What to do when changing your insurance company

What You Should Know When Changing Your Insurance Company

By Philip L. Franckel, Esq.

There are many reasons to look for a new car insurance company.  You may want to combine your car insurance with your homeowner’s insurance or renter’s insurance policy to get a discount or you may just be looking for cheaper auto insurance.

If you’re considered a risky driver, you may find a company that is more competitive for risky drivers.  For instance, Allstate is usually a little more expensive than other companies for regular drivers but may sell a policy to a slightly risky driver who might otherwise need a more costly assigned risk insurance policy.

Comparing Auto Insurance Policies

When comparing insurance companies, make sure you compare every item of coverage listed on the declarations page of your auto insurance policy, the page that shows your coverage and premium costs.  Make sure that all new coverage has the same limits as that listed on your current car insurance policy.

Make sure that uninsured and underinsured motorist coverage is the same as your liability coverage.

What Can Happen When You Change Your Auto Insurance Policy

Depending upon your state, the insurance company may have a certain amount of time such as 60 days to review your history and the insurance quote they gave you. You may have been quoted a premium lower than what you are paying now and you’re thrilled.

Two months later, you get a letter from your new insurance company saying that your new lower premium was only for drivers with a clean history.

Now, your new insurance company wants to increase your insurance premium to even more than what you were paying before. Worse, they could cancel you altogether and you’ll find that you are now assigned risk. Your old insurance company may not take you back.

What do Insurance Companies Look at When Considering Your Premium?

Besides factors such as your age, where you live, where your car is garaged, the type of car and many other factors, These are the major factors which can make a difference when changing to a new insurance company:

  • Accident history
  • Tickets
  • Credit history/score
  • Premium payment history (are you frequently late with your payments)

When to Cancel Your Current Car Insurance Policy

Do not cancel your current car insurance policy until payment for your new auto insurance policy has been received by your new insurance company and your new insurance policy is in force.  You don’t want to have a gap in your auto insurance coverage.

When switching to a new motor vehicle insurance policy, I continue my current insurance policy for at least 60 days while my new car insurance policy is in force because in NY an auto insurance company may cancel any new personal automobile insurance policy for any reason within the first 60 days, subject to the insurer’s established underwriting guidelines.

If you cancel your old auto policy and your new car insurance policy is cancelled within 60 days, you will be left without insurance and may become assigned risk.   After 60 days, I send a copy of the new declarations page, showing my new insurance coverage, to my old insurance company to obtain a refund of the amount paid since the start date of coverage with the new insurance company.

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This article is for informational purposes only, should be considered advertising, is the opinion of the author and is not meant to provide legal advice which cannot be provided without formally retaining a lawyer.

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