When shopping for the best auto insurance companies, you want to put as much time into understanding how your policy works as you do into finding new rates. Know in advance how much coverage you need, as well as how your policy works in terms of length of coverage and cancellation requirements.

With attention to detail, switching to the best auto insurance company for your needs will be a breeze.

You’ve probably heard that shopping around for the best auto insurance can save you money. This is true, and it’s good to know that the best auto insurance companies don’t want you to switch focus just to get your business.

The best auto insurance companies want you to focus on getting the auto insurance coverage you need.

If you’re not happy with your current auto insurance coverage, don’t simply focus on how much you’ll save by switching to get the best auto insurance.

Breaking Up With Your Current Auto Insurance Company and How to Move On

Ending a relationship can create a combination of feelings like frustration, confusion, anger, anxiety or, on a positive note, freedom. But when your relationship with your auto insurance company comes to an end, it might cost you some dough and could affect your standing with your next provider, regardless of who’s responsible for the breakup.

When your insurer breaks up with you

When an auto insurance provider wants to end things, it usually comes in the form of a notice of cancellation or non-renewal. Whether it’s a cancellation or non-renewal notice you receive, start searching for a new provider immediately.

Cancellation means termination of coverage during the life of the insurance policy. According to the Insurance Information Institute, an insurance company cannot cancel a policy that has been in force for more than 60 days unless:

  • You do not pay your premium.
  • You have committed fraud or misrepresented yourself in your application.
  • Your driver’s license has been revoked or suspended.

If you receive a notice of non-renewal, it means your insurance provider will not continue coverage after your current policy expires.

According to the Texas Department of Insurance, a company cannot refuse to renew your policy unless it has been in effect for at least 12 months. If you initially bought only six months of coverage, your company must stick it out for another six months so that you have a full year of coverage. Texas law also requires your insurance company to give you 30 days’ notice if it plans to refuse to renew your policy after the end of those 12 months.

When you break up with your insurer

When the tables are turned and you’re the one ending the relationship, put it in writing. Your bank account and credit report could be affected if you don’t give your insurance provider enough notice.

If you try to dump your auto insurance company by ignoring it, this tactic could backfire. Even if your policy term is about to end, it doesn’t mean you can terminate your policy by simply stopping payments. According to Edmunds.com, your jilted insurance company will automatically bill you in advance for the next term’s premium if you fail to send a notice of cancellation. The insurer will cancel your coverage if you don’t pay, thus dinging your credit.

By giving your insurance provider a written notice of cancellation in advance, you can avoid penalties and demonstrate to your new provider that you’ll adhere to your new contract agreement.

Moving on

Your motive behind leaving your auto insurance provider might be to get a lower premium with another company, but be sure to review your insurance contract beforehand. It may include a short-rate cancellation fee.

According to Oregon’s Department of Consumer and Business Services, this short-rate provision may require you to pay a penalty for early cancellation to cover what an insurance company spent on you in the beginning of the relationship — in other words, the costs it incurred in issuing the policy. If your policy contract does not include a short-rate provision, you’ll be reimbursed for a portion of any premiums you paid in advance.

Regardless of who ends the relationship, it’s important to find a new insurer immediately. You don’t want to violate your state’s financial responsibility laws or be held personally liable if you’re involved in an accident. You might even consider looking around before the breakup to see what’s out there and obtain insurance quotes from several auto insurance providers. Just make sure your new coverage kicks in before your old coverage ends.

If your insurance company sends you a notice of cancellation or non-renewal that you think is unfair or if you want a further explanation, the Insurance Information Institute suggests calling your insurance company’s consumer affairs division. If you’re not satisfied with the explanation, call your state’s insurance regulator.

How to Get the Best Auto Insurance

Be sure to consider the following, according to Edmunds.com:

  • Review your own auto insurance needs.You may have had car insurance coverage that extended beyond your state’s requirements, so it’s important to make sure you have as much coverage through your new policy. Otherwise, you’re not really getting a good deal. Be sure to opt in to any extras you had under your old policy, like comprehensive coverage, before comparing auto insurance quotes.
  • If you’re switching because you’re relocating, know your new state’s minimum insurance requirements.Make sure your new auto insurance policy will meet the state laws for bodily injury liability, property damage liability and any uninsured/underinsured motorist insurance requirements.
  • Evaluate the potential new auto insurer.Ask friends or local body shops for recommendations, review the auto insurance company through your state’s insurance regulator and check consumer satisfaction surveys using resources like J.D. Power and Associates.
  • Remember to cancel your old policy, but not until you’re sure that the new policy has gone into effect.Remember, a lapse in auto insurance can lead to higher premiums, may hurt your chances of obtaining a new policy and will leave you uncovered if you get into an accident.
  • Switch your proof of auto insurance card (wherever you keep it).

The Best Auto Insurance Companies Will Help You to Be Aware of Penalties

The best auto insurance policies contain a short-rate cancellation provision. Essentially, this is a penalty for early cancellation. There’s a good chance your insurer will require you to purchase a policy for at least six months.

If you cancel your auto insurance policy early, you could get hit with a penalty that’s 10 percent of the annual premium, according to the Oregon Department of Consumer and Business Services. Before you switch to a new auto insurance provider, ask about this provision. If there is a penalty, you might not save money by switching companies.

Again, when shopping for the best auto insurance companies, put as much time into understanding how your policy works as you do into finding new rates. With attention to detail, switching to the best auto insurance for your needs will be a breeze.