How To Switch Insurance Companies

Sometimes your current insurance company doesn’t end up being the best option for you going forward. It’s natural for consumers to switch insurance companies a few times in their lives, if not more. There are several reasons consumers switch. Their previous insurer may not offer all the coverage options they now need, or the customer may move to an area where their previous coverage isn’t applicable. Other times it’s as simple as dissatisfaction with the insurer’s service or a simple matter of price. Whatever your reasons, you should never feel like you’re locked into your insurance coverage. Let’s take a look at the steps required to switch insurance companies.

First Steps To Switch Insurance Companies

It may seem like the first step is to cancel your current insurance coverage, be it homeowners, auto or whatever you want to discontinue. However we strongly suggest you keep your current coverage while you shop around and cancel it as the very last step. Before you can cancel your existing coverage, you have to find a better option to move to. Cancelling after you find a new company will also ensure there are no coverage gaps. Instead, your first step is to write a list of your current needs as they may have changed since the last time you shopped around. With this list in hand, we recommend contacting an insurance broker to shop different options that fit your needs. The advantage you receive when you choose an insurance broker is that they work for several insurers, not just one. This allows the broker to present you with several options that fit your coverage needs, and they can display price quotes along with them. Choosing the best coverage based on price or services is much easier this way. If you choose an exclusive or “captive” agent that only works with one company, it’s hard to truly know if you’re getting the best deal possible.

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Additional Considerations Before Cancelling

As you shop coverage options and begin to narrow them down, remember there are some additional considerations that may effect your new policy.

Change In Discounts

Many insurance customers take advantage of bundling discounts. Essentially an insurance company will give you a discount if you buy more than one insurance product from them. For example, an insurer might give you a slight discount if you bundle your homeowners and auto coverage with them. They may offer a deeper discount if you bundle boat, RV or umbrella along with the home and auto policies. Bundling discounts vary from company to company, so it is best to ask your broker about exact discounts. Remember, if you’re switching your homeowners policy but want to keep your current auto coverage and you’re receiving a bundling discount, you will lose that discount when you move one policy to another company. This can make a difference in your overall insurance costs, and we recommend calculating the difference carefully.

If your current insurance company has accident forgiveness, or if you’ve driven with a monitoring device to lower your rates, these savings will not transfer to your new policy either.

Your Insurance History Goes With You

If by chance you want to switch insurance companies to try to avoid a raise in rates due to a claim or accident, you should know the switch might not make much of a difference. Insurers can access claims and accident data even if it was filed with another company. This helps them evaluate your insurance history and the risk of insuring you in the future. While you still may see savings, they may not be as substantial as you hoped. Remember, it is still your right to switch companies whenever you want. The fact that your insurance history goes with you should not deter you from switching insurance companies if you so desire.

Cancellation Penalties

As we just stated, it is your right to switch insurance companies whenever you want. However, there are some potential penalties that come with switching if you don’t do it at the right time. Ideally the best time to switch is before your yearly policy renewal date. We recommend providing 30 days of notice to your previous insurer, which means you should start shopping around two to three months before your renewal date. Cancelling before or at your renewal date ensures you’ll pay no penalties for cancelling your coverage early. Just make sure you cancel before the exact renewal date. If the renewal date passes, your current insurance company will auto-renew your coverage and you will be subject to penalties if you still decide to cancel.

Other times you can cancel your insurance coverage at the midterm date, or roughly halfway through your yearly policy. If you pay bi-annually, you may not be subject to any cancellation fees. Even if you pay yearly, your current insurance company will be able to prorate your coverage so you only pay for the months you used the coverage. Again we recommend checking your current policy before you switch insurance companies. This will help you determine whether or not you’re subject to cancellation fees.

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Time To Move Your Coverage

Once you’ve shopped around and found a suitable insurance alternative, it is time to make the move. Plan it around your old insurance’s renewal date if possible, and provide advance notice that you’ll be cancelling your coverage. At the same time, make sure your new policy goes into effect before the old one ends. This will ensure you’re not subject to any coverage gaps. Switching insurance companies can require some work, but it is well worth it if you find superior pricing or receive the exact coverage you and your family needs.

Final Thoughts

Here at Square State Insurance, we are an insurance broker, which means we work with several different insurance companies. What this doesn’t mean is we work with less-reputable companies that provide cut-rate insurance coverage. We only select the top carriers so we ensure our customers receive the coverage and customer service they deserve. If you’re unhappy with your current coverage, or just curious about what else is out there, we can help. As we outlined above, you don’t even have to do anything to your existing coverage right now. Let us see what alternatives are out there for you. Contact us today to learn more about switching insurance companies to the best option for your needs.

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