How to Change Your Insurance Provider

Posted on Dec 9th 2009, 03:46 pm, under Auto Insurance 101

A few weeks ago, we talked about the benefits of changing your auto insurance provider. There are several different reasons why you might do this. You may have found a company that offers the same coverage for less money, or your current provider doesn't give you satisfactory service. If you want to get the best insurance for your money, it really pays to reassess your coverage every few years and shop around for better deals on insurance.

Whatever your reason, once you decide to switch, you'll find that changing companies is relatively easy. However, the process does contain potential pitfalls if you're not careful. Here's what you have to do, step by step:

1. The most important thing to do, as mentioned in our previous article, is to ensure that you already have a new policy with your new provider before you cancel your old policy. If you forget this crucial step, it's considered a lapse in your auto insurance coverage. This can seriously damage your credit rating. In addition, a lapse in coverage is against state law, and you will probably face a heavy fine as a result.

2. Email or write your former insurance provider and tell them to cancel your plan. Ask them to provide you with a dated letter of confirmation as well. To prove that you already have new coverage, give them the name of your new insurance provider and the number of your policy with this firm. Otherwise, your former provider will have to report you as an uninsured driver to the Department of Motor Vehicles, as required by law.

Never walk away from an old insurance policy without canceling it formally. If you don't notify your provider, you'll just be billed continuously and your coverage will be canceled due to your failure to pay.

3. Try to cancel your old policy before the renewal date. This way, you won't have the additional hassle of getting back the unused portion of your premium. However, if you cancel your policy after the renewal date, remember that they owe you a return premium. Follow up with your old insurance company for this amount. The downside is that they may return it with a 5 to 10 percent surcharge (otherwise known as a short-rate return premium).

4. Finally, replace your insurance ID cards. If you replaced your old policy in mid-cycle, your auto ID cards will still have the original expiration date on them. Change these out for new cards as soon as possible. This way, you'll have valid identification in case you get into an accident.