Is It Bad to Switch Insurance Companies? [& When Should You Switch]

If you’re wondering if it’s bad to switch insurance companies, you’re probably dissatisfied with your current provider. But is your fear warranted? You’ve probably heard all of the horror stories about people getting hit with fees when they tried to switch their car insurance. Can that happen to you?

Luckily, you don’t have much to worry about when switching insurance companies. Here’s everything you need to know to successfully change your auto insurance plan to another agency.

Why Do People Switch Insurance?

There are plenty of motives behind changing your insurance provider, but most of them boil down to a single reason—personal preference. That said, here are a few different reasons why an insurance customer may want to switch their insurance:

• Lifestyle changes: It’s very common for a person to “outgrow” their current insurance package due to a lifestyle change. For example, say a person who was previously living in Virginia, paying $1,297 a year on car insurance, decides to move to New York City. 

In their new state, they would have to pay double what they used to pay on car insurance. And since they likely won’t use their car as much, they may decide to change to a policy that allows them to only pay for the months they need a car.

• Price changes: Insurance rates can rise for a variety of reasons. In the case of auto insurance, moving to a new state changes the average cost of insurance. But insurance rates can also just go up on their own as time elapses. At a certain point, it can become more cost-effective to switch insurance providers.

• Bad customer service experiences: Many insurance customers become frustrated after a bad experience with their provider’s customer service. In many cases, customers simply don’t feel listened to or that the insurance company doesn’t actually have their best interests in mind. 

When this happens, many will jump ship to an insurance provider that a friend or the general public has had a good experience with.

• Different benefits: Most insurance providers have similar coverage to one another, but they usually offer different benefits. As insurance customers look around at insurance packages, they may find a benefits offering that is more enticing than their current coverage.

The Pros and Cons of Switching Car Insurance

Having car insurance is always beneficial (for starters, it’s illegal to drive without it). But just like any big decision, there are pros and cons to switching your auto insurance coverage to another company. Here are the big things you should consider when weighing this decision.

Pros

• Lower costs: More than likely, you’re enticed to change your insurance because of a lower price point. By spending less on your car insurance, you can increase your personal savings or have enough money to spend on luxury items.

• Better coverage: Ideally, your new package will be cheaper and offer better coverage that suits your lifestyle.

• Less stress: When you switch to auto insurance that doesn’t break the bank and keeps you covered from accidents, you can feel less stress. And when you feel less stressed about your coverage, you won’t be as stressed on the road.

Cons

• New insurance agents: If you hate your insurance coverage but get along with your agent, switching means you’ll lose them. This can be particularly hard if you’ve built a strong sense of rapport and trust with your agent—something you’ll have to reconstruct from scratch at your new insurance agency.

• Termination fees: Some insurance companies charge termination fees whenever you cancel their services. This may be an additional cost you don’t want to pay.

• Lost loyalty discounts: Often, insurance companies offer loyalty discounts for long-time customers. By switching to a new agency, you’ll miss out on these benefits. However, the money you’re saving on your new auto insurance plan should be enough to compensate for those discounts.

The Best Times to Switch

When considering an insurance provider switch, there are several instances that offer more advantages. The best times to switch insurance packages include:

• When your current policy is about to renew. Instead of letting your policy renew, you can simply cancel and swiftly switch to your new plan.

• When you’re making a change to your policy. If you want to add another driver or vehicle to your insurance policy, that can be a great time to switch. You may find that another insurance provider can give you a better deal for your new insurance needs.

• After your current provider raises your premium. You don’t have to stick with an insurance plan if it gets too expensive. Each time your insurance costs go up, consider what it would cost you to switch to another provider.

• When you start bundling home, auto, and other insurance packages. Your current insurance may be great for auto, but leans toward unaffordable when you try to bundle. If you’ve just bought a house or are looking for a new life insurance plan and want to bundle it with your auto insurance, that’s a great time to switch.

• Your credit score changed. In every state that Cheap Insurance covers, aside from California, insurance companies use your credit score to determine how much to charge for insurance. So, if your credit score recently changed, you may want to shop around for new insurance packages.

What Questions Should I Ask When Looking for New Car Insurance?

There are a handful of essential questions everyone must ask when shopping for a new insurance plan. You should be able to get a direct answer about most of these questions from insurance agents, so make sure you ask them:

• How many drivers will this policy cover?
• What happens if I get in a car accident?
• Does this insurance provide coverage if someone is injured in a car accident?
• What out-of-pocket costs should I expect when I get into an accident?
• What perks and benefits come with this plan?
• What are the policy limits?
• Is this insurance tax-deductible?
• What is the monthly and annual premium?
• What are the circumstances where benefits are not paid?

What’s a Good Rate on Car Insurance?

Different states have different average rates for car insurance. For example, California drivers pay an average of around $1,800 a year for full coverage, while Texas drivers pay an average of up to $1,692 a year. On the other end of the spectrum, Maine drivers only pay an average of $889 each year.

To get a better idea of what auto insurance in your state is like, check out our state directory.

Does Switching Car Insurance Affect Credit?

No, switching your car insurance will not affect your credit. Many people fear their credit scores are affected when switching because many states allow insurance companies to view credit scores. However, this kind of check is a “soft pull”—an inquiry that doesn’t damage your credit score. As such, it’s not bad to switch car insurance companies as it will not affect your credit score.

Do I Get a Refund If I Cancel My Auto Insurance?

It depends. While it is possible to get a refund after canceling an auto insurance plan, it is reliant on a handful of factors.

• If you cancel before your policy is set to renew, you will often get a refund for the remaining months/weeks that would have been covered.

• If you change your policy to a cheaper alternative after already paying for your plan, you can get refunded.

• You can NOT get a refund if the insurance company cancels your plan after you failed to make payments.

Switch Your Insurance Today

As you can see, it’s not bad to switch insurance companies. In fact, it might even be a good idea. Looking for a more affordable and reliable insurance provider? Consider what Cheap Insurance has to offer. We try to offer some of the highest quality insurance at the best price point possible. Contact Cheap Insurance today!