How to change car insurance provider?

Your car is more than just a set of wheels that gets you from place to place, it’s also likely to be one of your biggest purchases. That makes your car worth protecting with insurance. But you don’t have to stick with the same insurance company year after year. We explain how to change car insurance providers, and the traps to avoid when making the switch.

Why would you change car insurance?

Simply renewing your car insurance cover when the annual premium is due each year can seem like the easy option. However, insurance companies are keen for your business, and many offer tempting upfront discounts to entice new customers. As a guide, you may be able to save around 15% off your first year’s premium when you buy a new car insurance policy online. This makes it worth looking at different car insurance policies to see if you could enjoy better value for money or improved service while still getting the cover you need.

You don’t need to wait for renewal time to rethink your car insurance. It could be that your circumstances have changed, or perhaps you’re using your car in a different way—like driving less. You may simply be looking at your budget for ways to cut back on expenses. These can all be cues to review what’s on offer through a variety of providers to see how your current cover stacks up.

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4 steps to change car insurance

If you’ve decided that you want to switch car insurance, make sure to avoid accidentally leaving yourself without cover. This four-step process can help you make the move seamlessly.

1. Compare car insurance policies

The first step to switching car insurance is to compare policies online and get a few quotes from different insurance providers to help you find a new policy that’s right for you. Price may not be your only consideration, as the type of car insurance cover you’ll need as well as what additional features, such as rental vehicle cover, roadside assistance and windscreen replacement, you want may impact your decision. You can compare comprehensive car insurance with Canstar.

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2. Know what you’re buying

Whether you’re trying to reduce the cost of your car insurance premiums or find better quality cover, make sure you carefully compare the cover of any new policy with the cover your existing policy provides. Check the sum insured amount/s, all inclusions and any exclusions—these will all be set out in the Product Disclosure Statement (PDS). Also consider the Target Market Determination (TMD) before making a purchase decision. It’s also worth thinking about what kind of excesses you may have to pay in the event that you need to make a claim. A higher excess can lower your premiums, but you’ll have to pay more in the event of a claim. Contact an insurance provider directly for a copy of a policy’s PDS and TMD.

If you’ve found a better deal elsewhere, it may be worth contacting your existing provider to ask if they will match it to keep you as a customer. This would save you needing to switch while still getting a better deal. But if they won’t budge, be prepared to change policies.

3. Take out the new policy before cancelling your old one

When you decide you want to make the switch, you can time it to take advantage of any discounts from your new provider and to minimise any fees from your old one. The key is to make sure you have been accepted and paid for your new car insurance policy—and have the letter or email of confirmation from the provider—before you cancel your old policy. Overlook this step and you run the risk of being uninsured, which could prove costly.

It’s also important to note that if you purchased your vehicle with a car loan, you may be required to have a certain level of car insurance while repaying the loan. If you’re switching your car insurance, you’ll generally need to provide your lender with the new Certificate of Currency from your new provider. This can also make it important to line up the confirmation of your new insurance with the cancellation of your old one, to ensure that your coverage is uninterrupted.

4. Cancel your old policy

With the new cover in place, it’s time to inform your previous provider that you are cancelling your original policy. They should follow this up with written confirmation that the policy is cancelled. If you simply stop paying the premiums, it could negatively impact your credit score. You can check your credit score for free with Canstar or via the Canstar app.

While a new policy will take effect on a start date designated by the provider, ideally aim for the policies being simultaneously cancelled and started, respectively, on the same day.

Will I lose my no claim bonus?

The prospect of losing a no claim bonus, also known as a safe driver discount, may make you think twice about comparing and changing car insurance policies. A no claim bonus can give you a discount on your car insurance if you don’t make any insurance claims over a set period of time. Further savings can generally be available for each year that you don’t make a claim, up to a maximum number of years. However, some car insurance providers will let you include your existing no claim bonus as part of a new policy. Bear in mind though, that you may not be able to transfer the discount if you are taking out a policy for another car. That said, the Federal Government’s Moneysmart website advises against staying with the same provider just because of a no claim bonus.

Will I pay cancellation fees?

When you take out a new car insurance policy, a cooling off period typically applies. This means you should be able to cancel the policy within the first 14 to 21 days and get a full refund, as long as you haven’t made any claims during that time. It can be important to confirm how long your policy’s cooling off period is with your provider.

After the cooling off period, a cancellation fee may apply if you want to switch mid-policy. Not all insurance providers charge a cancellation fee. Some do, and it can cost around $40 but this is something to check with your insurance provider first.

If you cancel your cover early, and you qualify for a refund, you should get back the unexpired portion of the premium, less any government charges that may apply. And, if you cancel your cover by declining the annual renewal offer, you won’t have to pay a cancellation fee.

How do I cancel my car insurance policy?

Cancelling your existing car insurance policy should be a fairly straightforward process. Generally, you’ll need to contact your insurance provider over the phone or via email. A phone call will often be the quickest form of communication. This process may vary depending on your provider and the policy you have, which is why it can be important to read the PDS. Your policy’s PDS should contain information on how to cancel your car insurance policy.

How do I transfer my current insurance to a new car?

This can generally be done by either updating your current policy details online or by calling your insurance provider to inform them of the details of your new vehicle. Depending on the make and model and value of your new car, your insurance premiums may change.

Can you switch car insurance policies if you got insurance through a dealership?

Taking out car insurance through the dealership where you bought your car doesn’t mean you’re locked into that policy forever. Just like any other car insurance policy, you should be able to switch to your preferred insurance provider either at the time you buy your vehicle or any time after.

It’s important to note that if you took out dealer finance, the terms of the loan may stipulate that the vehicle must have a certain level of insurance coverage during the loan term. This is why it can be important to line up the start of your new coverage with the cancellation of your old one, so that your vehicle is not left uninsured during the time between.

Can I switch car insurance providers while I still have an outstanding claim?

As long as the claim occurred while you had cover, you should be able to switch car insurance providers while you have an active claim. If you’re claiming for a total loss on your car (i.e. a write-off), your provider may deduct any outstanding monthly payments (if you’re paying your premiums in this way) from your payout while they process the claim.

How can I lower my car insurance premium?

There are a few ways in which you can potentially lower your car insurance premiums, such as by paying your premiums annually rather than monthly, choosing a higher claim excess, insuring your car for its market value rather than an agreed value, opting for a low km policy, or restricting the number of drivers listen on your policy (especially those under 25 years of age and/or who are inexperienced drivers). There may be other ways to save, which we outline in our article on 10 tips to save money on your car insurance.

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