If you are unhappy with your auto insurance provider, switching car insurance after an accident may be an option for you. You can discontinue your policy even if you have a current open claim or were at fault in an accident. In fact, you can seek a new insurance company anytime you are unhappy with your current policy. However, you will still need to work with your previous insurance provider to settle open claims related to the recent accident.
Taking Steps to Switch
Your auto insurance can increase by up to 32 percent after an auto accident even if you were not at fault. When faced with this higher premium, you may be tempted to shop around and see if you can get a lower rate rather than pay hundreds of dollars more to your insurance company every year.
Ideally, your auto insurance company should offer both outstanding customer service and reasonable policy rates. Most experts recommend getting quotes from at least three to five companies before committing to a new policy. You should also request quotes from an independent agent, a traditional agent, and an online-only agent.
Once you get a quote that meets your needs, research the company online through sources like the Better Business Bureau. Read customer complaints and keep an eye open for possible red flags. Otherwise, you might be looking for a new auto insurance company again sooner rather than later.
Remember that when you apply for auto insurance, the company will require you to answer questions to determine your risk. This will include inquiries about prior claims, accidents, and traffic tickets. Failure to disclose a recent accident when seeking quotes for a new policy constitutes insurance fraud, which can result in serious criminal penalties.
If you are able to obtain a lower quote from another insurance provider, find out if your current insurance company will lower your current premium to match. If you decide to leave after hearing their new offer, request to end your policy in writing and indicate the desired end date. Some insurance companies may require a different process to discontinue your policy.
Depending on when you cancel your policy, you may be eligible for a prorated refund from your current insurance provider. However, you should also make sure you will not be charged a cancellation fee when you end your policy. If so, you can generally avoid the fee by switching at the end of the policy term. You may also owe financing charges if you pay your policy monthly rather than all at once.
You should consider whether you may lose discounts after switching auto insurers so you can factor that loss into your calculations. For example, many insurance providers offer an annual loyalty discount of anywhere from 2 to 5 percent. You could also lose a discount if you save by bundling your home and auto insurance, unless you are planning to switch your provider for both policies.
If your coverage lapses between policies, you may have to pay a higher premium. What’s more, if you have a gap in coverage and get in an accident, you do not have an auto insurance policy to cover the collision. Start your new policy on the same day you end your old policy. You can even receive penalties in some states if your auto policy lapses for even a day, according to the website Insure.
Ask about cancellation fees and refunds. Find out upfront about any fees or possible refunds from your current insurer. Many companies allow you to cancel for free at any time, but some might charge a fee if you cancel mid-policy.
Don’t forget to let your lender or the leasing company know about the change if you finance or lease your car. They will likely require proof of your new policy so they can ensure that you have continued to meet coverage requirements.
Ways to Lower Your Auto Insurance Premium
While increasing your deductible is associated with higher out-of-pocket costs when you have a claim, you’ll pay less overall for your auto insurance premium. Try these strategies:
- Increase your deductible. According to the blog Money Under 30, the Insurance Information Institute reports that you can save 40 percent on your auto insurance by increasing from a $200 to a $1000 deductible and about 30 percent with a $500 deductible.
- Ask about discounts. You should ask your insurance adjuster if you’re taking advantage of all available discounts. For example, you may qualify for a lower premium rate for limited mileage or multiple drivers. Often, insurance companies have reduced rates for drivers who travel fewer than 10,000 miles per year.
- Shop around for a lower rate. The ValuePenguin blog recommends comparing auto insurance quotes at least once a year.
- Take a defensive driving course. Car insurance companies may give a discount if you take a defensive driving course. In some states, this type of education allows you to have points removed from your driving record, according to the website AutoInsuranceQuote.
- Look for accident forgiveness. You might want to seek out a policy with a clause for accident forgiveness. On average, motorists have a car accident about every 18 years. If you do have a collision, this type of clause prevents your premium cost from going up.
- Adjust your coverage. If you have an older car, you can also save by dropping comprehensive and collision insurance. If you finance your vehicle, however, your lender likely requires you to carry full auto insurance coverage.
- Compare perks. Look for car insurance companies that offer special benefits. For example, the NerdWallet blog reports that NJM replaces customers’ vehicles with a brand new version of the same make and model after a theft or break-in. Drivers only have to pay for the deductible to qualify.
Steps to Take after an Auto Accident
If you have an accident, you must notify your insurer right away. Follow the claims procedure detailed in your customer policy paperwork. Failing to report an accident, even one with no immediate injuries and only minor property damage, can result in serious problems if the other driver tries to sue you in the future. Your insurer may refuse to cover these costs if you fail to notify them about the accident in a timely manner.
An auto accident can have a serious impact on the cost of car insurance. Make sure to weigh the pros and cons when you consider changing insurance companies after a claim.
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