Need better insurance coverage? Learn how to switch car insurance providers today.
Should you switch or renew your car insurance? It all depends on the situation. In some, you might want to at least compare other quotes, for example, if you change circumstances; your premium has risen or you have a new car. This guide explains when it might be better to renew or change car insurance, and what to look for.
Find out more about switching car insurance
How do I switch my car insurance company?
It’s a straightforward matter of cancelling one policy and taking out another. However, to make it more simple, it’s helpful to consider a few tips.
- Know whether you want to switch or renew. You naturally want to know that changing your policy is worthwhile, before cancelling your current cover. This means having a suitable replacement ready.
- Know when to switch. Timing matters when changing insurers. The best time to do it is when your current policy is coming up for renewal, as this means you will receive the most value from your old policy and won’t incur cancellation fees. Make sure your new policy starts as soon as possible after the old one runs out, to avoid being without insurance. Simply cancel your policy, rather than renew it, when the time comes and take out a new policy elsewhere.
- Have a new policy ready. Don’t cancel your insurance until you find a replacement. Compare different car insurance policies online; review other insurers and their levels of cover, and make sure you can get cover. Some insurers might decline especially risky drivers.
- Know how to cancel your policy. You must notify your current insurer, usually in writing, that you will not be renewing your old policy. Read the product disclosure statement (PDS) or contact the insurance company to familiarise yourself with the cancellation process and know how long it takes.
With these three things in place, you can switch policies, while minimising the amount of time you spend without insurance. After this, making the switch is easy.
Step-by-step guide to changing car insurance companies
- Decide you want to look at other options. Whether you feel your premium is too high; your cover insufficient or your car insurance just isn’t right for another reason, deciding to look around is the first step.
- Compare car insurance online to find a new policy that’s right for you.
- Examine your current policy and other policies side-by-side and work out how much you will save. If you come up empty-handed after doing this numerous times, it might be preferable to renew your car insurance.
- Decide when you want to make the switch. You can time it to take advantage of any discounts from the new company and to minimise fees from your old one. Most importantly, you want to make sure you aren’t left without car insurance for too long.
- If you want to switch car insurance mid-policy, check for cancellation fees and similar conditions in your old policy
- Cancel your old policy and sign up for the new one. Insurance policies are usually cancelled from when the company receives notice in writing, while a new policy takes effect on a start date designated by the insurer. Ideally, this is on the same day.
Why should I change insurers?
There are various reasons you may want to change insurers.
- Are you unhappy with the current level of service? Commonplace issues with service include, too little or too much communication; problems when when making a claim; unhelpful customer support or difficulty with offshore call centres.
- Do you want better value for money? It’s important to reassess your needs each year when you renew your policy. Your insurance may have been great value for money when you first got it, but premiums and circumstances change and it may no longer suit your requirements.
- Have your circumstances changed? Maybe you have a new young driver raising your premium; you’ve moved to an area with a higher or lower crime rate or you now have a different source of income. A lot of things affect insurance costs and needs, so changing car insurance policies is a good way to adapt and find a better price.
- Are you eligible for discounts? You may be eligible for discounts that your current insurer doesn’t offer. These could be multi-policy discounts, for insuring multiple products with the same provider; freebies that come with a new policy; periodic bargains or anything else that looks tempting.
- Is your current policy the cheapest on the market? It may be as simple as that. New brands enter the market continually, and offering low prices is a great way to steal customers away. Allowing yourself to be stolen by a competitor might lead you to a great deal!
Even if you think none of the above applies to you, it’s still worth comparing car insurance providers. There are many companies in the marketplace, but circumstances change and you’re usually only with one car insurance provider at a time. It’s reasonable to assume there’s a more competitive deal somewhere, and you just need to find it.
Tips for switching car insurance
- Is the switch going to be worth your while? Make sure it’s worth the effort, by looking at how much you can save versus the administration and cancellation fees you may be charged. If you’re only going to save a couple of dollars on your premium, you might be better to wait until renewal time before you change car insurance.
- When is your new policy’s activation date? Check the activation date on your new policy and make sure it is before your old policy expires.
- When should I cancel my old policy? Cancel your old policy at the end of a payment cycle, so you don’t have to worry about chasing a refund or attracting cancellation fees.
- Should I change insurer every year? Unless you’re receiving a good discount, loyalty can be overrated. If you can find a better deal with another insurer, let your current insurer know and see if they are willing to match it. If not, make the change. Other than the hassle and loss of loyalty discounts, there’s no reason not to change car insurance each year if there’s a preferable option out there.
- Is the cheapest policy right for me? Don’t base your reason for changing insurers on price alone. Make sure any new policy you look at also offers the right cover. A cheaper policy might be problematic if it’s not as good as your old one.
- Should I review my cover each year? Yes. Make it a habit to review your car insurance every year before renewal time. You will often see premium increases at this time, as insurers usually count on customers renewing their policy automatically each year without comparing other options.
- I already have car insurance, will it cover my new car? Unfortunately, you usually need to take out a new policy for a new vehicle. However, if you wish to take out cover with your current insurer rather than changing to a new provider, you may be able to secure a multi-vehicle discount. If you have more than one car, you might want to switch rather than renew all of them at once.
- Should I change policy after having an accident? Be careful about switching car insurance after an accident. Your claims history is available to your new insurer, meaning you won’t necessarily get a clean slate by changing car insurance. However, having an accident certainly qualifies as a changed circumstance, so you might want to take the opportunity to shop around.
Can changing policies save money?
Going online and comparing car insurers means you can save a significant amount of money by playing the field. If your current insurer won’t offer you a better deal or match a quote you’ve found, then tell them you’re thinking of switching car insurance policies. If that doesn’t prompt an offer or a better deal, it might be time to go. Other ways to save money include:
- Reviewing your current level of cover. Reviewing your current cover can be a great way to save cash. If you have kids under 25 or you were under 25 and you have not yet updated your policy, you could be overspending on your insurance. Your car may be overvalued on your current policy, (ie the replacement value of your car may have decreased), so make sure your details are up-to-date and avoid paying too much.
- Knowing the different cover options. When you switch car insurance policies, it’s important to understand the options available. For example, choosing a higher excess will lower your premium. Being protected against reasonable hazards and making constructive claims for damage is usually how to get the most out of your car insurance policy, rather than always going for the cheapest option.
- Do you review your cover annually? If the answer is no, you could be wasting hundreds of dollars each year. Always check how your policy compares to others in the market. If you want to save money, there’s no reason to renew your car insurance without first comparing other options.
What isn’t my insurer telling me?
Knowing how the industry operates can help in your search for a better deal. The following are some things your insurer won’t necessarily tell you, but are useful to know.
- Insurers share information between themselves, so don’t lie about your claims history or driving record.
- Insurers calculate the replacement value of your car based on the cheapest quote they can find, so you might find different valuations from different insurers. If you are unhappy with your insurer’s valuation, get quotes from 3 different providers and submit them to your insurer.
- Personal items such as stereo systems aren’t usually covered by your car insurance. If stolen or damaged, try claiming them on your house and contents insurance instead.
- To attract new customers, many insurers offer better deals than their current customers receive. To find out if this is the case with your insurer, apply for a quote online as a new customer and compare it with what you currently pay.
- Most insurance renewal statements do not list last year’s premium, so make sure you look at your last renewal and compare what you paid then to what the premium is now. Once you do, you might be surprised to find your car insurance premium has increased without you realising.
How do I cancel my current policy?
You should only cancel your current policy, once your new policy is ready, to avoid any gaps in your cover.
- Notify your insurer in writing.
- Pay any cancellation or administration fees.
- Make sure you inform your insurer in writing that you are cancelling the policy. Otherwise, if you just fail to renew it without contacting your insurer, you might be considered in default and end up with a black mark on your credit record.
How do I switch car insurance mid-policy?
Some circumstances may force you to change insurers before your current policy expires. You could be changing jobs; moving locations; changing drivers on the policy; switching cars or you may have found the deal of a lifetime and can’t afford to wait.
Whatever the reason, if you change car insurance mid-policy some insurers charge a cancellation fee and may refund varying amounts of the unused premium. These refunds take time, so make sure you are not waiting for your refund to pay the premium on the new policy.
Steps to changing car insurance mid-policy
If you’re switching car insurance before your policy finishes, follow these steps:
- Contact your current insurance provider or go through the product disclosure statement to find out what’s involved in cancelling your insurance mid-policy. You need to know how to cancel; when the cancellation takes effect; what the associated costs are and whether you will receive a refund.
- Decide on your new policy. You should have a replacement policy ready to go before cancelling your old one. Compare the savings or additional benefits of the new policy with the cancellation fees of the old one, to make sure it’s beneficial. Refunds usually take time, so don’t plan to pay for the new policy with a refund from your old one.
- Sign up for the new policy and then cancel the old one. If possible, try to have your new policy take effect as soon as the old one ends, without any gap in cover.
It is better to renew or change car insurance policy?
Weigh up the pros and cons, before jumping ship. On the plus side, you may find a better deal elsewhere or your current insurer may come back with an improved offer. On the downside, you may lose any discounts you currently have or your no-claims bonuses may not be transferable.
If nothing else, it’s probably worth shopping around to see if you can do better, but do consider trying to work it out with your current insurer before making the switch. Your provider will often be happy to extend discounts, if it means keeping a customer, particularly one who has been loyal for many years and not made any claims. Give them an opportunity to match or improve any new deal you have found and you may be pleasantly surprised at what they have to offer.