switch.

Comparing Auto Insurance QuotesLegend: Average Quote NationwideAlliedState AutoAllstateEncompass 153045607590105120135150165$99$122$123$148$174

If you are proactive, ask the right questions, and follow all the rules, you can make your car insurance policy switch a smooth experience.

You can even save some money while you do so but before you even decide that you want to change carriers, you need
to compare quotes between different providers in your area and choose the one that is the most affordable for you.

Use our FREE quote tool to compare insurance rates now!

Free Auto Insurance Comparison

Enter your ZIP code below to compare auto insurance rates.

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