Should I Wait until Renewal to Switch Auto Insurance?
Are you unhappy with your car insurance?
Maybe you’re paying an astronomical price. Maybe you realized you don’t have nearly enough coverage. Maybe you had a life change your policy doesn’t reflect. Maybe you just aren’t satisfied with your current company’s customer service.
Whatever the reason, we get it. At Berry Insurance, we have worked with many clients who felt their policies weren’t up to par and helped them get the coverage they needed for the best value.
Even though you may think you are stuck in your policy until it expires, you aren’t! Car insurance policies are not a binding contract. If you are not happy with your policy you can cancel at any time -- you don’t have to wait until it expires to reach out to your (or a new) agent.
While in some cases, it might be OK to wait it out, often times it is not the best option.
We’ll talk about some scenarios when it’s best to stick with your current policy or jump into a new one.
When to switch car insurance early:
You find a better deal:
Car insurance rates are calculated using several variables such as vehicle information, driving history, age, location, coverage amounts and more. Because these variables are always changing, your policy options and cost are also changing.
You may find you’re overpaying for a policy, or a change in one of the previously mentioned variables makes you eligible for a lower premium.
If you shop around and find a policy offering more value than your current one, of course you want to switch mid-policy!
Why wait to save money when you can start saving right now?
You need better coverage:
Not everyone is an insurance expert. And it’s easy to not fully understand what/how much is covered under our policies.
For example, the MA state minimum for auto insurance property damage is $5,000. While you may think this seems reasonable, consider this scenario:
You’re driving on the highway in the rain and suddenly all the cars in front of you are braking. You try to slam on your brakes, but you slide on the slippery road into the car in front of you and total it. If the car you hit costs $40,000 and your insurance will only cover $5,000, you’re stuck with a $35,000 bill. Could you afford it?
Specifically if you are working with an online insurance company, or an agent who doesn’t have your best interests in mind, there are several opportunities for gaps in coverage.
Stay in the know by reading all about the required minimums on your policy, as well as what we recommend, in this article: How Much Car Insurance Do I Need? (And Why the State Minimum Isn’t Enough)
If you’ve recently realized your coverage is not adequate, you may not want to wait another minute to switch to a sufficient policy.
If this is the case, it makes sense to switch policies immediately.
In the meantime, if you have low limits, you should increase them with your current policy until the new one begins.
You’ve had a life change:
If you’ve recently moved, got married, have a new driver using your car, etc. your car insurance policy needs to be updated accordingly. If you do not change your policy immediately after a life change, you are risking having a claims issue or not being covered if you are in an accident.
Often, these changes will affect the price of your policy and in many cases, may even result in a cost savings.
The following changes should result in an immediate policy change:
- Moving: Your premium could increase or decrease depending on how “safe” the new zip code is.
- Marriage: Your premium might decrease depending on the terms of the discounts the carrier offers.
- Adding a new driver/car: Your policy could increase if you are adding an inexperienced driver or someone with a bad driving record. It could also decrease if you are adding a driver with a good driving record or getting a multi-car discount.
- Removing a driver/car: Your policy could go down if you’re removing a young driver or driver with a poor driving history or could increase if you’re removing a driver with a good driving record or losing a multi-car discount.
- Beginning to use your car for business: Your premium will most likely increase because of additional risks.
An incident just dropped off your policy:
As you are aware, a ticket, accident or DUI on your record significantly increases your premium.
If an incident drops off your policy, your rates will not reflect it until the next renewal. However, if you choose to cancel your current policy and acquire a new one, the incident will not affect your rates since it has already dropped off.
If the cost savings is worth it, it may make sense to switch your policy once an incident has dropped off.
You might get a discount:
Some insurance companies actually offer a discount for switching, and sometimes even offer a discount for switching more than a week or two before your current car insurance policy expires.
You aren’t happy with your current customer service:
If you feel like you aren’t being properly supported or treated by your insurance company or agent, it might make sense to switch right away. It’s not worth the headache to endure poor customer service until your policy ends.
When to wait until renewal:
You might be charged a cancellation fee:
While some insurance companies don’t penalize you for cancelling early, it is not unheard of for a carrier to charge a small fee if you cancel before the term ends.
If your insurance company charges a fee higher than the cost savings you are receiving from your new policy, it’s probably best to finish your current term.
You might lose discounts:
If you’ve been a client with one insurance company for an extended period of time, you may be receiving a loyalty discount. If you leave that insurance company, you will no longer have those benefits.
If you have your home/renters insurance and auto policy bundled and you move just your auto, you might lose your multi-policy discount. Because bundling generally results in significant savings, it may make sense to move all your policies over to the new company to get their multi-policy discount.
However, if making the switch still results in a cost savings, losing these discounts shouldn’t deter you from switching.
For more tips on how bundling can help you save money and ensure proper coverage, check out our article all about why you should bundle your insurance policies with one agent.
The cost savings isn’t significant:
If the new policy you’re considering switching to isn’t all that much cheaper than your current policy, or if your term is already close to expiring, it might just make sense to wait out your current term.
You don’t want to extend the life of an incident on your policy:
As we discussed above, if an incident drops off your policy, your rates will not reflect it until the next renewal.
So if you currently have an incident on your policy and you renew right now, you would be extending the life of the incident because your rates would reflect it until the new policy expires.
In this case, it may be best to wait to get a new policy until right after the incident drops off your policy.
Accident forgiveness is being used:
If your insurance policy has accident forgiveness that is currently forgiving one of your accidents, switching policies would increase your premium.
Even if your new policy has accident forgiveness, it will not forgive the old accident since it did not happen while covered under the new policy.
In this case, it probably makes the most sense to wait until the accident happened long enough ago to not impact your policy before switching carriers.
It might take a little extra time:
While changing an auto insurance policy early isn’t uncommon or challenging, it will usually take an extra couple steps.
Once you get your new policy, you will have to inform your insurance company or agent you are cancelling your policy and send confirmation of your new policy. However, if you are working with an insurance agent, he or she will be able to take on much of the burden of cancelling your old policy for you.
But, if the cost savings isn’t significant or your policy is already fairly close to expiring, you may feel the extra phone call or email to end your policy early just isn’t worth it.
How do I cancel my current policy early?
So you’ve weighed your options and decided you want to switch insurance policies … what’s next?
Before you cancel your existing current policy, you’ll need to ensure your new one is active.
If you have even a small gap in policy, you’re at risk of being in an uncovered accident or getting into legal trouble for driving uninsured.
Once your new policy is in place, you or your insurance agent will need to reach out to your previous insurance company and provide them with the appropriate cancellation request so they can cancel your old policy.
Make sure you get a confirmation of the cancellation to ensure you don’t get billed.
If you paid in full or paid ahead on the cancelled policy, the insurance company will refund you the cost for any coverage beyond the cancellation date minus any cancellation fee. If you owe any outstanding premium to the carrier, they will bill you.
It doesn’t hurt to shop:
If you’re not happy with your coverage, or if you’re just curious if there’s a better deal out there, there’s no harm in looking. At the very least, you’ll be more educated about the types of policies and coverages available to you.
Berry Insurance agents are always willing to go over your auto policy with you and ensure you are getting the best deal … we do it every day!
Keep in mind, you never want to sacrifice quality to save a few bucks.
If you are looking to change your policy simply to save money, check out these other ways you can save money on your car insurance!