This article clarifies a major assumption about when you can change car insurance. By reading this article, you will get an idea of how car insurance works, clear the assumption that you have to wait to change, see examples and a typical change process.
How car insurance works
When you take out car insurance, it is valid for either 6 months or 12 months, depending on which alternative the company offers. As far as I know, there is no law (at least in Ohio) that says you MUST wait until that time has passed to get another car insurance policy.
The car insurance is yours and as the insured, you have the right to make decisions about that policy, including canceling it on a certain date.
When your 6 or 12 months are over, the next 6- or 12-month period is called your renewal. Yes, many people wait until renewal, but you do NOT have to.
So if you can switch at any time, why do so many choose not to do so?
Many people mistakenly assume that if they change to a time other than renewal, the premium they have paid in advance will not be refunded. That's completely false. Car insurance is always paid for in advance – even with a monthly payment option that you always pay for the next month. If you cancel your car insurance in the middle of the insurance period, the money paid in advance is called a "earned" premium and must be repaid. It is called earned premium because the insurance company has not "earned" the right to use it.
Two examples that show how to change car insurance at any time
- You have a 6-month car insurance that runs from 1 April to 1 October. You will change from company X to company Y from 1 July. You paid a full 6-month premium in advance. The former company would repay the premium for July 1 – October 1.
- Same 6 month car insurance with the same date, but you pay per month. You have already paid July 1 – August 1, so the insurance company will refund that month's premium.
I should note that some insurance companies charge a cancellation fee, so it is important to ask if this will happen in your case.
Another thing to note: regardless of your payment method (EFT, online portal, credit card or if you send a check), 99% of the time your refund will come by check.
What is the typical process of changing car insurance?
I can not speak for how others handle middle policy breakers, but this is how we usually handle it.
- Potential customer accepts our proposal and wants to change.
- We complete a standard cancellation form that the customer signs. Note: the form requires that we list the current insurance company's name, insurance number and effective date.
- We will send the form to the current cancellation agent.
This is a nice option that is fast, easy and painless.
Sometimes the customer wants to contact the previous agent to cancel, which is also good. As long as the previous policy is canceled, it does not matter if we do it or the customer does it. We offer the standard cancellation form as a service to make the process easy.
So now that you know how easy it is, is it time for you to change car insurance? Fill in the form below and we will be happy to review your policy!