Your Guide to Switching Auto Insurance Companies
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UPDATED: Apr 8, 2019
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Car insurance is one of the necessities if you plan on driving, but if you are not happy with your current provider then it is time to switch auto insurance companies. It is not something to take lightly, but it is also not something you should put off if you have been considering it.
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When it comes to purchasing auto insurance, there are a number of things to keep in mind. You don’t want to purchase blindly and end up with a company as bad as your current one.
That is why it is worth it to do a little extra research into the companies you are looking at and make a decision that is not based on price alone.
Reasons to Switch
There are a multitude of reasons as to why you may be switching companies for your auto insurance. Some reasons may be because you have to and others may be your choice to do so.
Not all insurance companies are able to offer car insurance in all states.
Each company needs to be registered, as well as licensed, in each state that it plans on doing business. That is why, if you move to a different state, you may be forced to switch insurance companies.
You are not allowed to be insured in a different state than the one in which you live, except under certain circumstances.
Another reason that you may want to switch companies is if you are dissatisfied with the company you are currently with. You may be unhappy with the agent you have been working with or unhappy with some aspect of the provider.
A big reason why drivers switch insurance is price. Car insurance can be quite expensive and, these days, people are doing what they can to save money.
Fortunately, there are many insurance providers available and many of them offer competitive premiums to get you to insure through them. It is also quick and easy to compare pricing.
Have Your Old Policy Available
When you are looking to switch companies, make sure to have your current policy nearby. All you need is your declarations page, which lists which coverage you have, what your limits are, and what deductibles you are carrying.
When you are switching companies and comparing prices, you want to make sure that you are comparing similar policies.
You will be asked for certain information when applying to different insurance companies and your declarations page will help you fill some of it out.
The quickest way to compare insurance rates is online. This is the best route to use if price is your main objective, as you can easily compare multiple rate quotes at once.
These sites are available 24 hours a day so you can search on your own time, when it is convenient for you. Getting quotes is also free and there is no obligation.
If you have a pretty good idea of which insurance companies you would like to compare, you can visit their websites individually. The bulk of insurance websites offer the ability to get a free quote within minutes.
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Use an Insurance Broker
Using an insurance broker is another option when it comes to switching auto insurance companies. A broker is similar to an agent in that it is a physical person to meet with and discuss what you need in terms of insurance, but they differ in other ways.
A broker, unlike an agent, does not work for one particular insurance company. With an agent, you are limited as to the types of coverage and pricing that is offered by the provider that the agent represents. With a broker, you have many more options from which to choose.
A broker will initially sit down with you and discuss what you are looking for. This is in reference to coverage, deductible amount, number of drivers and vehicles insured, and your budget. He or she may also ask about other ways you are covered, such as health insurance and life insurance, as this could affect which auto policy would be the best.
The broker will then tap into all of his or her resources.
Because there are many insurance providers with which a broker works, there is a better chance that you will be able to get exactly what you want in the price range that you are looking for.
Ask for Referrals
A good way to find a new insurance company is to talk to people you know. Friends, family members, and co-workers are some of the best resources. Find out who they use to insure their vehicles and whether they are satisfied with the provider or not.
You can also get referrals from other consumers, even those whom you don’t know. J.D. Power and Associates is a site that produces ratings of auto insurance companies by consumers who have experience with them.
The site rates the providers based on a number of different categories, such as pricing, which policies are offered, payments and billing, and their experience with contacting the insurer.
The ratings are also broken up into different areas of the country so that you have a better idea of which providers are in your area.
Research your Choices
Once you have narrowed down your choices, you should do some additional research. Make sure that the company is licensed and permitted to sell insurance in your state. The insurance department of your state can help you with that information. It can also let you know if there are any complaints against the companies you are looking into.
Finding out the financial situation of the insurance companies is important.
Companies like Standard & Poor’s allows you to look up individual companies to see what financial rating they have been given. Make sure to choose a company that rates on the high side, such as with an A- or better.
Inform Others about Your Complaints
In the case you are looking to switch companies because your last one didn’t fulfill your needs, you should let others know. This way, the problem either can get fixed or you can prevent others from making the same mistake.
Letting your state department of insurance know is a start. If your complaint is with a particular agent or local office, let the insurance company know and/or contact your local Better Business Bureau. The BBB has a place where you can list complaints in different categories.
Don’t Cancel Your Current Policy Right Away
One important thing to be aware of is that you do not want to cancel your current policy too early. If you cancel it before you get a new policy, this is considered to be a gap in your coverage.
A gap in your coverage does not look favorable to other insurance companies and it can negatively affect you for years.
An insurance gap will usually result in increased premiums on your next policy because some companies will consider you to be a higher risk because of it. This information usually stays on your record for years to come. That’s why you should keep any other insurance policy until the new one becomes effective.
Once your new one is in place, most agents or companies will contact your old company for you to cancel it. You will even receive a refund of any money that you paid ahead of time to the company.
Switching Companies Due to a Cancellation
One unfortunate reason that you may need to switch companies is because your other company cancelled your policy. There are a number of reasons why you may have been dropped from coverage. You may have missed some payments, were found to have lied on your insurance application, were caught driving without a license, or were convicted for a DUI.
In many of these cases, you will be considered to be high risk and will have trouble finding insurance coverage with normal companies. This means that you will have to find non-standard coverage. Non-standard insurance is meant for high-risk drivers and those who can’t find insurance coverage elsewhere.
There are two options to find an auto insurance company when you are high risk. The Insurance Information Institute outlines the two types of insurance.
One is non-standard insurance, which may be offered by traditional insurance companies or by private ones. Most will allow you to purchase full coverage on your vehicle. Just be aware that this type of insurance will be very high priced.
The other, and sometimes last, option is assigned risk insurance. This is available through your state government.
It allows anyone to get covered by insurance, although sometimes you are only allowed to purchase the basic minimum that the state makes you carry. This type of coverage is usually for the drivers with terrible records and it will also be very expensive.
When changing to a different insurance company, whether it is your choice or one that is made for you, there are options available. Take a little time to find the best provider for what you need.
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