Once in a while, you may need to switch to a new auto insurance carrier. If that time comes, you should be careful with the switch so that you don't make mistakes that can cost you money in the long run. Here are some of these mistakes.

Incurring a Coverage Gap

A coverage gap arises if you cancel your existing coverage before the new coverage takes effect. Auto insurers view such gaps suspiciously; anyone who goes for a period without auto insurance coverage is likely to experience rate increases in the future. Thus, before you cancel your current coverage, confirm that the new one is effective; a small overlap doesn't hurt either.

Not Researching Fees or Penalties

Depending on when you cancel your coverage, your current auto insurer might require some penalty or fees from you. Most companies that charge cancellation fees or penalties do so if you cancel your coverage in the middle of the policy term. Ask your agent or insurer about such fees before you terminate your coverage. If the reason for the switch is not urgent, you may save some money by delaying it for a few months.

Failure to Cancel Policy

When you switch auto insurance carriers, you shouldn't just stop paying the premiums to your old carrier; that is not how auto insurance cancellation works. You need to notify your insurer about your decision to terminate your policy, and the notification should preferably be in writing. Otherwise, the insurance company may treat your non-payment of premiums as a default, and not as a cancelation. Your "failure to pay premiums" will see your auto insurance rates rise in the future.

Not Asking For a Refund

If you cancel your policy in the middle of the term, which you have the right to do, you deserve a refund for the prepaid premiums. However, you might not get the premium refund if you don't request it. Don't forget this the next time you cancel an auto insurance policy midterm.

Keeping Your Agent in the Dark

Lastly, it usually pays to inform your auto insurance agent when you want to switch carriers. The agent might help you find a better deal than even the one you have identified alone. In some cases, even your current carrier might sweeten their offers to prevent you from leaving. Even if you don't get such benefits, it doesn't hurt to talk to the agent first.