Switching Auto Insurance Providers

If you find a provider with whom you can save money or are simply unhappy with your current insurance company, just follow a few simple steps and avoid costly mistakes or gaps in coverage.

Setting Up a Policy with a New Company
When you switch providers, the very first step is to make sure you've got the new policy completely squared away. Don't do anything to your current policy until your first make sure you have been approved and made your first policy payment.

Also make sure you have a firm effective date in place. The ideal time to start your new policy is the day after your old policy ends. Don't allow your coverage to overlap. Technically it's not possible since you can't collect twice on one claim but it is also likely to create problems for you and your insurance companies.

Cancelling Your Old Policy
The next step is to cancel your old policy. This is very important because you don't want to pay unnecessarily for insurance coverage. Make sure you explicitly tell them verbally or in writing that you're canceling your policy and when. As mentioned previously, it's best to end your current policy the day before the new one begins.

It should be fairly easy to cancel your policy and the company may likely just terminate it over the phone. Some companies may have more formal procedures and might have you sign a simple cancellation form.

Finally, if you prepaid on your policy, it is likely you have a positive balance. Make sure you inquire about any refunds you may be owed.

Wrapping up Lingering Issues
It will entirely depend on your state but you may have to contact your department of motor vehicles about the provider change if your new carrier doesn't do it for you. Also, if you have had a lien placed on your vehicle, you should update the lienholder with the change.