Comparing car insurance quotes at renewal

When to shop for car insurance quotes

You can compare quotes at any time. New Jersey's buyer's guide makes the point plainly: you do not have to wait for renewal. In practice, a few moments make the most sense.

• A few weeks before renewal. Your insurer normally sends the renewal offer with the new price before the term ends. That gives you a firm number to beat and time to compare without rushing.
• After a big life change. Moving, marriage, a new car, a teen getting a license, or a change in commute all change your price and may change which insurer is cheapest.
• When your record improves. An accident or ticket dropping off your record after a few years, or a better credit-based insurance score in states that allow it, can make other insurers more competitive.
• When your insurer raises the price or nonrenews. A large increase is a signal to compare. If the insurer decides not to renew, you must find new coverage before the policy ends.

Shopping mid-term is allowed too. If you switch mid-term, the main cost is the way your old insurer calculates your refund, explained below.

How many quotes to get

Triple-I suggests at least 3 price quotes, and the California Department of Insurance tells drivers to always get several. More quotes help when your situation is unusual, such as a young driver, a recent DUI or a high-value car, because companies price these risks very differently.

There are three main ways to get quotes, as the NAIC describes:

Using a mix of channels gives the widest view of the market. Whatever channel you use, give the same accurate information each time. The NAIC warns that the final premium can change if the details on your quote were wrong.

Apples-to-apples checklist for comparing car insurance quotes

1. Use the same liability limits for bodily injury per person, per accident and property damage on every quote.
2. Match uninsured and underinsured motorist limits and any medical payments or personal injury protection.
3. Use the same collision and comprehensive deductibles, or drop those coverages on every quote, not just some.
4. Include the same extras, such as rental reimbursement, roadside assistance and gap coverage.
5. List the same drivers and cars, with the same garaging address, annual mileage and use (commuting, pleasure, business).
6. Give the same driving history for every driver, including tickets and accidents, so no quote is based on missing information.
7. Compare the same term length. Convert every quote to a six-month or yearly figure before comparing.
8. Ask which discounts are included and whether any depend on things you have not yet done, such as joining a telematics program.
9. Add every fee, including installment charges, policy fees and any charge for paying by card, to get the true total.
10. Get each quote in writing with the insurer's full legal name, as the California Department of Insurance advises.
11. Check the insurer's licensing and complaint record with your state insurance department, and its financial strength rating.

Our coverage checklist helps you decide the coverage to put into every quote request.

Before you switch: cancellation and refund rules

Cancelling your own policy is generally allowed at any time. What varies is how much of the unused premium you get back and how quickly.

How refunds are calculated

When you have paid ahead and cancel early, the money for the unused part of the term is called unearned premium. Insurers calculate the refund in one of two main ways:

• Pro rata. You get back the full unused share. For example, cancel exactly halfway through a term you paid in full, and you get half back.
• Short rate. The insurer keeps a penalty on top of the earned premium. New York's Department of Financial Services says that, on average, the extra cost is about 10% of the unexpired premium. Some insurers instead charge a flat cancellation fee plus a pro rata refund.

Ask your insurer which method it uses before you cancel. If it uses short rate, switching at renewal rather than mid-term avoids the penalty.

Examples of state refund rules

Rules differ by state. Your state insurance department can tell you how refunds work where you live.

When your insurer cancels or nonrenews

Insurers face tighter limits than you do. The NAIC notes that a new policy can typically be canceled for any reason only during the first 60 days or so, and after that usually only for reasons such as nonpayment or dishonesty on the application. For nonrenewal, the insurer must give notice before the term ends, typically about 30 days, though the period varies by state.

State examples:

• Texas: insurers must give 10 days' notice before cancelling, and at least 60 days' notice of a nonrenewal.
• New York: a permitted mid-term cancellation needs at least 20 days' notice, or 15 days for nonpayment, and a nonrenewal needs 45 to 60 days' written notice.
• California: once a policy is issued, it can be canceled or nonrenewed for only 3 reasons: fraud or material misrepresentation, nonpayment, or a substantial increase in the hazard insured.

If you think a cancellation or nonrenewal is unfair, contact your state insurance department.

How to switch without a coverage gap

A gap of even a day can be costly. Driving uninsured is illegal in almost every state, an accident during the gap would not be covered, and an NAIC shopping guide notes rates are lower for drivers who stay continuously insured.

1. Buy the new policy first. Choose a start date that is the same day the old policy ends, or earlier.
2. Get proof of insurance. Download or print the new ID card before the start date.
3. Cancel the old policy in writing. Ask your old insurer to cancel as of the new policy's start date, and get written confirmation.
4. Stop automatic payments. Make sure the old insurer will not draft another payment, but do not stop it until the cancellation is confirmed.
5. Update your lender. If the car is financed or leased, send the new insurance details to the lender.
6. Check your state's reporting. Some states' motor vehicle agencies track insurance electronically. If you get a notice saying you are uninsured, respond quickly with proof of your new policy.
7. Watch for the refund. Track any unearned premium owed to you and follow up if it does not arrive.

Mistakes to avoid when shopping at renewal

• Comparing different coverage. A cheaper quote with lower limits is not a cheaper version of the same thing.
• Letting the old policy lapse first. Always overlap, never leave a gap.
• Leaving out a driver or ticket. The price can change later, and misrepresentation can be grounds for cancellation.
• Ignoring fees and payment plans. Two quotes with the same premium can cost different amounts once installment fees are added. See payment options.
• Forgetting bundles and discounts. Ask about discounts and compare bundled and separate policies.
• Accepting the renewal without reading it. Check that the coverages, drivers and discounts on the renewal still match what you need. See reviewing your coverage.