You have just received an auto insurance quote. Congratulations! You have made a wise move. Getting online car insurance quotes are a free, easy and prudent way to save money. The quote you received indicates that will save a few hundred dollars if you switch car insurance companies. For you, that’s a no-brainer. It’s time to make a switch. It seems easy enough, right? Just ring up the insurance company and cancel. Well, there are some things you should do and some things you should not do when changing car insurance companies.
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Don’t Cancel Your Old Policy Before Your New Policy Begins
Now that you have decided to go with another auto insurer, you ring up your current car insurance company and tell them you’re through. You want your policy terminated, effective immediately. Problem is that today’s date is September 5th and your new policy doesn’t take effect until October 1st. Since you have canceled your old policy, it is technically illegal for you to drive your car until October 1st. And besides the fact it’s against the law, to drive without insurance, if only temporarily, is incredibly dangerous. If you get into an accident, you could be on the hook for several thousand dollars, if not more. So make sure your old policy doesn’t terminate before your new policy begins.
Do Make Sure To Officially Cancel Your Old Policy
The best way to cancel an auto insurance policy is to do so in writing. This way you have provided the auto insurer with official documentation. In the letter you can specify what exact date you want the coverage to end. This will prevent any potential mix-ups, like having double coverage or no coverage at all for a period of time.
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Don’t Wait Until Renewal Time To Cancel Your Policy
There is some debate about this point. There are those who argue that it is best to wait until your policy is up for renewal in order to cancel. That way you will avoid having the rest of the period pro-rated, in which case the auto insurer will send you a check for the amount you have already paid (which could take weeks). The problem with this advice is that if you find another policy that will save you hundreds of dollars, it doesn’t make much sense to wait until your policy is up. Waiting several months could end up costing you more money, as you would be still be forking over cash for the more expensive premiums. We believe that it is worth the hassle of waiting for a check in order to take advantage of some significant savings immediately.
Don’t Cancel Your Old Policy By Not Paying Your Bill
Some people figure that if they stop paying their old car insurance bills, the policy will automatically cancel. This lazy approach can actually have profound negative affects on your finances. By not paying your insurance premiums, your policy will lapse. This lapsed policy will negatively impact your credit rating, making it harder for you to take out a loan or get a new line of credit. At the same time, having a lapsed policy makes it harder for you to get car insurance in the future. A lapsed policy can flag you as a “high-risk driver" to car insurance companies, forcing you to pay higher premiums and/or it could result in you being denied coverage. So, pay your premiums until your old policy terminates. The lazy approach in this instance is very much the wrong approach.
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