How to Switch Car Insurance (2024)

You feel awkward. You want to leave. But you can’t think of a nice way to say, “Hey, this isn’t working for me.”

No, we’re not talking about a bad date. We’re talking about sticking with a car insurance company you can’t stand! Whether they’re overcharging you or the customer service sucks, sometimes you just gotta break up with your old insurer and move on to one that’s a better match.

Breaking up is tough—even if it’s just with your insurance company—but we’re here to help! (Think of us as your automotive fairy godmother.) We’ll teach you everything you need to know about how to switch car insurance so getting your new policy will be as easy as waving a magic wand.

Choose When to Switch Car Insurance

There are two main reasons most people want to switch car insurance: Either their premiums are too high or they’re dissatisfied with the company itself.

(If it’s the second one, here’s a hint: It’s always the right time to stop working with a crummy company!)

But let’s go back to that other reason—price. Car insurance can be expensive. Of course you’ll notice if your premium jumps up all at once, and that’s definitely a great time to shop for new insurance. But premiums can also creep up slowly over time. There’s nothing worse than a creepy premium, so it’s good to shop around for better rates once a year.

Here’s something you may not have thought about: Sometimes, major life events affect your premiums—and the company that was giving you the best deal before isn’t anymore. It’s a good idea to consider switching car insurance if you’ve:

• Moved
• Bought a car
• Gotten married
• Gotten divorced
• Added a teen driver to your policy
• Lost a loved one who was on your policy

Look at Your Current Coverage

We mean really look at it—not just the part that tells you how much to pay every month. (By the way, if you pay for several months at a time, you can actually get a discount and save some money. #budgetingwin.)

Double-checking your current policy now will help you know what to look for when you start shopping for a new one. After all, it’s kind of hard to shop for something when you don’t even know what you need.

So ask yourself questions. Are you just carrying the minimum liability insurance? (You need more.) Did you buy collision but not comprehensive? (You might need both.) Figure out if you have any gaps in coverage or other things you want to change, and make a shopping list.

Decide How Much Coverage You Need (and What Kind)

A lot of people don’t know how to switch car insurance because they don’t actually know what they need to buy. (That’s why we wrote an article that’s all about choosing how much car insurance you need!) We’ll just recap the basics here. You need:

• At least $500,000 in liability insurance (we’ve heard too many stories from people who know firsthand that the state minimum liability isn’t enough)
• Comprehensive insurance with a policy limit equal to the value of your car (it’ll pay to repair or replace your car if it gets ruined by bad luck, like if a tree falls on it or there’s a hailstorm)
• Collision insurance if you still owe money on your car and/or haven’t saved three to six months’ worth of expenses in a fully funded emergency fund (if you’ve checked both of those boxes, you can probably skip this coverage because you’ve got enough cash on hand to repair your car if it gets damaged in an accident)

Think about your deductible too. That’s how much money you pay before the insurance company starts chipping in. A high deductible means you pay more up front for repairs if something happens to your car, but you’ll pay lower monthly premiums. Unless you’re super accident-prone, it’s worth having a high deductible to save a little cash every month.

Shop Around for a New Insurer

Here’s where you can really tell who’s a financial nerd and who’s a free spirit. Nerds love this part. Comparison shopping is your thing. This is where you shine. So the thought of getting quotes from five, six or even 10 insurance companies doesn’t bother you. You just want to know that you’re getting the best deal, whatever it takes.

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For free spirits, this sounds like zero fun. In fact, you just remembered that you have to go do that thing, and you better leave right now or you’re going to be late . . . Whew, that was close! You almost had to shop for car insurance. Ew.

Nerds, listen up—the free spirits are right! Shopping around for car insurance is a lot of work. And if you’re being totally honest, it’s not the best use of your time. But free spirits, the nerds are right too. It’s important to get the best deal on car insurance. (Hello, that’s why you wanted to switch in the first place!)

That’s why at Ramsey Solutions, we recommend working with an Endorsed Local Provider (ELP). These independent insurance agents are experts on how to switch car insurance. They’ll do the hard work for you, so you can get the best rates and save hours of time you would’ve spent getting your own quotes.

Plus ELPs live and work all across the country, so you can find an agent in your neighborhood. That means you get to support a local business—not a big company that treats you like a number on a spreadsheet.

Negotiate With Your Old Insurer (If You Want)

We love a good bargain—and getting a good bargain starts with asking for one. If you got a low quote and your only complaint about your current insurer is the price, tell them what the other guys are offering. They may be willing to match or even beat that offer. (Of course, if you hate your insurance company and are just over it, it’s totally okay to skip this step and move on to the next one.)

Check for Cancellation Fees

We know, it’s awful for the insurance company to make one last grab at your wallet as you go. But sometimes it be that way. If they’re going to charge you an arm and a leg to cancel your policy, it may not be worth switching right this second.

Instead, wait until it’s almost time for your policy to expire. Then buy a policy with the new company and let the old policy expire on its own. In fact, that brings us to our next point . . .

Get the New Policy Before You Cancel the Old One

Can we be real with you here for a second? (That’s a silly question—of course we can!) Look, it’s really, really stupid to drive around without insurance. Even if it’s “just for a few days.” Because it doesn’t take a few days to wreck your car, damage someone else’s property or—worse—hurt yourself or someone else in an accident. It takes a few seconds, tops.

And driving without insurance is practically begging Murphy to show up—you know, Murphy, the “anything that can go wrong, will go wrong” guy. He’d love nothing more than to total your car and cost you thousands.

So before you go scampering off to cancel your old insurance policy, make sure your new policy has taken effect. And that you’ve printed your new vehicle ID cards and put them in the glovebox in case you need them!

Cancel the Old Policy

Now that you have a copy of the new policy and your vehicle ID cards are actually in your vehicle, you can cancel your old policy. (Woo-hoo!)

But before you celebrate too hard, make sure the old policy is actually canceled. Some insurance companies let you do this over the phone. If that’s the case, ask for written proof too. That way if they accidentally try to bill you later, you can show that your policy really was canceled.

Other insurance companies require you to submit a written cancellation letter. So check their rules and follow them to the letter (pun intended). Then your old insurance will be canceled and you’ll be ready to ride off into the sunset with your new insurance policy in hand.

Ready to switch your car insurance? Get a quote from an ELP today.

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.