The auto insurance marketplace is very competitive, with many carriers trying to earn the business of new customers. Consumers will change auto insurance companies from time to time, but you have to be very careful during the process so you don’t negatively harm or change your financial protection.

Some auto insurance carriers will offer much better rates than what you are currently paying, but be sure to look before you leap. In other words, don’t sell yourself short by paying less money for an inferior policy.

Our Top 5 Tips:

If you decide to change auto insurance companies for any reason, here are some great tips to make sure you come out ahead at the end of the process.

• Check Coverage Levels – If you are leaving your current insurance company due to price, don’t forget the old saying “you get what you pay for” before making your final decision. Your new insurance quote might be less expensive than your current plan, but does it afford you the same level of coverage that you have been enjoying? Is everything that you need covered for your car going to be protected the same way in the new policy? Checking coverage levels is very important before you change auto insurance companies.
• Timing Is Everything- If you change auto insurance companies, don’t accidentally leave a gap in coverage between the end of the old plan and the start date of your new policy. Doing this even unintentionally could result in a serious financial risk if something happens during the transition phase. Let’s say for example, you arrange for your old auto policy to expire on 12/31 and the new one is set to start on 1/1. But what happens if your former policy’s terms are such that a 12/31 cancel date is as of 12:00am on 12/31? Under this scenario, if your new plan starts on 1/1, you will go an entire 24-hour period without insurance. Be sure to know the actual cancel provisions in your policy before you change auto insurance companies.
• Don’t Forget To Cancel Old Policy – As you transition from one auto insurance policy to another, be sure to cancel your old plan when the new policy takes effect. Some people believe that by just not paying the premium on the former policy anymore, your insurance will be cancelled. While it’s true that you will eventually get cancelled for non-payment of premium, your old insurance company may hold you responsible for payments up to the delayed cancellation date. This situation may also affect your credit score, so be sure to let your former company know you are cancelling upon the issuance of the new plan.
• New ID Cards – Your new auto insurance policy won’t help you if you get pulled over with your old ID cards in your glove box. Before it slips your mind, remove your old ID cards from the car and replace them with the new ones. You will thank yourself if you are later put in a position to present them to a police officer.
• Informing Your Bank Or Leasing Company – Before you change auto insurance companies, confirm that the limits of the new plan meet or exceed the requirements of your bank or leasing company. Failure to maintain the minimum limits that you agreed to in the contract might cause these parties to repossess your car. In addition, don’t forget to tell your bank or lease company the details of your new policy such as the name of the carrier, policy number and the address of the home office. Scan in a copy of your new insurance card and email it to them. This is a great way to make sure they have all the information they need.

Changing Auto Insurance Doesn’t Have to Be Stressful

Changing your auto insurance company can be a good idea if it saves you money or provides other positive benefits. But making this move without doing your homework first can cause you a lot of problems down the road. By confirming that you are getting the same level of coverage on the new policy and that the timing of the change doesn’t leave you exposed (even for a short time), you will prevent a lot of possible headaches.

Also, don’t forget to communicate with your former company about the cancellation or fail to inform your bank or leasing company. Lastly, secure and store your new ID cards in the car. Following these simple tips will ensure a smooth transition as you enjoy some extra cash in your pocket from your savings!