Switch Now. Save Now?

What happens if you find a better car insurance deal before your current policy expires?

So you already have a car insurance policy, but thought you'd get a quote just to see what you could be saving. The quote comes in $450 lower than what you are paying now, but you still have 6 months on your current policy. Should you wait for your policy to run its course, or should you switch insurance companies now?

Well, that depends.

The cancellation fee

Most insurance companies have cancellation fees if you stop your policy mid-year. Those charges will vary depending on the company, the price of your policy and how long you've been insured by that provider.

If you find that you can get a better deal from another company, it's worth checking out what your current insurance provider would charge you to cancel your existing policy. You may find you could save more if you switch now.

When does switching make sense?


To switch, or not to switch. That is the question. To find out what makes sense for you, follow our easy "When-To-Switch"* formula. It will give you an idea on whether it's worth changing companies mid-policy or if it's best to stay put until your policy is up.

The "When-To-Switch" Formula

Step 1: Call your current car insurance company and find out what they would charge you to cancel your policy.

Step 2: Take your current policy premium and divide it by 12. If you pay for your insurance in monthly installments, just use the monthly payment. Now multiply that number by the amount of months you have left on your policy. Write this number down, you'll need it in Step 4.

Step 3: Now take the premium total from the new company's policy and divide it by 12. Then multiply it by the number of months you have left on your old policy.

Step 4: Take the final number from Step 3 and subtract it from your final number in Step 2. This represents your total savings over the remaining months of your policy.

Step 5: If what you are saving is less than your cancellation fee, there is no point in you switching companies until your current policy expires. If the savings is higher than your cancellation fee, you may be better off switching.

Let's walk through the formula, with an example:

Let's say you have a policy with an annual premium of $1873, and to cancel this policy after 6 months, your insurance provider says they'll charge you $126. If you found a low cost car insurance policyfor $1390 would switching be worth it?

Step 1: $126
Step 2: $1873 / 12 x 6 = $936.50
Step 3: $1390 / 12 x 6 = $695.00
Step 4: $936.50 - $695.00 = $241.50
Step 5: A $241.50 savings is greater than the $126 cancellation fee, so switching mid-year is worth a discussion.

What do you do if you want to switch now?

As a rule of thumb, don't cancel your current policy until you have the new low cost car insurance policy price confirmed and a start date set up with the new company. Once you know the exact date your new insurance will be in effect, arrange to cancel your current policy on the same day. This way you won't have any gaps in coverage.

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* The "When-To-Switch" formula and the information in this article is for general reference only. Insurance companies vary and may have different rules about what is covered and under what circumstances. Please check with your insurance provider for exact coverage rules, regulations, service fees and guidance if considering switching car insurance providers mid-term.

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