Can You Switch Car Insurance in the Middle of a Policy?

Insurance rules are set state by state. This page uses the Texas Department of Insurance's published guide as a worked example because it states the rules plainly. Your own state's insurance department publishes the rules that apply to you.

The short version

1. Compare the new quote against your current coverage, line by line.
2. Buy the new policy with a start date on or before the day you cancel the old one.
3. Cancel the old policy, in the way the insurer requires, effective the day the new one starts.
4. Watch for the refund of unearned premium, and stop any automatic payments to the old company.
5. If you have a car loan or lease, send the lender proof of the new policy.

Step 1: Make sure it is a real comparison

A lower price can simply mean less coverage. Texas's guide explains what each part of a policy does: liability "pays to repair the other driver's car if you caused the accident"; collision "pays to repair or replace your car after an accident"; comprehensive "pays if your car is stolen or damaged by fire, flood, vandalism or something other than a collision." [1] It also notes that many coverages "have dollar limits," and that "you must pay a deductible for collision, comprehensive, and uninsured/underinsured motorist claims." [1]

Your current policy's declarations page has the summary. Texas describes it as "the first page of your policy," with "your coverages, dollar limits, and deductibles." [1] Matching those numbers on the new quote is the only way to know whether the savings are real.

Step 2: No gap in coverage

The main risk when switching is a gap in coverage. Texas requires drivers to carry liability insurance, with a minimum of $30,000 per injured person, up to $60,000 per accident, and $25,000 for property damage. [1] Texas's guide puts the timing rule simply: "Make sure you get a new policy before your old policy ends so you won't have a lapse in your liability coverage." [1]

In practice, that means setting the new policy's start date first, and then making the old policy's cancellation effective on the same day.

Step 3: Cancel the old policy properly

Cancellation, in Texas's definition, is the "termination of an insurance policy by the company or insured before the renewal date." [2] Buying a new policy does not cancel the old one. The process is set by each insurer, so asking the old insurer how it accepts cancellations, and getting confirmation, closes the loop.

A written confirmation that shows the effective date of cancellation is worth keeping. It is the record that proves when coverage ended if a bill or a lapse notice arrives later.

Step 4: The refund

If you paid ahead, part of that money was never used for coverage. Texas calls it "unearned premium": "the amount you paid in advance that didn't go toward coverage." [1]

Texas requires that "if either you or the company cancels your policy, the company must refund any unearned premium to you within 15 days after the date of the cancellation." [1]

Worked example, from Texas's guide: "Say your premium is $100 a month and you paid for six months in advance. If you cancel your policy after one month, the company would owe you $500 in unearned premium." [1]

Two things vary by state and by policy: whether the refund is the full unearned amount or reduced by a cancellation fee, and how quickly it must arrive. The policy's cancellation section and your state insurance department are where to check. If a fee applies, compare it with what you would save for the rest of the term.

If you pay monthly by automatic withdrawal, cancelling the policy may not stop the withdrawals by itself. The CFPB says you can revoke a company's permission to debit your account by telling both the company and your bank, and that "after you contact your bank and the company to clarify that you have revoked authorization from the company, any additional payments initiated by that company would be errors." [4]

Step 5: If you have a car loan or lease

A lender can require more than the legal minimum. Texas's guide says: "If you still owe money on your car, your lender will require you to have collision and comprehensive coverages." [1] If those lapse, the guide warns, "your lender will buy single-interest coverage and add the cost to your loan payment. This coverage is expensive and protects only the lender." [1]

Sending the lender the new policy's details right away avoids that.

Will shopping or switching hurt my credit?

Getting quotes does not lower your credit score. Experian, one of the three nationwide credit bureaus, says insurers use a soft credit pull that "doesn't affect your credit scores," including when "starting coverage." [3]

Who this fits

• Drivers who found the same coverage for less partway through a policy.
• Drivers who moved, sold a car, or changed how they use a car, and whose current insurer no longer fits.
• Drivers whose insurer sent a nonrenewal or a large increase.

Who should skip this

• Anyone whose new quote covers less. If the limits or deductibles do not match, the savings may be a smaller policy, not a better price. [1]
• Anyone in the middle of an open claim. Finishing the claim with the current insurer first keeps things simpler.
• Anyone whose cancellation fee outweighs the savings. For a short time left on the term, waiting for renewal can cost less.

Related reading

• How to shop for car insurance
• Why did my car insurance go up?
• Car insurance quotes without phone calls