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I've found a better deal on auto insurance, but how hard is it to switch from one insurance company to another?

Actually, it's very easy to switch auto insurance companies, and the process can be completed quickly. The key to making a successful transition from one company to another is to avoid any gaps in your insurance coverage by having a new policy in place before canceling your old one.

When you apply for auto insurance, you'll be asked to provide information about your vehicle, including the make and model and the vehicle identification number (VIN). You'll also be asked for the name of your current insurer and the types and amounts of coverage you have. This is spelled out on the Declarations Page of your auto insurance policy, so having this document in front of you will make it easier to fill out an insurance application.

Once your new policy is in effect, it's time to cancel your old policy. Your insurer will probably require you to provide proof of new coverage before doing so. You may be required to cancel your policy in writing by sending a letter to your insurer or filling out a cancellation request form. In some instances, your insurer may even require you to send back the actual insurance policy.

If you're thinking about switching policies, there are some other things to keep in mind:

  • Insurance laws vary from state to state, so contact your insurer to find out what guidelines you must follow before switching companies.
  • Although all standard policies allow you to cancel your policy at any time, switching your policy just before renewal will help you avoid incurring a cancellation penalty.
  • When you cancel your policy, your insurance company will prorate your latest premium payment up to the cancellation date and send you the remaining amount.
  • If you have an auto loan, the lender should be named as loss payee. Ask your new insurer to send proof of insurance to the lender right away.