Exit strategies: How to dump your old auto insurance company.   When it comes to changing auto insurance, it can be very expensive to go without an exit strategy. Thou shalt not just let your old plan coverage lapse!

When it comes to changing auto insurance, it can be very expensive to go without an exit strategy. Thou shalt not just let your old plan coverage lapse! Your credit may be damaged if your old carrier keeps you insured. Your driving record may be effected if your old carrier reports to the DMV that your policy was canceled (by them).

When considering when to cancel, most carriers will charge you a $50 fee if you cancel before the policy expiration. Keep this in mind if you plan on changing close to the policy expiration. If you are going to save less than $50 over the policy period with the new carrier, why not until policy expiration rather than incurring any cancelation fees? Of course, we understand there are other reasons to cancel, like poor service, revenge, claims issues, etc.

Before you cancel your old plan, make sure your new coverage will coincide with your desired future effective cancellation date of the old policy. You do this buy working closely with your new carrier. You don't want any gaps in coverage when choosing a new carrier. Because of DMV fines and liability from accidents, it's not a good value to drive without insurance for any period of time.

When buying a new plan, you can avoid rate ups or premium increases from your new carrier (because of corrected underwriting) by; Making sure your new company has examined your drivers license record, looked up any old accidents (your claims history), and has your correct physical address where your car is kept (hopefully garaged for insurance purposes). Some old fashioned brick and mortar carriers will need your old current declaration page, drivers license and down payment to get the policy started. Insurance companies allow you to cancel your policy at any time during the policy term by sending written notice stating the date of cancellation. It's always good to send your cancellation notice in writing (not over the phone). Many carriers want you to use their cancellation request form.

If you cancel your coverage via phone, many things can go wrong. The phone operator may have computer problems, there might be a language barrier, maybe they cancel the policy of another customer. A written cancellation notice eliminates that (just make sure all your information including address and policy number are correct!).

After you cancel, make sure you are canceled! Look for written verification from your old carrier you were canceled. Also make sure proof on insurance has arrived from your new carrier.

If you are going to cancel your policy BEFORE it expires (not recommended unless urgent):

  Make sure the new auto insurance carrier has all your information to (avoid rate ups).

  Set your new policy begin date to the day after (usually 12:01 midnight) your old policy expires.

  Call your old carrier and give them the effective date of cancellation.

  Send your written cancellation notice (or download their cancellation form) well in advance to hopefully coincide with your policy expiration (to avoid the $50 cancellation fee).

  Wait for written verification your policy was canceled either from the insurer, or on your driving record.

  If your insurer keeps billing you, send them a copy of your written cancellation, and check your credit report to make sure your old insurer has not submitted any derogatory statement.

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