Dissatisfied with your auto policy? Ready to shop for the cheapest car insurance quotes out there? Here’s the smart way to cancel your existing policy and switch car insurance.
The worst thing you can do is to just stop making payments on your current car insurance policy while you shop for another one. Sure, your policy will be canceled but non-payment. The insurance company will report that to the credit bureaus, which new insurance companies check to decide what level of risk you represent to them. When they see that you didn’t pay your last provider, they’re going to reasonably assume you’ll take the same slacker attitude toward paying them. Outcome of this scenario: new insurers will either charge you a higher premium or they’ll decide not to issue you a policy at all.
A better solution is to first secure your new car insurance policy. This will assure that your new insurer can put your policy in place to coincide with the cancelation of your old policy. Two good things happen: you don’t have a lapse in coverage and you haven’t damaged your credit rating.
Just as there is a right way to cancel and switch car insurance, there’s also a right time. You do not need to wait for renewal time to cancel and switch. All standard policies have a clause that confirms your right to cancel at any time if you have given them the require notice of your intent. Some may even prorate and refund any unused portion of your paid premium up to the cancelation date. Other car insurers, however, may short-rate you with a cancelation penalty if you cancel before your policy term is over. If you’re not sure if your provider does this, call and ask. The amount of the penalty may outweigh the advantage of switching at this particular moment. You should also keep in mind that many insurers offer discounts and perks to loyal customers. When you switch, you may stand to lose those.
If you decide to go ahead with cancelation, inform your existing insurer in writing. Note the date you want the policy to cancel. If you have a reason for canceling, let them know. Don’t be surprised if your old insurer asks for proof of your new policy, either. Many states require insurers to report when a policy is canceled so that the state can track uninsured drivers.
There’s just one step left before you can kiss your old car insurance policy good-bye. Confirm your cancelation. Get a written official notice of cancelation from your old insurer stating the date and time when your coverage with them ends. Keep it on file, in case you need proof to correct a bad credit mark.