Switching insurance companies can be complicated, but it shouldn’t be. Changing your auto or home insurance to a new company may be impacted by several factors. Many significant life events can influence your insurance needs–things like having a child, getting married, moving, or buying a house, for example.
Switching insurance companies is not as easy as getting a new pair of sneakers. Switching insurance companies can have lasting implications and getting a new policy at a better price shouldn’t cause anxiety if done correctly.
Debating Switching Insurance Companies? Consider These Points First
Apples To Apples Comparison:
If you are thinking about switching insurance companies, first make sure that you are making an apples to apples comparison. This means when you are trying to make an accurate comparison, you should first make sure the two items you are evaluating are evenly comparable. For example, let’s say you were trying to determine wealth by comparing two different people’s paychecks. This may not be the best method of comparison if one person gets paid biweekly, and the other person gets paid weekly. Similarly, if you are not making a straight apples-to-apples comparison, then you might be faulting a watermelon for not being a good apple.
The same thing applies when you are thinking about switching insurance companies–the two policies you are comparing should have the same limits, the same deductibles, and the same types of coverage. If one policy costs you way less, but also covers you way less, it may not be in your best interest to switch insurance companies.
Quality of Carrier Comparison:
Look at the J.D. Power rating of the company you’re considering switching to. JD power conducts surveys of customer satisfaction, product quality, and buyer behavior for many industries, including the automotive industry. One company may offer a cheaper policy, but if that company has a horrible rate of paying claims, then what good does it do you? The higher J.D. Power rating one carrier has, the more likely that company is to pay on a claim. Remember, the best price is not necessarily always the best deal.
Financial Rating Comparison:
Look at the A.M. Best rating of the company to see if they are financially stable. A.M. Best is a rating agency focused on the insurance industry. They evaluate factors and issue financial strength ratings based on companies’ ability to pay on claims. You may think you have found a much cheaper insurance company to switch to, but it will do you no good if the company could go bankrupt at a moment’s notice!
An insurance company does not have access to your complete motor vehicle history, but they do have the ability to pull your most recent accidents, convictions, and tickets before offering you a policy. The insurance company evaluates how much of a “risk” you as a driver will be to them before issuing you a price.
Make sure any new insurance company you’re evaluating has your complete driving record and the price they are quoting you takes everything on it into account. You don’t want to find out that your driving history raises the price of your premium significantly after you’ve gone through the trouble of switching insurance companies.
Canceling the Old Policy:
Make sure your new policy is in place before canceling your old policy. This will guarantee that you are insured solidly without any lapse in coverage from one policy to the next. And to avoid unnecessary problems (or being overcharged!) don’t just let your old policy lapse for nonpayment–make sure to contact your insurance company and cancel it.
If you have an umbrella policy, you’ll want to make sure that it hasn’t been impacted by you switching insurance companies. Some insurance companies won’t issue an umbrella over policies issued by other carriers.
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