When you purchase an insurance policy, your insurer will writer the policy for a term - usually six months or a year. You have the choice of paying your insurance premium all at once, or dividing it up into smaller installments that you pay monthly. Most insurers either renew at the end of their terms, or they shop around for a better rate and switch when their policy expires. But what happens if you find a better insurance rate and want to switch insurers mid-term?
If you change insurers after you've already renewed your policy with your present insurer, be prepared to face a penalty. Depending on how long you have left on your policy and its terms, your insurer may reserve the right to impose a fee for early termination. Furthermore, whether or not you have to pay an early termination penalty, you may have to wait a while before receiving a refund for prepaid premiums.
If you wish to switch insurance carriers, it may be better to wait until the end of your current policy, so you know exactly the day your present coverage ends and your new coverage will begin. Otherwise, you could face the risk of a lapse in coverage, which is not only illegal, but could also leave you financially vulnerable in case of an accident. If, however, you decide that switching carriers mid-term is beneficial for you despite potential cancelation fees, do not cancel you current coverage until you make absolutely certain that your new coverage will begin immediately following the cancelation. Also, follow the cancelation procedures outlined in your policy, as your present insurer will likely need a specified amount of time to close your policy and issue any refunds that may be due to you.
Finally, before you make a decision to change insurance providers, check your new policy for hidden fees, and compare the coverage amounts to your existing policy. If you find that your new insurer offered you a much lower price at the expense of your coverage amounts, the deal you're getting may not be as great as you think. Discuss your coverage needs with your existing agent, and find out if you could modify your policy to avoid switching carriers mid-term.
Does Having a Trampoline or Pool Increase My Home Insurance Cost?
Before you put in a swimming pool or purchase a trampoline for your children, consider the additional cost to your home insurance rates. Coverage for a house that already has a pool is much higher ...
Read More →
Tips on Staying Sane During the Insurance Claim Process
Combining home and auto insurance is a great way to save money, and it can also save you a bit of sanity— especially when it comes time to pay the monthly bill. But all of that peace of mind ...
Read More →
How does the Insurance Company Determine the Cost of Each Driver on My Policy?
Thanks to online comparison tools, car owners looking for the best auto insurance coverage can look at competing quotes from a range of insurance companies. Many wonder how a company determines the...
Read More →