Managing an Auto Insurance Policy (Expert Tips)
Make sure to arrange for a new policy to start before canceling your old one. Any lapse in coverage can increase your rates by an average of 12%.
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UPDATED: Oct 6, 2020
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Mandatory Insurance Coverage
|Apart from New Hampshire and Virginia,
car insurance is mandatory
|Cheapest Car Insurance Provider||USAA & Geico|
Do you change your auto insurance policy often or stick with the same auto insurance company because you’re happy with their rates and services?
Buying a policy requires a lot of effort in terms of research and seeking quotes, but your work shouldn’t end there. Periodically, you should assess the rates and benefits of your policy to make sure it’s worth the price.
Sounds like a lot of work?
Don’t worry, in this article, we will cover when exactly should you switch your auto insurer and how you can ensure that you’re paying reasonable rates for your coverage. Some life events and changes in auto ownership demand changes in an auto policy, so we will write about those as well.
If you’re ready to start comparing, enter your ZIP code above to get started.
Without further ado, let’s get started by seeing what an auto insurance policy looks like!
Updating Your Auto Insurance Policy
Some changes in life, however big or small, warrant the need to review your auto policy for any updates. For instance, if you get married, you can enjoy discounts on car insurance with your partner, whereas individual policies will cost more for both of you.
Another scenario involves purchasing a house — many insurers offer bundling discounts if you buy auto and home insurance from them.
If you want to know more about how bundling can save you money, watch this video:
When Should You Update Your Auto Policy
You can update your policy just to get a better rate or because of a big change in your current situation — like your kids getting a driving permit.
Let’s look at some scenarios when you should update your policy.
Purchasing a New Vehicle
You may be askingif you need proof of insurance to buy a car. In short, yes! When you’re driving an old car in college, you don’t care about how much insurance coverage you carry. You’re also content with only liability coverage because you drive on limited routes.
But, later on, when you buy a new car or a family car, you have to think about upgrading your coverage limits and buying collision and comprehensive coverage if you haven’t already.
Though most states make it mandatory for motorists to buy minimum coverage, you should always consider buying a higher level of coverage to protect yourself from major accidents.
Experts recommend you carry at least $500,000 in liability coverage, including both personal injury and property damage. Liability coverage will help you pay for any medical injury expenses or property damages sustained by the other party in an accident that is your fault.
To avoid paying exorbitant repair or replacement costs on a new vehicle, consider buying collision and comprehensive coverage, as these options would pay for any damages to your car regardless of fault. We all know how much repairs can cost for a new car.
Fortunately, collision and comprehensive insurance aren’t expensive. The average annual expenditure on collision insurance is $342 and for comprehensive coverage, it’s $153. Nationwide, average annual liability coverage is $566. Paying for a few extra auto coverage options will buy you peace of mind.
When looking to add another car to your auto insurance policy, you should be prepared to provide some basic information about the new vehicle.
Typically, you will be asked to provide the year, make, model and mileage of the additional vehicle. You will likely also be asked for any registration information you have on the new vehicle.
Keep in mind that if there is any other information that is related to your auto insurance policy that needs updating, this is a convenient time to get it done.
Changes in Income or Personal Assets
Say your aunt just left you a big part of her estate or you just got hired for a job that doubles your current income.
Aren’t you curious to know how are those two scenarios relate to car insurance?
Low liability coverage limits can’t cover all expenses incurred in a major accident, especially when the injured party decides to sue you for recovering non-economic damages, i.e. pain and suffering.
Since it’s difficult to quantify someone’s pain and suffering, some lawyers try to take advantage of the situation by seeking a large reimbursement depending on the at-fault party’s net worth. So, if you have a lot of personal assets, those could be at risk.
That’s why you should increase policy limits when you inherit or get a huge jump in income.
Adding Teenagers to Your Auto Policy
Teenage drivers are responsible for the majority of the crashes on roads.
This is why an average married couple is quoted a rate 90 percent above the base rate when they add their 16-year-old kids.
As per the Consumer Reports data analysis, some insurers charged married couples as much as 250 percent more than their previous rates when they added a teenage child on their policy.
If you are planning to add a teenage child to your policy, research your options well. In the above illustration, Consumer Reports has analyzed rates for hypothetical policyholders to calculate the increase in premiums when they add a teenage child.
Among all the states, Alaska has the highest rise in premiums when a teenage child is added and Hawaii has the lowest.
Making Modifications to Your Vehicle
Having a modified car means that you probably did something specific to “soup it up.” It is true that modified cars are typically more expensive to insure, just like a fancy sports car would be.
However, modified cars are different than exotic or luxury cars because they refer to alterations to the performance or appearance of the car. The parts added to the car are typically non-standard and can be very expensive to find and replace if there is damage to the car.
It is important to let your auto insurance agent know if you have modified your car in a significant way. Simply put, your failure to do so means that you might not be able to get coverage for the true value of your modified car in the event of an accident.
There are some things that insurance companies will simply refuse to cover. Any modifications that make the vehicle a non-legal car to drive on public roads will certainly not be covered by your insurance company.
Items such as wheelie bars or drag wheels are not typically covered under a private passenger automobile policy. Sport-type modifications, such as performance wheels and exhaust systems, can be covered under an auto insurance policy as long as you declare them.
Be sure to contact your insurer to make sure that your policy has coverage before you make any major modification to the performance aspects of your car. It is a good idea to make sure that you will be covered before you invest money in modifying your car, and what counts as a modification.
Making Changes to Your Auto Insurance Mid-Term
Making changes to your policy is financial prudence, but can you do it mid-term? You might have to make changes any time during the policy term, so let’s look at if you would be allowed to do so by your insurance provider.
Changing Your Policy Coverage Limit or Adding Optional Coverage
Changing your policy coverage limits can be done at any time during the policy period — but you can’t decrease your coverage level below the state minimum requirement.
Here’s the minimum liability coverage mandate in all the states:
|U.S. States||Type of Insurance Coverage Required||Minimum Liability Coverage Requirements|
|AK||BI & PD Liab||50/100/25|
|AL||BI & PD Liab||25/50/25|
|AR||BI & PD Liab, PIP||25/50/25|
|AZ||BI & PD Liab||15/30/10|
|CA||BI & PD Liab||15/30/5|
|CO||BI & PD Liab||25/50/15|
|CT||BI & PD Liab, UM, UIM||25/50/20|
|DC||BI & PD Liab, UM||25/50/10|
|DE||BI & PD Liab, PIP||25/50/10|
|FL||PD Liab, PIP||10/20/10|
|GA||BI & PD Liab||25/50/25|
|HI||BI & PD Liab, PIP||20/40/10|
|IA||BI & PD Liab||20/40/15|
|ID||BI & PD Liab||25/50/15|
|IL||BI & PD Liab, UM, UIM||25/50/20|
|IN||BI & PD Liab||25/50/25|
|KS||BI & PD Liab, PIP||25/50/25|
|KY||BI & PD Liab, PIP, UM, UIM||25/50/25|
|LA||BI & PD Liab||15/30/25|
|MA||BI & PD Liab, PIP||20/40/5|
|MD||BI & PD Liab, PIP, UM, UIM||30/60/15|
|ME||BI & PD Liab, UM, UIM, Medpay||50/100/25|
|MI||BI & PD Liab, PIP||20/40/10|
|MN||BI & PD Liab, PIP, UM, UIM||30/60/10|
|MO||BI & PD Liab, UM||25/50/25|
|MS||BI & PD Liab||25/50/25|
|MT||BI & PD Liab||25/50/20|
|NC||BI & PD Liab, UM, UIM||30/60/25|
|ND||BI & PD Liab, PIP, UM, UIM||25/50/25|
|NE||BI & PD Liab, UM, UIM||25/50/25|
|NJ||BI & PD Liab, PIP, UM, UIM||15/30/5|
|NM||BI & PD Liab||25/50/10|
|NV||BI & PD Liab||25/50/20|
|NY||BI & PD Liab, PIP, UM, UIM||25/50/10|
|OH||BI & PD Liab||25/50/25|
|OK||BI & PD Liab||25/50/25|
|OR||BI & PD Liab, PIP, UM, UIM||25/50/20|
|PA||BI & PD Liab, PIP||15/30/5|
|RI||BI & PD Liab||25/50/25|
|SC||BI & PD Liab, UM, UIM||25/50/25|
|SD||BI & PD Liab, UM, UIM||25/50/25|
|TN||BI & PD Liab||25/50/15|
|TX||BI & PD Liab, PIP||30/60/25|
|UT||BI & PD Liab, PIP||25/65/15|
|VA||BI & PD Liab (9), UM, UIM||25/50/20|
|VT||BI & PD Liab, UM, UIM||25/50/10|
|WA||BI & PD Liab||25/50/10|
|WI||BI & PD Liab, UM, Medpay||25/50/10|
|WV||BI & PD Liab, UM, UIM||25/50/25|
|WY||BI & PD Liab||25/50/20|
You can also increase the deductibles on your policy if you want to lower your premiums, but doing so may mean you’d have to pay the major part of the expenses for a minor accident.
Motorists are also allowed to add any optional coverage or riders/endorsements to their policies mid-term. For instance, if you suffered a mechanical breakdown while on a holiday, you would have to pay for it out-of-pocket.
You can add a mechanical breakdown coverage to your policy so that you don’t have to pay for the expenses again.
Though you have the option to add optional coverage online, it would be better if you call your insurance company to understand what coverage you may need depending on your situation.
Making Temporary Changes to Your Auto Policy
Many motorists buy state-minimum liability coverage to keep their premiums low.
But what happens when you’re traveling somewhere far? Would your policy limits be enough to cover the expenses of any major accident?
Motorists can increase the limits of their insurance policy while on vacation or for a certain period of time.
There’s a workaround to make changes to your policy for a specific period of time. Initially, you will have to make changes effective until the end of the policy period, but you can cancel the extra coverage whenever you don’t need it anymore.
Your insurance carrier will refund the pro-rated premium amount from the cancellation date to the end of the policy period.
For any physical damage coverage, most insurance companies will require motorists to get the vehicle inspection done to assess a cars’ value.
Adding Drivers to Your Auto Policy
You need to add drivers who regularly use your car to your policy, or else you might be denied coverage if the other person gets involved in an accident driving your car.
There are a few different types of drivers that can be named or listed on your policy. Generally speaking, the named insured who owns the policy and who has the power to make changes to the coverage is also a primary driver.
The primary driver is the individual who is named and rated for the purpose of calculating rates on a specific vehicle. This person’s personal information is what directly affect insurance rates.
The primary driver’s age, years of driving experience, licensing status, driving habits, mileage, and driving record will all come into play to determine the price of your insurance rate. Other listed or named drivers can be found on the policy declarations page, but don’t actually affect the premium of the vehicle as the secondary driver that they are.
When you have a named driver, this person has regular access to the insured vehicle and can affect rates with their driving record.
When you have a listed driver, however, the company is aware that the driver has access to the car but won’t charge for the individual because they have their own coverage on their own vehicle. If listed drivers end up canceling their coverage, they’ll need to become named and rated.
When should you add someone to your policy?
Anyone living with you — who has access to your car and a driving license — should be added to your policy. It can be your spouse or kids or even roommates.
If your roommate uses your car only occasionally, even then consider adding them because some insurance companies only settle claims when the crash was caused by drivers named on the policy.
Should you add guests to your policy?
If your guests are coming over for a brief period of time and use your car occasionally, you wouldn’t need to add them to your policy. Guests can also mean your college-going kids — as long as their permanent address is different from yours.
But if a guest uses your car frequently for a long period of time, you should add that person to your policy. In any case, don’t forget to call up your insurance provider to know whether you need to add occasional drivers or not.
If the driver who is borrowing the car does have their own insurance, their liability coverage limits will be primary.
Their carrier will always pay first and then the car’s policy will pay second if the limits aren’t high enough.
Physical damage coverage typically follows the car and not the driver, so the car’s policy will pay for repairs needed for the car. If you’re not happy with your current insurer or you’d like to price coverage with a new driver in your home, it’s time to start shopping.
How do you add a new temporary driver?
Simply call your car insurance provider (and some insurers also allow you to add drivers online).
This may not raise the premiums for you; however, adding permanent drivers would impact your premiums. Therefore, you need to shop around if the change is permanent.
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Transfering Auto Insurance to Another Person
There are several circumstances that might call for the transfer of auto insurance from one person to another in the United States, but can you transfer auto insurance to another person?
As long as you have proper documentation, this transfer should be a fairly simple process. Transfer of insurance can be temporary or permanent, depending on the situation as well as your auto insurance policy.
If your insurance policy extends protection to driving another car, this process won’t be necessary. Learn more here: can someone else get auto insurance for me.
Here are the primary reasons for the transfer of insurance from one person to another in the US:
- Transfer of ownership from one person to another through the sale of second-hand cars
- If you are in no condition to drive, either due to health issues or complications for old age
- Some insurers will transfer your insurance coverage from your vehicle to another car if you currently don’t have access to your vehicle
When would I do a temporary transfer?
Also known as a temporary transfer, a short-term transfer of insurance is necessary when a driver doesn’t have access to his/her car and is not insured to drive another vehicle.
Some insurers will offer you a short term transfer of insurance in situations such as when you take your car to the garage for repairs or general maintenance.
This way, you will be able to drive another vehicle with sufficient protection as long as the car does not belong to your employer or it is not a lease. Typically, rental cars are fully insured by the car company, so you don’t have to worry about that.
When would I transfer ownership?
At some point in your life, you will need to sell your car to someone, perhaps because you need to upgrade to a new car or maybe you are broke, and you need to make some extra cash.
In other cases, you need to buy a second-hand car from a friend or someone you just met because you badly need a car and don’t have the financial ability to buy a new one at the moment.
Whatever the situation is, to be able to sell or buy a second-hand car without issues you need to handle related paperwork properly, and that includes the transfer of insurance alongside the transfer of ownership and the relevant documents.
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Renewing an Auto Insurance Policy
Usually, your auto insurance policy renews automatically when the policy period ends at six or 12 months, in which case you wouldn’t have to worry. But at times, it doesn’t auto-renew. If you miss renewing your policy, you would go out of coverage, which is illegal in most states.
When Does an Auto Policy Renew?
Most of the auto policies are effective for six months, after which you have the option to either renew or cancel it.
Buying auto insurance for a year is possible, but it’s not always an option wherever you’re shopping.
As you’re looking for the right term for you and your family, you’ll find that you can either select a 6-month term or a 12-month term. Some companies will offer both and others will only offer one of the two.
If your policy set to auto-renew, you would need to call up your agent to cancel.
Similarly, your car insurance company would contact you if they aren’t planning to renew your policy for any reason — at least 45 – 60 days before the expiration date.
Would Your Rates Go Up At Renewal?
The simple answer is: rates may rise up at renewal.
This may or may not have to do with your personal factors. Insurance carriers take into account inflation and external factors like crash or theft rates to calculate premiums every year.
In addition, if you have a claims history or your credit score went down during the policy period, chances are that your insurance rates will be increased.
That’s why it’s important to shop around for better rates if you feel that the hike isn’t justified. By seeking quotes from multiple insurers, you can reduce your premiums.
Auto Insurance Renewal Discounts
Renewals are a good opportunity to get discounts from your insurance provider. Even if you aren’t aware of what types of discounts are available, keep asking your agent for anything new that comes up.
For instance, there are providers who offer discounts if you prepay your six- or 12-month premium at the beginning of the policy period. Here are some discounts that you may get on renewal, so don’t forget to ask:
- Discounts on completing a defensive driving course
- Multi-policy discount
- Excellent credit score discount
- Low mileage discounts
- Loyalty discounts
- Multiple car discounts
- Clean driving record discounts
- Prepayment discounts
If you want to understand how these discounts work, you can watch this informative video:
Grace Period For Auto Insurance Renewal
In case you are unsure about renewing auto insurance or unable to pay your premium, most insurance companies offer a grace period of five days after the expiration date to renew your policy.
If you don’t renew during this grace period, your insurance policy might be canceled for non-payment. When your coverage cancels, the state will be notified that your coverage is no longer active.
If you can’t provide proof of insurance for the period when the policy lapsed, you could be fined or your registration could be suspended. If your policy has canceled, see if you can reinstate it.
Many states will accept the following as proofs of insurance:
- Insurance card – usually sent to you upon issuance of the policy
- Copy of your insurance policy
- Facsimile of the proof of insurance (FAX)
- Letter from your insurance company on company letterhead
- Electronic proof of insurance – this may be in the form of insurer provided electronic image on your cell phone, and laptop
- If your insurer has web-based services, these may be accessed
- Electronic mail from your insurer
A gap in coverage might lead to a rise in your future premiums, not to mention it is illegal to drive without insurance coverage. Also, not all providers or states offer a grace period for car insurance premium payments.
What if You Don’t Renew Your Policy?
You may choose not to renew your policy due to various reasons, but if you go without coverage for even a day, it can lead to a penalty as per the state laws.
Though your rates will not increase significantly if you were out of coverage for a day or two, it will surely impact your premiums if you are without coverage for two to four weeks.
Also, car insurance companies offer discounts to their loyal, continuous customers which you might miss if you choose to not renew your auto policy.
Canceling Your Auto Insurance Policy
To cancel your policy, you just need to follow the cancellation process of your insurance provider. Do not stop your premium payment and wait for your insurance company to cancel your policy.
That’s not a wise way of canceling your policy, no matter how unhappy you are with your insurer because other insurance providers would take that cancellation as a red flag even if you have a stellar record.
Cancellation Process of the Leading Insurance Providers
Most of the providers let policyholders cancel their policy online or by calling an agent. It might vary from one provider to another. Therefore, check the process before its too late to cancel.
You can see below the cancellation process of leading auto insurance providers. To cancel a policy, most insurers allow policyholders to do it over a call, through the mail, or in person.
|Insurance Providers||Cancellation Process|
|Allstate Corp.||You can call your Allstate agent to cancel your policy who may ask you for a written request|
|Farmers Insurance Group of Companies||You can call the customer service 1-888-327-6335 to cancel your policy|
|Liberty Mutual||You can call the customer care at 1-800-658-9857 to get help with cancellation|
|Nationwide Mutual Group||You can call their member services at 800-882-2822 or write a mail to One Nationwide Plaza, 1 West Nationwide Boulevard, Columbus, OH 43215|
|Progressive Corp.||You can call Progressive at 1-800-776-4737 to cancel your policy|
|State Farm Mutual Automobile Insurance||You can connect with your local state farm agent to cancel your policy. You can also mail a letter to: State Farm Insurance, One State Farm Plaza, Bloomington, IL 1710 or fax to 888-633-0405 or 905-750-5002.|
|Travelers Companies Inc.||You can call the customer care at 800-842-5075 to cancel your policy|
|USAA Insurance Group||You can call USAA at 800–531–8722 and request cancellation. You can also write to USAA, 9800 Fredricksburg Rd, San Antonio, TX 78288|
Information you will need to cancel your policy:
- Policy number
- Personal details such as name, date of birth, and social security number
- Your new insurance details
Do you have to pay any auto insurance cancellation fee?
Usually, insurance carriers do not charge any fee if you want to cancel your policy, but you should check by calling an agent beforehand. Many insurers may even refund the pro-rated premiums if you’re canceling a policy mid-term.
You want to know where the policy number is actually going to be located.
Chances are it is right on the very first page of your car insurance policy, but if you cannot find it easily, be sure to ask your insurer.
Your insurer should be able to point you right to where the policy number is. If that fails, check your account on the insurer’s website and your smartphone app, as both of these should also have the policy number information in there.
Most policy numbers are a sequence of 10 or fewer numbers and letters. Unfortunately, since companies are responsible for creating their own sequence, no carrier uses the same series when they are generating policy numbers.
With most carriers, it’s helpful to know that there won’t be a mixture of numbers and letters.
Usually, the letters preceding numbers represent the state where the policy was issued and the type of policy the number identifies.
The letters may be the state abbreviation or a code that represents the state in the company’s system. The numbers following any letters are the digits that are unique to your policy. Only your account will have these numbers.
The policy number on your car insurance policy is what ties you to the insurer that you are paying your premium to. You will need this to cancel your current policy.
Canceling Policy When You Aren’t Using Your Car
As long as you own a car that’s registered, you will need to maintain car insurance coverage in most states. Even if your car is parked in a garage, you have to keep your insurance.
To save on premiums, you can choose the state minimum liability coverage. It’s advisable to also keep comprehensive insurance in place to protect the car from any damages out of your control.
Canceling Policy After the Sale of Your Car
Once the sale transaction of your car is through, you should ideally cancel the coverage on your policy. If you have the same policy for multiple cars, you should approach your provider about taking the sold car off the policy.
What if you are replacing your old car with a new one?
If you’re just selling your car to buy a new one, it’s advisable to continue your policy and simply switch the vehicle details. When you continue your policy, you will also maintain coverage with the same insurer who will offer you loyalty discounts in the long run.
Make sure you cancel your car’s registration and take the plates off your car after a sale. You might be held responsible for an accident if the new owner drives with your registration and plates.
Can Your Insurance Provider Cancel Your Policy?
Insurance carriers assess the risk involved with each policyholder to determine if they should be provided coverage. If their risk assessment signals something that might lead to non-payment in the future or frequent claims, they will likely cancel your coverage.
Nonetheless, they must discuss non-renewal with a policyholder about 45 – 60 days before the cancellation.
What situations can trigger an insurance provider canceling your policy?
- Frequent non-payment of premiums
- Multiple claims in the recent past
- Criminal record
- A material change in risk
If you think your policy was canceled because you’re a high-risk customer, then it will likely be difficult for you to get coverage in the voluntary market.
Every state offers a high-risk insurance plan to provide coverage to those unable to obtain insurance elsewhere, so you can consider applying to these programs. This way, you’ll be insured and can drive legally.
When will my new policy start?
If you already have a car insurance policy and are switching companies, it is important to ensure your new policy is active before you cancel your old policy. Failure to do this can leave you with gaps in your coverage, which can result in your becoming a high-risk driver.
If you choose to drive between policies, you could be putting yourself at risk by driving illegally.
If you get into a car accident without insurance, you could find yourself responsible for not only the damage you incur but also the damage caused by the other driver and his or her medical bills. The driver could even opt to sue you to recoup damages.
To ensure you are covered, it is important to purchase a car insurance policy, print your temporary insurance cards and double-check when your car insurance starts.
In many instances, you are covered from the moment you make your first premium payment, but you should always check with the insurance company and your agent before driving your car.
Traditionally, as a new business customer for an insurer, you are probably going to be asked to pay a car insurance deposit before your coverage goes into effect.
While this is not always going to be a requirement, it is the rule of thumb that most insurers will go by.
The reason as to why insurers want to get that initial deposit from a new customer is so they know that the customer actually intends to pay the premium on their policy. It is a deposit payment in good faith, essentially, for the insured to say to the insurer that they are buying the policy and they intend to pay the full premium and see it through.
This does not mean that a deposit is always going to be required, though. Some insurers, in an effort to get your business, will not require a deposit right out of the gate.
They may allow you to get a car insurance policy, have it be in effect for a month or so, all before they every collect that first installment payment for the premium.
Moving to A New State
Any move to a new state is filled with a lot of excitement — you plan tons of activities and sightseeing after your move.
But you also have to think about your car’s registration and insurance coverage to meet the legal requirements in your new state.
Regulations for Updating Your Policy After Moving
There are two scenarios that can happen when you move — your car insurance provider may not write coverage for motorists in your new state or the coverage requirement is different from your previous state.
In both these scenarios, you will have to update your car insurance policy to legally drive in the new state.
In addition, you must update your registration and driver’s license as per the law of your new state — most states require motorists to update these within 30 days of establishing residence.
If you’re moving to a no-fault state from an at-fault state, the coverage requirements are different. In no-fault states, motorists are required to get Personal Injury Protection along with liability coverage to claim expenses in an accident, irrespective of damage.
The following states follow the no-fault system for car injury claims:
- District of Columbia
- New Jersey
- New York
- North Dakota
If you’re moving to one of these states, your car insurance coverage should be updated.
If you’re just driving to another state, your car insurance policy will cover you. On a permanent move to another state, you must update your policy. You can call your agent to see if your insurance carrier offers coverage where you’re moving and ask them to update the same.
However, moving is a good opportunity to seek quotes from multiple insurers so you can get the best rates.
Impact of Moving on Car Insurance Premiums
Your car insurance premiums may or may not rise when you move to a new state. It completely depends on factors like where you’re planning to live, what’s the theft rate in your new city, or how many fatal crashes take place close to your new home.
That’s why it’s important to shop around, because your current provider may not offer you the best rates. Local providers might offer you lower rates than some other carriers.
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Managing Auto Insurance Paperwork
When you buy auto insurance, you receive a thick envelope full of documents. These papers include everything from your policy contract and disclosures that are required by law to ID cards and declarations pages that show information specific to your policy.
You might instantly think of all of the paper that’s wasted every time someone buys insurance, but each document has helpful information you should be familiar with.
It’s tempting to file your car insurance documents away without ever looking at them.
After all, you don’t need to understand the policy language until you need to file a claim. Fight that temptation.
You will need to be familiar with what is on the certificates and accounts your insurer gives you, as you’ll have to check coverages and provide proof of insurance on many different occasions.
To help you make sense of your paperwork, we are going to go through everything from declaration pages to how you get your car insurance certificate.
What is a declaration page for auto insurance?
The Personal Auto Policy contract includes terms and conditions that apply to all of the standard auto insurance policies that are issued by a specific carrier.
While the policy terms are the same across the board for all of the policies issued, every policy has information that is personal to the insured who buys the coverage.
You can find personal information about you and your covered property on the declarations page for car insurance. The key information found on the declarations page will vary from client to client.
That’s why this document is also referred to as the information page by some agents and representatives. Information on the declaration page:
- Policyholder name and address
- Policy number
- Policy term
- Insured vehicle information (VIN, year, make, model, odometer, annual mileage and safety features)
- Schedule of coverage options on each vehicle
- Premiums for each coverage carried
- Total policy premium
- Policy forms and endorsements
- Discounts on the policy
- Surcharges for tickets and accidents
- Drivers listed on the policy with vehicle assignments
There are a few instances when a declarations page will be helpful you review your coverage or prove that you have coverage that’s required by a loss payee.
Here are some of the scenarios where you might need your information page:
- You’re buying a new car and need to prove you have full coverage
- You want to see if there are errors on your policy ratings
- You need to verify the loss payee clause is accurate
- You’re shopping for insurance, and you want to compare premiums and coverage options
So make sure to save your information page in a safe place.
What is an auto insurance binder?
You should never just take an insurance agent’s word for it when they inform you that you have coverage. You will need some sort of document that solidifies the fact that you’re covered in writing just in case you have to file a claim. This document is called a binder letter.
A binder letter is a document that proves you have temporary coverage for a stated period of time. It’s dangerous for an insurance carrier to issue your ID cards for the entire term before they’ve verified your information.
The letter is something that you carry in your car as proof of insurance until everything is issued and you get the official ID cards. However, if something is found and your rates are going to change, the insurer can take one of a few different actions.
The first action would be to raise your rates to match the new risk class you fall into. If this happens, the carrier will bill you for the difference between what you’ve already paid and what you owe for the coverage that’s already been provided.
The company can also cancel the coverage if you don’t qualify for it. If the insurer decides to do this, you’ll get a notice giving you about 10 to 30 days to find new coverage elsewhere.
Carriers will only cancel policies if it’s found that you’ve lied on the application. This is called a policy rescission.
This is why car insurance binder letters are important. These documents make it possible for the carriers to give clients coverage right away. If you’re about to shop around for insurance and you need immediate coverage, don’t forget to print a binder. Learn more here: what is an auto insurance binder?
How can I get a copy of my auto insurance certificate?
Your insurance certificate is usually a card that your insurance company sends you in the mail upon signing up for an auto insurance policy. Getting a copy of your current insurance information is a fairly easy task. If you lost the original copy of your proof of insurance, you can always get another copy from your insurance company.
The quickest and easiest way to do this is to call your insurance agent directly, who will be able to arrange to mail you another copy.
If you find that your insurance information is not up to date, you should be sure to fix any issues immediately. Many state laws require insurance companies to notify the state department of motor vehicles if a driver has canceled or not renewed their policy.
An insurance agency may choose not to renew your policy or cancel your coverage completely if you fail to pay the required premiums or if you are not honest on your insurance application.
If you are searching for your auto insurance card because you have an issue with your coverage, this is a prime opportunity to consider whether you should shop around for a better insurance rate.
If your current insurance policy has been canceled or not renewed by the insurance company, then you should act immediately to make sure that you retain at least the required coverage under your state law.
If you find that you do not have a copy of your insurance card, the best thing to do is call your insurance company right away.
They can send you another copy in the mail, which you should keep on you whenever you drive. In some states, you can face serious penalties for not having physical proof of insurance if you are pulled over by the police or involved in a car accident.
Do I need to carry my auto insurance certificate?
The police may stop you and demand to have a car insurance certificate, and if you do not have it with you, the police may require you to produce it in the next seven days at a police station.
It can also lead to fines, suspended licenses, and court summons. However, your attitude greatly influences how the police handle the situation.
A proof of insurance is important because of the following reasons:
- It helps the police pull off the uninsured cars off the road.
- It helps the drivers cover all the third party liability claims in the case of an accident.
- Insurance card assists in filing a claim as soon as the accident happens since it has all the information required at the back.
- Car insurance protects individuals against losses that occur during accidents as well as theft.
The insurance companies provide the insurance cards, and they will always provide an additional copy of the auto insurance policy should you misplace yours.
Other insurers also allow access to online accounts in their website to allow easy means of verifying car insurance. Some states have embraced the use of electronic reporting rules that allow motorists to prove their liability coverage electronically.
The motor vehicle departments in different states have made it a requirement for the insurance companies to notify them whenever cancellation or failure to renew a driver’s license is made.
Do I need to keep my old auto insurance documents?
If you are wondering what to do with copies of your past auto insurance policies or certificates of auto insurance, you probably do not have to keep them any longer when you sign up for a new auto insurance company.
The only reason that you may need to keep a copy of them is if you have a pending claim open under your current auto insurance coverage and are looking to switch to another one.
If you were involved in an accident, another driver could have a claim against you that has not yet been filed.
You will want to retain a copy of your auto insurance policy in this scenario because you need to know exactly what is covered under your auto insurance policy.
You may also want to keep documents for tax purposes. While the personal use of your vehicle cannot be counted in your vehicle expenses in terms of a tax deduction, you may be able to deduct the expenses related to your vehicle for business purposes.
This is especially true if you maintain an auto insurance policy specifically for your business vehicle.
You will need to show the exact cost of your auto insurance premium in order to tax this tax deduction. The IRS may audit your tax returns for a period of up to seven years.
If you take a tax deduction, you should be prepared to show accurate documentation of it. This is why you would want to retain proof of payment of your auto insurance premiums for up to seven years if you claim this deduction.
Are you wondering, “How long should I keep my car insurance statements?” or “Do I need to keep old car insurance documents?” No, they can make their way to the recycling!
Can I view my auto insurance policy online?
Lost track of some of your documents. Once you get online quotes and you choose the plan that you like the most, you can bind the policy and choose an effective date by submitting your application and making a payment.
After the policy is issued and you get your declarations page, you should be able to view your auto insurance policy online as long as you have your policy number.
You’ll probably get a copy of your quote via email when you’re getting estimates online. Technically, this isn’t viewing your actual policy online.
The quote will probably have a link for you to follow where you can enter your policy number and your name so that you can register to access your policy online. Viewing and printing auto insurance documents online is also an option for you when you’re doing business with a large insurer.
Reputable companies that are established in the industry have online systems that display information and give the policyholder the option to make changes as well.
Here are some of the changes that you may be able to make online:
- Adding a newly purchased car
- Deleting a car from the policy after it’s sold
- Replacing a vehicle that was traded in
- Removing coverage from a vehicle or changing limits and deductibles
- Adding coverage to a vehicle
- Adding a driver to the policy
- Changing loss payee information
- Changing your mailing or physical address
As you can see from the above list, you can do more than just view your insurance policy online.
Paying Your Auto Insurance Policy
Managing and figuring out payments for an auto insurance policy can be difficult, which is why we are going to go through a few common problems and questions about car insurance payments.
Keep reading to learn all about how car insurance payments work.
How often is auto insurance paid?
You may be wondering how often you have to pay for auto insurance? It depends on a number of factors, including the policy and the company you decided to get coverage from. When it comes to insurance payments, there are several options available to you. In the past, insurance had to be pre-paid for a six-month or one-year term, but companies started offering monthly plans that are easier on tight budgets.
However, taking advantage of the monthly options can lead to higher fees. While most companies are happy to provide you with payment options, you should remember that these do come with some hidden costs.
Before you decide to make smaller payments throughout the year, ask your company if there are any fees associated with this option.
The insurance company may charge a little more to cover administrative costs and the assumed risk that a client may stop paying on the policy midterm. Some companies don’t offer installment plans, but they will provide you with assistance for financing, known as a “premium financing agreement.”
If you decide to sign up for this type of plan, be sure that you understand:
- The schedule of payments
- Finance charges and annual percentage rate
- The potential consequences of a missed payment
These fees can vary widely from one company to the next. When shopping around, be sure to ask if there are any installment fees associated with paying your bill a little at a time.
Can I pay for auto insurance in cash?
Out of all the major auto insurance companies, there are only three where you can pay your car insurance with cash:
- Nationwide Group
- MetLife Personal Lines Group
- Mercury General Group
Those preferring to pay in cash should request quotes from these three companies in order to review the coverage options they provide. Paying cash is a nice benefit, but the prime area of consideration should always be the quality of the coverage.
Flexibility seems to be expanding in the auto insurance world.
Interestingly, MetLife and Mercury are two of three insurance providers that accept PayPal payments as well. The third PayPal-friendly insurance company is Progressive Insurance.
Does this mean that only the three companies listed above are capable of accepting cash payments? Rules do change from time to time and other insurance companies, big and small, may change their policies in the future. It never hurts to ask.
Can I pay my auto insurance online?
When you’re considering the auto insurance options available in your state, one important factor to keep in mind is ease and convenience of payment.
You can make use of a variety of mechanisms to pay your car insurance bill:
- Traditional mail-in payments
- Automatic payment
- Online banking managed through your bank’s website
Some of the major car insurers, however, also offer online payment through their own website, an extra bit of convenience that can help you pay your car insurance bill quickly and easily with a credit card or bank transfer.
More and more, when it comes to asking if online payment is an option, for car insurers, the answer is an enthusiastic, “Yes!”
There are a number of payment options offered by major insurance providers. While the large national insurers offer a variety of online payment options, there could also be small or localized offices that do not offer these payment options.
It’s best to check directly when setting up your insurance policy to ensure your access to online payments.
What if I can’t afford to pay my auto insurance bill in full?
If something happens in your life and you can longer afford to foot your auto insurance bill, it’s time to explore other options. Maybe you need to pay legal fees, you have a large medical bill, or you lost your job, the insurer still expects payment at the end of the month.
Since you can’t pay a fraction of your monthly premium, you will have to come up with ways to cut down your premium to a figure you can afford.
Insurance companies aren’t fond of people who can’t pay their car insurance bills. Your policy will be canceled leading to a coverage lapse. You don’t want that. Here are a few ways to lower your auto insurance bill:
- Drive a cheaper vehicle – The higher the cost of replacing a vehicle, the more expensive it will be to insure. Driving a cheaper vehicle can lower your premium.
- Increase your deductibles – The deductible is the amount you will pay towards the settlement of your claim. Choosing a higher deductible reduces the amount the insurer will have to pay in the case of an accident which lowers on your premiums.
- Drop certain coverages – You can drop optional coverages such as collision and comprehensive. They are expensive and with a cheaper car, you probably don’t need them.
Is auto insurance a utility bill?
Utilities are specific services that are supplied by the local government at a cost. The services that are provided to help you keep your house up and running so that you can live comfortably.
Some of the services that meet the definition of utilities include:
- natural gas
Auto insurance is a financial contract but it’s more than just that. When you’re paying for your policy, you’re paying for the protection and the service.
You’ll have to pay the installment or premium to maintain your insurance coverage, but that doesn’t mean that the contract meets the definition of a utility.
If anything, auto insurance is considered an auto-related expense that’s part of the true cost to own a car.
Many people associate regular monthly expenses as utility bills. In most cases, your utility bills are paid monthly or quarterly because they are based on usage.
While it is one of those bills that you’ll have to manage that can be paid monthly, car insurance is not considered a utility bill.
Can I pay my auto insurance early?
Many people aren’t in a financial situation where they can pay their full policy premium all at once. Fortunately, there are payment options that will work for most customers.
If you can’t pay a six-month premium, paying a monthly installment might be a better option. Then, if your financial situation changes, you can pay the auto insurance early.
If you selected an installment plan, you’ll need to organize your finances so that you can submit your payments by the due date. Knowing the due date is crucial. If there’s no grace period, your policy will cancel if you’re just one day late submitting your payment.
Check your last premium invoice to see when your car insurance payment is due. If you’ve paid in full, check your ID cards to see when your car insurance term expires.
Sometimes, when you work overtime and you save money elsewhere on a bill, you might have more money in your pocket to cover your recurring bills. To relieve yourself the burden of paying all of the installments on time, you can pay off the balance of your policy.
Check your last invoice and look at the premium balance instead of looking at the current amount due so that you can submit your payment.
Can I get auto insurance if I owe another company?
There are only a few circumstances where you’ll actually owe another insurance company money after you’ve severed your relationship with them. Typically, even when a policy is canceled for non-payment, you won’t actually owe your old company money.
This is because of the way that premiums are invoiced. It’s only in rare cases that you’ll have an account balance when your account is inactive. One way that you might wind up accumulating a balance due with your car insurance provider is when you endorse your policy and you make a backdated change.
Backdating a change isn’t very common, as if do you have the right paperwork sometimes the agent is willing to do it.
By making the change in the past you will have a prorated balance due for the added coverage. That means that the insurance company must bill you for that prorated difference during an upcoming billing period.
If you don’t pay that invoice, contains charges for the past, you may wind up owing the company money even after the policy has lapsed. This can affect your ability to get a new insurer.
If you signed up for an auto loan and didn’t pay your lender, that information will be found on your credit report. Any future lenders that you wanted to deal with will be able to see that you had a bad payment history with your prior finance company. This is not how it works in the insurance industry.
In the insurance industry your reputation and your insurance history do matter, but not in the same way that those things matter to a creditor. Insurance providers are more interested in knowing whether or not the vehicle owner maintain their insurance. If you had any lapses in coverage, the agent might be concerned. Having an insurance lapse, even it’s only a lapse for a week or two, is enough for the company to offer you a high-risk rate instead of a preferred rate.
Managing an Auto Insurance Policy FAQ
Auto insurance policies can be a confusing subject. If you still have questions, you aren’t alone. Below are commonly asked questions about insurance policies. See if your question is on the list.
Can I have two auto insurance policies on one car?
Unjust enrichment is a very big problem for an insurer.
The purpose of insurance is to help you restore your vehicle to its pre-loss condition after you get into an accident.
If you have two policies, you could attempt to make a claim against both and get double the money. You are not meant to profit from insurance and if you do, you could face large penalties.
Insurance companies have the ability to put your claim on hold if they find out that you have another policy in place. It’s possible that the two companies will go back and forth trying to classify the other policy as primary.
It’s best to avoid this by comparing insurance policies and then choosing the best one. Use an online rate comparison tool and cancel your old policy if you decide to make the switch.
Does my car need to be registered to get insurance?
If you have been driving a car that is not registered with your state DMV, you may face some trouble with state penalties. States require that cars to be driven on public roads are registered with the state DMV and insured.
You are also required to maintain current registration under your state law and have all of the proper tags on your vehicle at all times that it is driven on public roads. Failure to comply with these laws could result in your driver’s license being suspended or revoked along with some hefty fines.
Even though this is a requirement of the state, it is not enforced by your car insurance company.
That is to say, the car insurance company will insure a car as long as you are the owner of it and will provide coverage for any claims involving that car pursuant to the terms of your car insurance policy agreement.
One thing to keep in mind is that if you are pulled over and cited for not having the required vehicle registration, this could end up with you paying more for your car insurance in the future.
This is because the offense would end up on your driving record, which is something that all car insurance companies consider when deciding how much to charge you for your car insurance coverage.
When you buy your car from an established dealer, they are able to help you out with this process most times. Make sure that you keep a copy of your current vehicle registration in the car at all times when you are driving.
Make sure your car is registered to get insurance for it!
What if I can’t remember who my insurer is?
It may seem strange to come, but sometimes you may forget who your car insurance provider is. The best source for current information about your auto insurance policy is your proof of insurance card. You can also look for your insurer’s name on past bills. Here’s a list of places to find your insurance company:
- Mail statement
- Payment record
- Email messages
If you pay your auto insurance premium by check in the mail, then you are almost certainly sent a statement of when your bill is due.
The paper statement will obviously include the name of your auto insurance company along with contact information on how to ask any questions about your policy or coverage.
If you do not keep copies of your insurance bills, then you might be able to find the name of the company that you paid by looking through your previous bank statements.
It is very rare to ever make a car insurance payment in cash, so you will most likely have a payment record somewhere in your banking files. If you have signed up for electronic billing with your auto insurance provider, a quick search of your email may be able to turn up the name of the company.
You may also have electronic copies of billing statements as well as your important policy documents in your email messages.
Does the name on the auto registration and insurance have to match?
Most states require that if you change a name on the insurance policy, you must simultaneously change the name appearing on your vehicle title and registration.
Some insurance companies may attempt to deny the payment of an auto insurance claim if your vehicle registration and insurance policy name do not match.
These days, identity theft is a big problem for auto insurance companies.
While it’s possible that your auto insurance company will pay a claim in an unusual circumstance, such as when you’re driving your sister’s car and have an accident, it’s best not to assume that the auto insurance company will honor such a claim.
Ask your auto insurance agent about the particulars of your auto insurance policy. If you’re the owner of the vehicle, and your auto insurance policy is written in your name, you’re covered in the event of an auto accident (as long as your auto policy is paid and in force).
So to safeguard your identity, don’t let uninsured drivers operate your automobile. If they cause an accident while driving your personal car, the financial results could be disastrous for everyone involved!
Can I use a PO Box for my auto insurance?
Many drivers set up a post office box as a matter of convenience when receiving their mail, and others do so for the sake of privacy or anonymity. You may wonder if you can use your post office box when you set up your auto insurance policy as well.
While you may have legitimate reasons for wanting to provide only your post office box to auto insurance companies, most insurers need to know precisely where you live and where the car will be parked for several reasons.
Your physical address will be analyzed carefully to determine your rates, and statistics for litigation, car accidents, theft, and other factors within your ZIP code will be used in part to determine your rates. In addition, your physical address may also be used to calculate your commute length to work.
The average mileage you put on the car each year can affect your rates as well, so this is important information for the auto insurance company to have.
Because your physical address plays such an important role in your car insurance rates, you will need to update your auto insurance provider as soon as possible each time you move to a different location. Even when your post office box used as your mailing address does not change, your physical address change can alter your rates.
Can I backdate my auto insurance policy?
Is it possible to can auto insurance be backdated and have the auto insurance provider pay your claim anyway?
The answer is no. No auto insurance company of good standing will agree to backdate a client’s car insurance policy under any circumstances.
Simply put, backdating a policy is saying that your vehicle was insured before the date you actually purchased the coverage, which is in fact, lying.
On top of that, saying that a car insurance coverage was in effect long before it was even purchased could attract liability consequences for the insurance company.
Backdating a car insurance policy to a time when you were involved in an accident guarantees a payout from the company, meaning that the insurance provider doesn’t benefit from doing business with you.
Backdating car insurance is a risky business. No honest auto insurance provider can be involved in the acts of backdating a policy.
Even if a car insurance provider agreed to backdate a policy, the average American citizen couldn’t afford it since the company would have to include risk-based costs to account for any unknown infractions that might have occurred before the policy was issued.
How do I find out if I have auto insurance on a new car?
If you already have an active insurance policy, and you’re purchasing a new car, the newly acquired vehicle will have coverage for a limited period.
Policyholders who aren’t sure whether or not they have coverage can find this information in the Personal Auto Policy contract booklet.
Typically, a newly acquired vehicle that’s not replacing a vehicle on your policy is covered for 14 to 30 days, with four days of automatic full coverage on basic policies.
If the car is replacing a covered vehicle, the new car will have insurance for the remainder of the term, even if you don’t contact your agent to make the necessary changes.
It’s important that you have insurance before you drive off the lot. Otherwise, you are driving without insurance, which is illegal.
Can you change the date your car insurance is due?
There are going to be a few different ways in which, for insurers that allow it, you will be able to change the due date of your car insurance policy.
The first way is going to be the traditional route over the telephone. You pick up the phone and reach out to the customer service line of your insurer and voila, you can have them make a change to your billing terms and adjust the due date at that point.
The other ways in which changes can now be made typically for when car insurance is due is through the website of the insurer, or through their smartphone application.
Both of these are becoming more common than ever before as you can typically make changes even to your coverage without ever having to actually talk to your insurer over the phone.
Car insurance companies should be flexible to you as a consumer because you have so many options out there. Those that are not are the ones that you probably want to avoid, as they are not going to be in your favor when it comes to giving you the value and coverage you would expect.
Know that you should have the power to change when your car insurance is due and act on that ability when necessary.
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We hope this article helped you to understand how you have to manage your auto policies and when it is time to seek quotes for a better rate or value.
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