If you discover a different car insurance company that will cost you less money or you are unhappy with your current provider, you can follow a few simple steps and avoid any costly coverage gaps and mistakes.
Establish a New Policy First
Before you cancel your old policy, you should always make sure the new one is firmly in place. Don’t do anything to your old policy until you’re absolutely certain your new policy is in place and you’ve made your first policy payment.
Once you have established a new effective date, you should set up your new policy to start the day after the old one ends. You shouldn’t allow your coverage to overlap since you cannot cover a vehicle with two policies and trying to collect twice on one claim will create problems for you and the insurance companies.
Cancel Your Old Policy
Since you don’t want to pay for redundant coverage, you should explicitly state either verbally or in writing that you are cancelling your policy and the date it ends. As already mentioned, you should cancel your current policy the day before the new one is scheduled to begin.
Usually you should be able to just cancel your policy over the phone but some companies may require written notice.
You should also see if you have a balance on your policy and whether there are any refunds owed to you.
Depending upon your state you may still have to contact your Department of Motor Vehicles and inform them of your provider switch, if the new company doesn’t do it for you. Also, if you have lien on your vehicle, you will need to update your lienholder about the change.