We find more and more car insurance policyholders reflecting on their insurance and considering alternatives! Car insurance providers are inviting consumers to switch their insurance providers to others offering more attractive or cheaper car insurance products. There is less brand loyalty in the car insurance industry and we can expect that there will be many more switches between car insurance companies!
Before you switch your insurance, it is worthwhile to check with your existing insurer to see if he or she can match or do better than the new quote. Should you decide to continue with the switch – you would need to ask a few questions:
What do I need to know when switching car insurance?
It is important to recognize that once you have decided to commit yourself to changing car insurance providers, you need to be alert to potential pitfalls and dangers. Even though you might save on your monthly insurance premium – you might suffer financial harm if you take short cuts and not pay enough attention to performing this switch.
Communication and Notification of switching car insurance
You can only “switch” car insurance if you are insured. This brings us to the most important aspect of car insurance cover – you will need to consider what your existing car insurance policy says about termination of the agreement with them…
What does your car insurance policy say about termination?
A car insurance policy is an agreement between the policyholder and the insurer. In this you agree to specific terms and conditions and both have specific prescribed obligations. No switch should be performed without first considering the implications thereof on your existing insurance agreement!
Ask the following questions:
• What does my policy stipulate about termination?
• Is there a prescribed notice period? Do I have to provide a written note of cancellation?
• If I pay a yearly premium – will I receive a refund if I terminate early?
• Are there any cancellations fees?
• Is there perhaps a “cooling off” period?
What are the pitfalls and dangers when switching car insurance?
• The Uninsured Black Hole / Coverage Gap
If you are not cautious with regards to the dates when your existing car insurance policy is terminated, and when your new policy takes effect – you may find yourself in an uninsured black hole. Vehicle loss or damage during this time could spell financial disaster. If you leave a gap, even the slightest of accidents while you’re uninsured could wipe out any new policy savings you had anticipated.
• Cancellations fees / Loss of refund
You will need to take note of the terms and conditions of the existing policy to avoid paying more than is necessary on cancellations fees or risk losing refunds. Even if you don’t have to pay a penalty, when you cancel in the middle of a policy term you’ll have to wait on any refund of already paid premiums. Keep in mind that your old insurer will make the calculations on exactly when coverage ceased, meaning you could end up with less of a refund than you expected.
If the contract is not effectively terminated, you might incur further administrative effort and unnecessary time clearing your name as a bad creditor! Never just stop paying your premium – this could show up badly on your credit report.
Advice/ Suggestions
• If you proceed with the switch, make your cancellation a clean one!
• Notify your existing insurer and follow the cancellation steps as outlined in your policy.
• Be careful and coordinate the dates between termination of the old policy and activation of the new one.
• Give notice of cancellation in writing – This will protect against confusion and give you a record to fall back on if there’s any problem with the change.
• Ask for confirmation in writing as to the date that cover will be there no more!!
• Never cancel your existing policy until you know exactly when your new one begins.
With the necessary caution you should easily switch your car insurance to the new provider. Pay a little bit more attention in doing the research on providers – and a lot more attention to the terms and conditions of your car insurance policy! This should allow you the necessary cover and financial protection you deserve!
