Looking for a better rate on your auto insurance? Going online to get a free car insurance quote is a quick and easy exercise, and could net you significant savings if you find a cheaper rate and decide to make the switch. But before you cancel your policy in favour of a less expensive alternative, don’t forget these important factors:
Canceling Can Cost You!
Cancellation fees are almost inevitable if you’re looking to cancel your policy midway through the term. Nearly all insurance companies charge a cancellation fee – though the amount that you’ll be required to pay can vary significantly. Cancellation fees can be somewhat discretionary – they vary by the cost of the policy, the remainder of the term, and the amount of time you’ve been insured with your provider.If you can secure a new policy that saves you significantly over your old policy it may be worthwhile to make the switch.
To Switch or Not to Switch?
Deciding to switch auto insurance companies before your annual renewal date may or may not end up saving you money, depending on what it’s going to cost you to cancel. Remember that though the annual savings may be enough to convince you to switch, you’re not going to see all of those savings in the first policy year since you’re already partially through your term. Plus, you still have to pay the cancellation fees. Some simple calculations will help you to make sure that switching in the middle of your policy will leave money in your pocket.
To start, take your total annual policy savings and divide by 12 (for the 12 months of the year – your policy term). This gives you your monthly savings.
Then multiply that monthly savings you calculated by the number of months left on your term to get the true amount you can expect to save during the remainder of the policy.
Switch: If the savings are significantly more than the cancellation fee, then it makes financial sense to switch mid-term.
Stay(for now): If the cancellation fee is more than the savings you calculated above, then wait until your policy renewal date to switch. If the cancellation costs exceed the savings you can expect on this policy term, don’t worry! Just take note of the renewal date and arrange to switch insurers when your current policy expires. You’ll avoid any cancellation fees and make sure that you get the full benefit of the new rate for the next policy term.
Making the Switch
If you decide to make the switch you need to make sure that your new, cheaper car insurance policy is in place before you cancel your existing policy to avoid getting stuck without insurance. To make sure that your coverage is constant, call your new provider to arrange the effective date when your coverage will begin before you cancel your existing policy. This way you are entirely protected – and you can ensure that you have less expensive coverage in place before you cancel. Once you’ve confirmed the start date for the new policy, you can feel comfortable scheduling the cancellation of your existing policy on the same day.
If you pay your premiums annually, then you can expect a refund for the remaining term of your policy from your Canadian car insurance company – minus, of course, the cancellation fees.