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When to Consider Switching Your Auto Insurance Plan



Most Americans rarely change their auto insurance plans despite it being one of the biggest expenditures for a car owner or driver. According to data, the average cost of auto insurance in the U.S. is about $2,545 annually. Minimum coverage can cost you less, around $741 annually.


People will change their auto insurance plan for multiple different reasons. The most common reasons car owners change their policy is to save money, your family situation has changed, your driving frequency has changed, or they’re just simply unhappy with their current auto insurance plan.


Exactly how much you pay for your auto insurance will depend on various factors, such as your credit score, driving history, and discounts the insurer offers on your premiums. These factors change often, making it paramount that you reconsider your auto insurance plans and switch if necessary.


But when should I switch my Auto Insurance Plan?  Here’s all you need to know about auto insurance plans and switching to new, more comprehensive, or affordable policies.


Why Should You Switch Auto Insurance Plans?

There are various reasons for considering switching your auto insurance plan. Here are the top ones.


You’re Trying to Save Money

Getting a new auto insurance plan is an effective way of saving on your total expenditure. According to research, 26% of policyholders save at least $200 annually by switching to a more affordable auto insurance provider.


Therefore, to save money, you should consider calling different auto insurers, comparing quotes, and switching to a plan that fits your budget better.


Insurers will also offer discounts based on the policy, making it easier to change plans without changing your provider.


You Have a New Family Situation

Getting married alters your family situation, necessitating your auto insurance policy change. Typically, you’ll want to add your spouse to your auto insurance policy and potentially receive a discount on your premiums.


In most cases, insurers advise married couples to share the same policy if they keep their cars at the same residence.


On the other hand, if you’re divorced, you’ll need to separate your policy from your former partner, necessitating a change in your plan. In most states, getting a divorce increases your auto insurance premiums.


Also, if you have a teenager who’s just started driving, you’ll want to update your policy, especially if they’ll be driving your car. However, adding inexperienced drivers to your policy typically hikes the premiums. Some insurers offer generous discounts for young drivers, upwards of 25% to 30%.


Your Credit Score Has Improved

Your credit history significantly impacts your car insurance premium rates. This is true in all states except Hawaii, California, and Massachusetts.


Therefore, if your credit score improves, you should see a significant rate drop, making it crucial to assess your new premiums and which company offers the biggest drop and savings.


Your Driving Frequency Has Changed

Your driving habits and frequency also affect your auto insurance premium rates. For instance, if you used to commute daily but now work at a remote-only company, your annual mileage should drop significantly. This should be followed by a significant change in auto insurance premiums.


In cases where you use your vehicle less often, you should consider taking pay-per-mile insurance that allows you to pay your auto insurance on a daily base rate and a per-mile rate.


However, some providers can offer steeply fluctuating rates for this policy, so be careful about the insurer you obtain this plan from.


On the other hand, if your driving frequency has increased, shopping around for auto insurance plans can help you save money from the higher premiums imposed on your current policy.


You’re Unhappy with Your Current Insurance Company

This is an automatic reason to switch your auto insurance policy immediately. If you’re unhappy with your current insurer, there’s no reason to hold on to their policy. This can be the case if the insurer is often slow and unresponsive to processing claims, answering queries, investigating incidences, or simply deny your claims for no valid reason.


When shopping for a new provider, check their ratings and reviews to settle on a reliable and trusted option.


How You Can Switch Your Auto Insurance Plan

You can take a few simple steps to switch your auto insurance plan to a better policy. Here is the process.


Review Your Current Policy

Start by reviewing your current policy for deductible amounts and coverage. Also, confirm that you’re not subject to any cancellation fees.


Have Your Personal Information Ready

Switching auto insurance plans will require you to provide your personal information to enroll in the new policy. Therefore, have your personal information ready and at hand. This includes your vehicle identification numbers (VIN) and driving license.


Get Quotes

Start looking for quotes from different providers and comparing them. Ideally, you should get quotes from three different insurance companies.


Let Your Lender or Financier Know About the Changes

If your car is leased or financed, let the lender or financier know about the changes you’re about to make to your auto insurance plan.


Choose and Purchase a New Policy

With various quotes on offer and the necessary stakeholders aware, choose and purchase a new auto insurance policy that fits your needs.


Cancel Your Old Policy

Once you have secured your new auto insurance policy, contact the old provider and cancel your plan. This way, you avoid a gap in your coverage and duplicate coverage. Ask the old provider if you’re due for any refund for your premium payments to the old policy.


Is there Any Consequence to Switching Auto Insurance Plans?

Switching auto insurance plans has no penalty. Contrary to popular myth, changing car insurance plans doesn’t hurt your credit score or make it harder to get auto insurance later.


With most insurers, you don’t incur cancellation fees if you decide to switch mid-policy. However, the process can be a little bit complex.


Therefore, in most cases, you can use multiple providers for your auto insurance plan over a short period. This means you can frequently assess various auto insurance quotes and change insurers if necessary.


However, ensure you have the new policy before canceling the old plan. Canceling your old auto insurance policy before obtaining a new one can lead to a lapse in coverage, damaging your driving record, or even having legal ramifications for driving without insurance.


Choose the Right Plan

Choosing an auto insurance plan that fits your needs is crucial to avoiding unnecessarily high coverage costs and premiums that don’t reflect your current condition, such as credit score and driving frequency. It also helps ensure adequate coverage if your family status changes or any other factor warrants additional coverage.


Talk to an expert and learn which policy suits your current condition.

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