Suppose you’ve taken my advice, shopped your auto insurance with all the major insurance companies in your state, and you found a much lower rate. What is the best way to start your new auto insurance and cancel your old policy? This blog post will give you advice on how to avoid mistakes when changing auto insurance companies, like an accidental lapse in coverage, by canceling your old policy, before your new policy has started.

When you are considering switching to a new auto (or home) insurance company, here is what you should do:

Unless you hate your current insurance company or agent, give them a call, and tell them you have found a better price, and you are considering switching your car insurance.

I know some people feel bad about telling their agent they want to insure elsewhere, and may want to avoid what they expect to be an awkward conversation. So instead, they let their new agent help them fax or mail a cancel request to the old agent. But not speaking with your old agent, before you switch to the new insurance company, is not the best way to proceed.

Agents know auto & homeowners insurance is a competitive business, and a major expense for their clients. Good insurance agents act as professionals, and want to help you make the best insurance decisions for you — even if that means you should insure elsewhere, if you can get the same or better coverage and service for a much lower price.

As an agent, I always appreciated customers who called me before they switched to a new insurance company. It gave me an opportunity to keep them as a customer, by seeing if I was getting them the best price, all the proper discounts & coverage, and by explaining why staying with their current insurance may be the best option for them. Some customers would keep their insurance with me, but if they decided to change to a new insurance company, I knew the customers were making an informed decision to do so, knowing what they were giving up, by canceling their coverage, and insuring with another company.

There are 2 reasons you should call your agent before you switch insurance companies.

1. You may have benefits with your current insurance company your new insurance company will not offer you as a new customer.

For example, if you have been insured with the company for a period of time, you may automatically qualify for accident forgiveness, and your insurance company will not surcharge you if you, or any drivers in your household, are involved in an at-fault accident. If you are saving only a small amount of money by switching to the new insurance company, you may want to stay with your current insurance company for the added benefit of accident forgiveness.

Another benefit, some insurance companies may offer long term customers, is the guarantee they will not cancel your policy for claims. this benefit can save you a lot of money, if you have a string of bad luck with claims.

Your insurance agent is (or should be) an expert in the benefits and coverage for the insurance company your agent represents. Use the agent’s expertise to make sure you know what you are giving up with your old insurance company, before you switch to the new insurance company.

2. Allow your agent to make sure you are getting the best price the agent can offer you — it may be the best price quote you receive. Insurance companies have to charge the rates they have filed with your state’s department of insurance, so they can’t match another insurance company’s rate, if you find a better price. But your agent can look at your situation, and make sure you are getting the best price the agent can offer you. There may be new discounts you are not getting, or the insurance company may have a new auto insurance plan offering better rates.
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Also, have your agent review the lower-priced auto insurance quote (it is always best to get insurance quotes in writing) you received when you shopped. you may not be really saving money if the auto insurance quote has less coverage than you have now.

Again, use your agent’s expertise to see if switching to the new insurance company is really the best deal for you, or is in your best interest.

If, after contacting your current insurance company, it still looks like switching to the new insurance company is the best thing for you, call the new insurance company, and have them confirm the price, before you cancel your old insurance. The quote you received from the new insurance company was based on the information you gave them. The insurance company confirms the information you gave them by checking the motor vehicle reports, claims & insurance histories for all the drivers in your household. If you forgot about a ticket, or an accident you had was 2 1/2 years ago, instead of over three years ago, or there is a claim on your claims history of which you are not aware, your rate may be higher than you were first quoted.

Ask the new insurance company, before you pay to begin coverage, if they have checked your driving record, insurance history, and claims history, and if they can confirm & guarantee the rate they quoted you, on the effective date you wish to start coverage. Many insurance companies check these things before they take a payment from you. But there are still some companies checking your DMV records or claims history after the policy has started, holding you responsible for providing your information accurately, and raising your rate, or canceling your policy, when the insurance company finds undisclosed tickets, accidents, claims, or a shorter period of continuous insurance coverage than you told them.

Also, the effective date you start coverage can change your rate or eligibility, as discussed in this blog entry.

Once you have confirmed the price and paid to start your new auto insurance coverage, contact your old insurance company, and have them cancel your old policy on the same day your new coverage starts, so you have no lapse in coverage.

Some insurance companies will let you cancel a policy over the phone, but most companies require you to submit the cancel request in writing. It is your responsibility to cancel your old insurance coverage, and your new company cannot do it for you.

If you forget to cancel the insurance, and the old insurance company needs to backdate the cancel date of your policy due to duplicate coverage, you may need to provide written proof of the duplicate coverage, which your new insurance company can do for you.

It is not common, but if your old agent or insurance company refuses to cancel your policy in a timely fashion, after you have provided them with the proper documentation, you should file a complaint with your state’s department of insurance.

Shopping for better rates and changing auto insurance companies has never been easier. Don’t you owe it to yourself to make sure you are not over-paying for your auto insurance coverage? If you haven’t shopped your auto or home insurance in the last few years with at least 5 other companies, there is a good chance you are paying too much. Has your agent or company ever thoroughly reviewed your coverage, policy limitations, & exclusions? Use the ad below to find the major auto, home, & life insurance companies in your area, review your coverage, and get price quotes. If you don’t think you need to shop with other insurance companies, you need to read my webpage showing you the 8 things every insurance buyer needs to know here.

When was the last time you changed auto insurance companies? Did you have any problems cancelling your old auto insurance policy? Tell me about it. Comment on my facebook page. If you have questions and would like my help, you can reach me at help@smartshopyourcarinsurance.com. Follow me on Twitter for important insurance consumer news & new blog entries at CarInsWatch.