One simple way to save money is to periodically shop around for new car insurance. If you’ve been with the same auto insurance insurer for a while, you might be tempted to stay there. However, doing so could mean paying more than you need to for auto insurance.

Shopping around and comparing rates at least once a year is one of the oldest and most reliable strategies to see if you’re paying too much for auto insurance. It’s probably not worth switching insurance companies if the savings will be less than $5 per month. But if we’re talking twenty dollars a month, that’s two hundred and fifty dollars a year or more, so that’s something to consider.

Car insurance companies often do not penalize policyholders who choose to switch carriers. If you switch auto insurance providers, you might potentially save 10%-20%, or about $165-335 annually.

Although not all drivers will automatically save the maximum amount by switching driver providers, many will still find substantial discounts. USAA, for one, asserts that its members save an average of $700 per year on their insurance premiums by switching to them.

There isn’t much of a hassle involved with making the change from one auto insurer provider to another. It will go smoothly if you follow these instructions.

1. Research and Compare Auto Insurers

It’s recommended that you look into your options thoroughly before making any changes. First, it’s a good idea to compare auto insurance quotes from multiple companies. To receive an accurate comparison, enter the same coverage categories, limits, and deductibles from your current policy as you did when you got your quotes. That rule is an exception if you’re in the market for a whole new type of auto coverage to fit your needs.

Gathering many quotes can allow you to determine if you are paying too much for your current auto insurance coverage. Independent insurance agents are another option who can handle these tasks on your behalf.

While cost is certainly a consideration when selecting an auto insurer provider, other considerations, such as the number and nature of customer complaints and the range of available coverage options, should not be overlooked. Even if you find a company that offers a lower cost, you don’t want to have to switch again in a few months because of poor service or a hassle when filing a claim.

Further, it’s always a good idea to keep a look out for bonuses that could prove useful down the road. If you don’t have any accidents for five years, GEICO, for instance, will lower your discount by 22 percent.

2. Decide if the Time is Right

You can transfer auto insurance companies at any car, not just when your current policy expires. The following scenarios may leave you wondering how to change car insurance policies.

• Your insurance rates are now dependent on factors such as where you keep your car overnight, how far you travel, and where you typically drive. A cheaper insurance premium might be possible if you contact many companies and explain the changes you’ve made to your driving behavior over the past year.
• Incorporating a car or a driver: When you add a new driver or car to your policy, or when you bundle policies, you often qualify for a discount reduction. It could be worthwhile to switch insurer companies if you qualify for a better discount reduction by doing so.
• You’ve reached an important life milestone, like turning 25 or getting married or buying a house, and you should think about making the transition. Your auto insurance rates will change after experiencing any of the above, and in some cases, you may even see a decrease.
• Soon, it will be time to renew your insurance policy: In the last couple of rates before your policy is up for renewal, check around to see if you can save money.

3. Talk to Your Current Auto Insurer

Get in touch with your current auto insurer provider and let them know you’re shopping around for a lower rate before you switch. Check to see if your car insurance provider will match or beat the rates offered by other companies for the same coverage. It’s also a good opportunity to inquire about further discounts from your current insurer.

Investigate their cancellation policy if they are unable to negotiate with you. Cancelling an insurance policy may necessitate formalities, such as submitting a signed cancellation notice, depending on the insurer. If you get a new policy, don’t forget to notify your previous insurer so they don’t keep billing you for the old one.

4. Ask About Cancellation Fees and Refunds

Inquire about any up-front costs, as well as any reimbursements that may be available, from your insurance provider. While you can cancel your auto policy at any time without penalty from the vast majority of major insurers, some do levy a cancellation fee if you do so within the policy’s “effective” period.

You need to know if you’ll be charged anything if you decide to cancel. Many companies do not have cancellation companies, however there are those that do, usually around $50. 10% of any residual premiums is also possible.

If you cancel your Esurance policy before its expiration date, for instance, the company may charge you a fee of $30 to $50, or 10% of your outstanding premium balance.

Unused auto insurance premiums are often refunded by companies without a fuss before the policy expires. Suppose you purchased a yearly policy but changed your mind after six months; your insurer is obligated to pay for the remaining six months of coverage (minus a possible cancellation fee).

5. Avoid a Lapse in Coverage

To avoid a gap in auto insurance coverage, you’ll need to exercise extreme caution. Customers who have gone without auto coverage for an extended period will be hit with increased rates from insurers. To get around this, just schedule the start date of your new policy to coincide with the termination date of your old one.

It is common practice for insurance coverage to begin at midnight on the policy’s effective date. To avoid a lapse in insurance, it is important to have your new policy go into effect on the same day you purchase it. A gap in insurance of even one day might have serious consequences.