Is Your Insurance Provider Still Right for You – Or Is It Time to Find A New One?

I vividly remember the first time I was compelled to switch insurance providers. Several years ago, when I was still a student, I had overheard a classmate discussing the rates she was paying for her insurance. These rates were so much lower than mine. I interrupted the conversation to find out the name of the company. That random bit of lucky eavesdropping ended up saving me more than $100 a month! To a student (or anyone, really) that was a tremendous saving. It got me thinking: How many of us pay our premiums year-over-year without giving it much thought? How much could we potentially save if we shopped around a bit whether for auto insurance or home insurance (or both)?

Reasons to Switch

Some reasons to switch are more evident than others – but it’s no surprise that saving money always tops the list of top reasons why people change insurance providers. People often feel they are being overcharged, or that their rates keep going up year after year, even though they have kept a clean driving record. Moving is another big reason. Some providers don’t offer their services everywhere – so if you are moving out of province, it’s important you know your options long before the move and make any changes if necessary, to avoid gaps in coverage.

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Affiliations and Memberships May Save You Big Money

Think about all the organizations you are a member of, the school you attended, or even just the place that you currently work. Are you a student? Did you serve in the military? Chances are there is an affiliate or membership program that could save you money. Common ones include:

  • Memberships and Professional Associations. Are you a member of a professional organization (e.g. Certified Management Accountants of Canada, Canadian Nurses Association, Air Canada Pilots Association, etc.)? If the answer is yes, then some insurance companies will offer you a discount. Even other types of non-professional memberships (from CAA to Costco) have affiliate programs that offer potential savings.
  • Students. Some insurers may provide a discount for students with a high grade-point average. For novice drivers who have been licensed for less than three years and who’ve completed a recognized driver-safety training course, some insurers may provide a premium discount.
  • Alumni. Graduates from many Canadian colleges and universities may be eligible for a discount at certain insurance companies.
  • Employee Benefits and Union Members. Some companies offer discounts as part of their corporate benefits packages, or to union members. Always read the fine print of your company benefits packages when starting a new job to see if there are savings there for you.

Make sure you find out exactly what membership programs will offer you, and always continue to shop around. Remember, you might still be able to get cheaper insurance and better discounts through other means, or your current provider may even be able to match the savings.

Timing Matters – Take Note of Your Renewal Date

The best time to consider switching is just before your current policy is up for renewal. If you decide to do so before your policy period is over, you may incur penalties (which could eat into any savings you may be getting from switching). It is a contract, after all.

Pick a date about a month before your renewal is scheduled and mark this in your calendar. Use this date to compare rates, spend time gathering new quotes, and speaking to a few other companies. If you find one that offers savings over your current company or suits your needs better, you will be able to make a switch without financial penalty.

Need to Cancel Early?

Due to certain circumstances, such as moving out of province, you may not be able to avoid switching policies before your renewal date is up. When cancelling your policy before it is up for renewal, your insurance company may either “prorate” or “short-rate” your refund.

If prorated, you will be refunded the total premium amount for the coverage you did not use. For example, if you had a 12-month policy and you cancel after 10 months, you should receive a refund for the two months of coverage you did not use.

If short-rated, the car insurance company may take a cancellation penalty out of your refund. It would be best to check with your insurance company before deciding to cancel. If the fee is large enough, you may consider staying until the end of your term before switching companies.

Steps to Choosing a New Insurance Company

Review your existing policy to see what coverage you currently have. What is your deductible? Do you have accident forgiveness? What level of coverage do you have? Can you get any savings with your current provider? Make a list of all the features you want in your new insurance policy before contacting an insurance provider. This way, you can confirm the insurer is offering you a lower rate without compromising your existing coverage.

Shop around and get a variety of quotes before choosing. Just because one company is offering you a lower rate does not mean it is the lowest rate. Check online reviews to see what kind of reputation the companies have. Remember, most people dealing with an insurance claim are under stress, so make sure to pay attention to customer reviews that reflect on the company itself, rather than the commenters’ accident.

Before starting the process of cancelling your old coverage, make sure the new policy is in place. Find out the date your policy will become active and notify your old insurance provider. When cancelling an insurance policy, it is recommended to do so in writing, even if your insurer doesn’t require it. Now you have a record of the requested termination date, and you can avoid confusion around when you want your coverage to end.

Other Considerations When Switching

If you decide to start your new policy right away without notifying your old provider, you will have to ask them about their policy on retroactive cancellations. In most cases, you will need to show proof of insurance and the in-force date for your new policy.

Also, consider your prior accident, discounts, and bundles when cancelling your policy. Keep in mind, accident forgiveness typically doesn’t follow you between companies, but your driving record does. Make sure the new insurance provider has given you a quote based on the full disclosure of your driving history. If you omit this information, you won’t see accurate quotes. When you decide to switch, you could end up seeing higher rates for the accident that was forgiven through your prior insurer.

Lastly, longevity discounts (how long you were with your current provider) will also typically be lost, along with multi-policy deals. Consider the impact this may have on your other insurance policy rates. Will your home insurance policy go up? Does the new insurance provider offer similar discounts? You may even consider moving all your existing policies to the new company. Depending on how good the provider is, you may end up saving even more.

Making the Switch – Final Thoughts

Remember that it is your right to change car insurance or home insurance companies whenever you like, but keep in mind that you did sign a contract. It is also the right of the insurance company to charge cancellation penalties depending on the circumstances. Make sure the switch is saving you money and providing you with the coverage you need. Avoid any surprises by being prepared. Familiarize yourself with what’s included in your current coverage, and what discounts you may not be able to transfer.