Auto insurance companies promising to save your money

With so many auto insurance companies promising to save you money, it would be surprising if you weren’t tempted to look into switching auto insurance companies.

And you should, because there’s very real potential for a significant cut in your insurance premiums.

But when can you cancel your auto insurance? The good news is that you don’t necessarily have to figure out when your current policy expires and then wait for that to happen before moving to a new insurance company.

Here’s what you need to know when switching auto insurance companies.


Switching auto insurance companies? Know your policy

You can always switch insurers without a penalty if you do so when your current policy expires. If you go this route, don’t wait until the expiration date when switching auto insurance companies because you have to ensure that you maintain continuous coverage both to comply with state insurance requirements and because insurers might charge more if you have a gap in your coverage.

ALSO: 6 Tips for Keeping Your Teen Driver Safe

So shop for a new policy and then set the start date of that coverage to coincide with the expiration of the old policy. Policy documents should show the expiration date of your current policy, and the company or insurance agent can always tell you if you ask. Don’t forget to tell your current insurer not to renew your policy.


Know if there’s a penalty for canceling early

When switching auto insurance compenies, your current company will refund a prorated portion of premiums you’ve paid, although it may charge a penalty for canceling ealy. You could read your policy to find out if there’s such a penalty for switching auto insurance companies and how much it is, or just ask your company or agent.

Many insurers do not have a penalty, and, if your current carrier does, the charge may be less than the savings you’ll get from switching.

Just like when switching at the expiration of your current policy, you’ll want to make sure your new coverage kicks in at the same time as your old policy is canceled. A gap in your coverage will violate state insurance requirements and could boost your rates.


Shop around for the best auto insurance deal

Don’t just go with the company that has the most persuasive ads or that saved your friend or relative a bunch of money when switching auto insurance companies.

Each insurer weighs factors that affect auto insurance premiums differently, and there are a lot of factors, such as where you live, driving record, gender, credit history, age, whether you’re married and own your home, what kind of vehicle you drive, what you use your car for, how much you drive and how much coverage you want.

So the company that provides the lowest rates for one driver or in one place might be nowhere near the best deal for another or elsewhere.