What to Know About Changing Car Insurance

Couple driving a car who have car insurance
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You spotted a great deal for a hot new car insurance startup with great options while watching your favorite TV show. Or perhaps you heard that 15 minutes could save you 15% or more, did some online rate shopping, and found yourself with a great new car insurance offer.

Or maybe you’re moving to a new state, but your policy at the moment is from a great but local car insurance agency in your current state. Maybe you’re a new empty-nester and are getting rid of your two large SUVs in favor of an electric car.

Maybe you've simply found a better deal with a different carrier and want to make the switch. There are all sorts of reasons to change your auto insurance, but changing your car insurance always boils down to one of two things: a change in your life circumstances or the desire to save money.

So, you need to make a change, but now you just have to figure out the most simple way to go about it. If you are at the end of your policy period, no problem. Just make your changes with the next contract. But what if you are in the middle of a policy period? Here are some things you should know.

Changing Coverage Mid-Policy

Here are some of the most common causes for which you might need to change your auto plan:

  • Adding or removing a car.
  • Adding or removing a driver.
  • Increasing or decreasing coverage limits.
  • Changing car use, such as greater or lesser monthly mileage.
  • Changing locations.
  • Making a change to a car that also changes its value.

Changing your coverage mid-policy is almost never a problem. Carriers know that their client's needs can change quickly and that those changes rarely happen at the precise moment when one policy period ends and the next one starts up. Insurers want to keep your business, so they go out of their way to make the process of changing your plan as simple as it can be.

Most of the time, just a quick phone call to your carrier or a visit to its website is all it takes. Still, there are a few times when you will have to cancel your policy and start clean with a new one. In a few cases, moving from one state to another will require a new policy even if you remain with the same carrier.

Restricted to Renewal Only

You may run across some types of plans that will only let you make changes when you renew them. Most of the time, it's up to the underwriter to approve such a change in the middle of the term. Often it is "extra" coverage, which could be restricted. The kind of coverage you might have to wait until you renew get could include:

If you have any questions about how changes will affect your plan, be sure to call your agent, the sooner, the better.

Switching Insurers Mid-Policy

There are times when moving to a new state will mean more than changing the terms of your plan or writing a new one with your current insurer. There's a chance that your carrier doesn't write policies in your new state. If so, then you will have no choice but to seek out a new insurer. But the biggest reason by far that causes people to switch insurers mid-policy is money. They've simply found a cheaper option, and they don't want to wait until the end of their policy term to save money.

Switching insurers in the middle of your plan is a fairly routine event and not too hard to do in most cases. Still, it may take more effort than just making changes to a policy you already have. Check the wording of your current plan, and you will find the rules for being able to cancel it. It may allow you to cancel your policy in full at any time and will set out the terms for the return of any unused portion of your premium.

Still, you may be charged a fee for canceling early. This is even more likely if you decide to cancel early in the policy period. Be sure to weigh any penalty against the savings you expect under a new carrier. It may be to your financial benefit if you can wait until your current policy ends or until the penalty is no longer in effect.

If you are leaving a policy mid-term and not just making a change, you will need to do it in writing. A simple phone call will not suffice. Note that if you do cancel and you are owed some money back on your premium, it may take some time before the refund check shows up in your mailbox.

If you decide to switch plans, you must have your new policy in place and your car must be covered before getting rid of the old one. In many states, you will be fined if you go without coverage for even a day. You can almost bet that that one day you decide to go without coverage is the day you'll really need it.

One more thing: coverage slightly differs from one carrier to the next. It really does not matter how closely you try to match plans. Be sure that you clearly know those differences before switching. You might even run into a claim that eats up every bit of the savings you thought you earned.