How to switch car insurance
How to switch car insurance: Tips from an expert
Compare the Market’s car insurance expert, Adrian Taylor, has these top tips for drivers looking to switch their car insurance.
Adrian Taylor
Executive General Manager – General Insurance
Check for any cancellation fees
If you’ve paid your premium in full upfront, you’ll likely receive a pro-rata refund for the unused premiums of insurance when you switch. However, depending on your insurer, cancellation fees may apply, so it’s a good idea to check what these are before you decide to switch.
Compare like-for-like policies
That means you factor in the type of cover, excess, benefits and exclusions for the same car and the same listed drivers as your previous policy. This ensures that the policies can be accurately compared and you can make an informed decision on the best one for you.
Stay on top of your discounts
Many auto insurance providers offer a discount if you purchase online, but this usually only applies to your first year of premiums. After this, your premiums might automatically increase, which is why it’s worth comparing and getting car insurance quotes at least once a year.
Steps for switching your car insurance
Step 1: Find and sign up for a new policy
Once you find a policy you like, simply sign up with your details. Make sure your new policy becomes active from the time your old one expires so that you’re always covered.
If you purchased your car with a loan, you’re generally required to provide the financiers with a Certificate of Currency. The terms and conditions of your loan may require you to have insurance while the car is under finance. If so, it’s even more important to make sure you have uninterrupted coverage when switching insurers.
Step 2: Cancel your existing car insurance policy
Once you’ve signed up with a new insurer, you need to contact your previous one to cancel your existing policy. You may choose a date in the future for your existing policy’s cancellation to take effect so that it aligns with the end of your policy term or the current payment cycle. That way you can exhaust the remaining cover you’ve already paid for. If you’d prefer to cancel mid-policy, just keep in mind that your insurer may charge a cancellation fee.
Also, you will have a cooling-off period usually from the date of transaction. For a renewal, this would be the start date of the new term. This is when you can cancel the policy without incurring any costs or fees, or receive a full refund (provided you haven’t claimed in that time). Check the PDS to see when the cooling-off period starts and how long it is for with your selected insurer.
The basics of switching car insurance
When changing insurance companies, can I do it before the renewal date?
Yes, you can change your insurance before renewal time, or even before you’ve completed the current pay cycle. If you cancel outside these times, most insurers should provide you with a pro rata refund for the cover you haven’t used. For example, if you’ve paid annually but cancel your policy eight months into your cover, your insurer should refund you for the remaining four months of cover. However, they may also charge a cancellation fee.
Why switch car insurers at all?
There are many reasons why you might want to switch car insurance companies. Here are some key factors that encourage Australians to switch to a new car insurance policy:
- To save money
- To get more value for your money
- To only pay for the cover you need
- Your situation has changed (e.g. new car, you’ve moved address)
- To receive discounts.
Always check the benefit limits, exclusions and all other policy details in the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you switch car insurance.
How can I lower my car insurance premium?
Whether or not you decide to switch policies, there are still some ways to reduce your insurance costs, such as:
- Choosing a higher excess to lower your premium. Just keep in mind that if you do need to claim, you’ll have to pay this higher excess payment.
- Paying an annual premium instead of monthly instalments. You’ll have a higher upfront cost, but monthly instalments generally cost more in the long run.
- Setting an age limit restriction for who can drive your car. Younger drivers tend to be riskier to insure, so restricting them from driving your car could work favourably for your premium.
Learn more about reducing your car insurance premiums with our handy guide.
How long does it take to switch car insurance?
It doesn’t take long to cancel your policy and switch to another – you can typically do it all on the same day. You can usually sign up to a new policy online, and a quick phone call to your previous insurer is all it takes to cancel your old policy.
Another thing to keep in mind is the cooling-off period, which starts when you complete your purchase or when your policy commences. It’s usually between 14 to 21 days, and during this time you can cancel your cover for a full refund provided no claim has been made.
What’s the best car insurance policy to switch to?
There’s no single car insurance policy that’s best for everyone because everyone’s circumstances and insurance needs are different. You might want a comprehensive car insurance policy with roadside assistance and other benefits included, or maybe just a Third Party Property Damage policy for basic cover. So, the best policy for your situation will be one that meets the level of cover you want, at a price that works for you.
Your existing policy
How do I transfer my current insurance to a new car?
Usually, you can either call your insurance provider or update your current policy details online to let them know of your new car purchase. Your insurer will then process the details of your new vehicle and inform you of your new premium.
Since your policy costs are calculated partly using your car’s value, make and model, a new vehicle with a similar value to your existing car may not make much of a difference. On the other hand, a higher-value car may significantly increase your premium.
If I switch to a new policy, will I keep any loyalty discounts from my old insurance provider?
Discounts from your current policy may not carry over to your new policy. However, some insurance companies will honour any no claim discounts (NCD) you have, provided you meet certain terms and conditions when you switch.
I got car insurance through a dealership as part of a car loan. Can I still switch policies?
Personal finance lenders typically require you to get car insurance when buying a new car with a loan (they’ll generally require comprehensive car insurance). While they often offer their own insurance, you can choose your preferred insurance company at the time or switch car insurance later.
Can I switch car insurance providers while I still have an outstanding claim?
Yes, you can switch insurers while you have an insurance claim in progress. Your old insurance provider will process your claim as normal, so long as the incident you claimed for occurred while you had cover.
If you switch while claiming for a total loss on your car (i.e. a write-off) and were paying in monthly instalments, your insurance provider may deduct the outstanding monthly payments for the period of cover from your insurance payout.
How do I cancel my car insurance policy?
Cancelling your current car insurance policy shouldn’t be difficult. Typically, you can call your insurance provider and they can help you with your request. However, this process may vary depending on your insurer. Always read the PDS of your policy for the most accurate information on how to cancel your car insurance.
Meet our car insurance expert, Adrian Taylor
As Executive General Manager of General Insurance at Compare the Market, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.