Switching your auto insurance company

Drivers switch their insurance for a variety of reasons (not on price alone). You may not like your agent's service, have difficulty making payments to the company, have a renewal coming up, have a claims dispute, had your rates raised and other differences of opinion between you and your carrier. Remember that saving on auto insurance is a process and does involve some homework, but the rewards can be substantial. Even if you decide to keep your current carrier, peace of mind, knowing that you have a competitive policy with a carrier that will not fight your claim is valuable. To avoid problems, the steps to shopping for auto insurance below should always be followed and in order:

A. Learn your coverage limits
B. Comparison shop
C. Stay with your current carrier
or:
C. Go with a (more professional) lower cost carrier
then:
D. Cancel your old insurance policy

Personal story: I canceled the theft portion of my auto insurance policy since I had installed a kill switch on my truck. Several weekends later, I forgot to flick the kill switch, and the truck was stolen and dismantled. Keep your theft coverage, unless you have an older beater.

When switching car insurance companies, make sure they are able to sell you the policy online and are not just giving you an "estimate." Just be truthful about your driving record, the mileage on your car, etc. so they won't have to do a "rate up" later.

A. Learn your coverage limits.You can only do a fair analysis of your auto insurance premiums by comparison shopping policies with the same level of coverage. Learn about more auto insurance terms.

Your insurance policy has the amount of liability coverage you have as a series of three numbers, called split limits. Suppose your contract coverage reads 20,000/40,000/10,000. In this example, $20,000 is the maximum the insurance company will pay for bodily injuries to any one person in the accident. The maximum amount paid for all bodily injuries, no matter how many people are hurt in the accident, is $40,000. The maximum amount paid for damage to someone else's property (Property Damage) in the accident is $10,000. Your Bodily Injury and Property Damage Liability may also be shown as a single limit, e.g., $70,000 Combined Single Limit (CSL) or double limits 20,000/40,000.

Bodily Injury: Covers people listed on your policy who has an at fault accident which causes an injury to either the occupants of another car or a pedestrian. the Bodily Injury liability coverage part of your policy will pay for the medical bills, lost wages, expenses, pain and suffering, etc. up to the policy limits.

Property Damage: Covers damage to another person's property as a result of an accident in which you or someone else covered under your policy is at fault up to the policy limit. Examples are other vehicles, landscaping, fences, traffic signs, etc.

Medical Payments: Typical coverage will pay for the costs of necessary medical expenses, physician, hospital, and some rehabilitation and funeral costs for any persons in an accident up to your policy limit, regardless of who is at fault. Typically, these medical expenses must be incurred within three years of the accident's occurrence. Coverage is usually cheap with limits between $1,000 and $100,000. You may not need this is you have comprehensive health and disability insurance.

Personal Injury Protection (PIP): Coverage is a form of no-fault insurance required in states with no-fault laws. This coverage is a broader form of medical payments insurance. It pays for medical care, lost wages and replacement services for the injured party (for example, paying for a babysitter for children while a mother is hospitalized). It pays regardless of who is at fault in an accident.

Uninsured Motorist Bodily Injury: Covers you for bodily injury that you and your passengers sustain as a result of a negligent uninsured or hit and run driver. You'll need a police report stating that the other party is uninsured and at fault.

Uninsured Motorist Property Damage: Covers you for property damage to your vehicle as a result of an accident with an uninsured and at fault driver. Like uninsured motorist bodily injury, you'll need a police report stating that the other party is uninsured and at fault.

B. Comparison shop. Make sure you are getting a quote for the same levels of coverage and deductibles. Does the policy include towing, rental reimbursement and uninsured or underinsured motorist? Have them fax or mail a copy of the quote, then call your existing insurance company to see if they will match it. If your old company will give you a batter rate, you might save money and avoid time spent switching companies.

Factors affecting your premiums Auto insurers compete in risk selection along with price and service. That's why there is a lot of info gathered below that helps the company determine if you are a high risk or lower risk. Carriers want as much data about you as possible.Also find out if the quote you are given is an estimate or a real time rate. Some companies could give you a rate and then raise it shortly after with more accurate information. Does the company have online binding?

C. Stay with your current carrier and review in a year or upon changes. If you move, add or subtract drivers, add or subtract cars, divorce, marry or remarry, etc. again take the time to make sure you are getting the best rate. If a large number of people in your coverage group file claims during a given year, your rates will likely rise. That same coverage group may not file many claims with a different carrier, and their rates may the same or even go down. So do not be offended or mystified if your carrier suddenly raises your auto insurance rates without you being in an accident or having claims.

or:

C. Go with a lower cost carrier. Many states mandate continuous liability coverage, and you can have problems if you have a lapse in coverage while driving. Review the new policies coverage limits in writing to verify you got what you paid for. Try out their service and see if the savings was worth the switch. You won't know for sure until you make the move.

D. Cancel your old insurance policy. Inform your insurance company in writing, specifying the date you want the policy canceled. In some states, your new agent must notify your old agent of the cancellation. Some companies ask that you send back the actual printed policy or that you complete a cancellation request form to sign and return. Make a second follow up call to your agent or the company immediately to check on the status of your cancellation. Don't just walk away from your old policy without formally canceling it. You will get a notice from your insurance company 30 days before your policy renewal. Contact your old carrier within this time and let them know you have gone to a lower priced auto insurance company. Most states allow a policy cancellation fee (called a "short rate" penalty) if you cancel your policy before renewal, with the exception being if they change your rates or coverage. If you don't want to wait until renewal and the savings justify the change, try and cancel at the end of your payment cycle. You may need to show your old carrier copies of a new insurance identification card or the Declarations Page of your new policy. Your new company will be able to time the onset of your new policy to coincide with the cancellation of your old coverage.