Is Switching Car Insurance Bad? (2024 Guide) (2024)

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No, switching car insurance isn’t bad and won’t lead to penalties or hits to your credit score. Drivers typically don’t incur cancellation fees, even mid-policy. While it can be a pain to switch car insurance companies in the middle of your contract, you won’t face any negative consequences for doing so.

Switching car insurance won’t negatively affect how auto insurers view you as a potential customer, either. Using multiple providers over a short period of time won’t mean you’ll deal with greater obstacles to get coverage. There aren’t any significant downsides to getting car insurance quotes regularly and frequently changing insurers.

The one situation in which it’s bad to switch car insurance is when you don’t have a new policy in place before canceling your old contract. This could lead to a lapse in coverage, which is a period between policies when your car is uninsured. A lapse in coverage could lead to a damaged driving record or even legal punishments. Make sure your new insurance begins before your old policy expires so you don’t face legal penalties for driving without insurance.

It’s recommended to compare car insurance quotes at least once a year to make sure you’re getting competitive rates. It isn’t bad to consider switching car insurance before the end of each six-month policy, as auto insurers often increase rates when a new term begins.

Feel free to shop for auto insurance on a more regular basis, though. There won’t be any penalties or credit hits for switching car insurance at any point, whether it’s right at the start of your policy or when it’s nearing its end.

Canceling a car insurance policy is relatively straightforward, though you should have a new policy in place before canceling the old one. If you’ve already found a new car insurance company, call your current insurer and ask about its cancellation policy.

You may be able to cancel over the phone or provide notification in writing, depending on your provider. After you submit a cancellation request, you’ll likely receive a letter or email stating that your coverage was terminated.

Can You Cancel Car Insurance at Any Time?

Yes, you can cancel car insurance at any time. Just be sure to have another policy in place so you don’t experience a gap in coverage. Certain insurers charge a minimal cancellation fee for customers who end their policies early, but that’s quite rare.

What Happens When You Switch Car Insurance Mid-policy?

Switching car insurance isn’t bad, whether it’s in the middle of your policy or near its end. There’s no real difference between changing providers at various points, other than that those who switch mid-policy may save money compared to those who wait out their contracts.

Drivers rarely find that switching car insurance is a bad move, so there are plenty of reasons to consider different companies. We’ll outline a few of the best reasons to switch below, along with a few reasons you may not want to switch car insurance.

Reasons To Switch Car Insurance

Here are several reasons why it’s worth switching your car insurance policy:

• You found a cheaper policy: Motorists often change car insurance providers due to receiving more competitive rates elsewhere. That’s why it’s smart to regularly compare car insurance quotes online from various insurers.
• You found better service or coverage: Certain auto insurance carriers have stronger service standards, claims processes and coverage than others. Switching car insurance isn’t bad for those who’d like to see these improve.
• You added vehicles or people to your policy: If details of your auto insurance change, expect to see rates from your current insurer change. Shop around to learn whether other choices could be better than your current insurance company.
• You found potential discounts: Car insurance discounts can greatly decrease the cost of coverage. If you find that you’re eligible for additional savings opportunities, switching car insurance could be a good idea.
• Your credit score went up: Credit history plays a major role in determining car insurance premiums in all states except for California, Hawaii and Massachusetts. You could see large rate drops if your credit score improves, so it’s worth seeing which company will reward you the most.
• You moved to a new area: Your car insurance costs will change if you relocate, so this is a good opportunity to consider new coverage options to find better rates.

Some motorists look for new car insurance companies to take advantage of perks their current providers don’t offer. Accident forgiveness, varying deductibles or policy terms and savings opportunities for bundling auto coverage with home insurance may be reasons to leave an old insurance provider.

New drivers in particular should consider shifting between different car insurance providers, as those who’ve recently gotten their first driver’s licenses pay higher rates on average unless they carefully look through their options.

Reasons Not To Switch Car Insurance

It’s pretty uncommon to find situations when switching car insurance is bad, but a few do exist. Read on to learn when it’s worth sticking with your current provider instead of switching insurers.

• Your rates are already low: There’s little reason to change car insurance companies if you’re already receiving the best rates and are fully satisfied with your coverage.
• Your policy has a short-rate penalty: A short-rate penalty is a fee auto insurers charge policyholders who cancel their contracts early. While most providers don’t impose short-rate penalties, drivers with this type of contract should wait to cancel until the end of their current policies.
• You have a generous loyalty discount: While a loyalty discount doesn’t guarantee you’re paying the lowest price for car insurance, it rewards drivers with competitive rates. Don’t switch to a new provider if you’re paying comparable car insurance premiums, as you’ll lose all the benefits of your loyalty discount.
• You have an open claim: While it’s possible, switching car insurance is a bad move if you have an open claim with your current provider. The information about your at-fault accident will be given to future insurers, so you’re unlikely to receive better rates.

There are very few situations when switching car insurance is bad, which is why many motorists change providers each year. Yet if you’re satisfied with your current rates and the car insurance coverage and customer service you’re receiving, you can stick with your current option.

For the most part, switching car insurance gives you the chance to get better rates, better service and coverage from a different provider. Typically switching your policy has few downsides. However, there are some situations where this may not be the right choice for you. We recommend getting quotes from many different car insurance providers and comparing your options before changing insurers.

Switching Auto Insurance Companies

Since switching car insurance isn’t bad, you may want to compare car insurance quotes to learn about potential savings opportunities. We recommend State Farm and Geico as two providers that combine quality coverage with some of the market’s lowest rates.

State Farm: Best Customer Experience

AM Best financial strength rating: A++
BBB rating: C-

State Farm is the country’s largest car insurance company thanks in part to its discounts and stellar customer satisfaction scores. The provider has the highest score of large insurers in the J.D. Power 2022 U.S. Insurance Shopping Study℠, showing that drivers are generally content with State Farm’s service standards. The company is also known for a broad range of local insurance agents that make State Farm feel like a much smaller provider.

Keep reading: State Farm insurance review

Geico: Best for Budget-Conscious Drivers

AM Best financial strength rating: A++
BBB rating: A+

Many drivers select Geico for its affordable rates and mostly positive reviews. The company has an exceptional financial record and earns above average scores in almost every region of the J.D. Power 2022 U.S. Auto Insurance Study℠. Motorists generally believe Geico’s insurance claim payouts are fair and timely, and the company earns acclaim for offering cost-effective rates.

Keep reading: Geico insurance review

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

• Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
• Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
• Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
• Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
• Customer experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

Our credentials:

• 800 hours researched
• 45 companies reviewed
• 8,500+ consumers surveyed

*Data accurate at time of publication.