Is switching car insurance after an accident a good idea?

Car insurance can protect you from the financial implications of a car accident. However, suffering a car accident can be devastating none the same. It could also cause your car insurance premium to increase in the oncoming renewal cycle. And this may cause you to wonder if shifting your car insurance after an accident is a good idea. Well, read on to find out!

When can car insurance be switched?

Technically, car insurance can be changed at any time. Not just during car insurance renewal. However, if you change your car insurance before the renewal time, you may be charged a penalty for early cancellation. That is why it may be better to switch car insurance plans during insurance renewal. Unless you are relocating, adding a new driver or buying a new car.

Can you switch car insurance after an accident?

Yes, changing car insurance after an accident is possible. Although, it may cost you more to switch car insurance plans, than stick with your current plan. Usually, car insurance is switched to save money on the policy premium. However, during an unfortunate accident, switching your car insurance may only increase your new policy premium with immediate effect. In the next subheading, we will discuss why this is the case.

How to switch car insurance after an accident?

If you raise a claim for accidental damages, you may incur an increase in the policy premium in the forthcoming cycle. This is because your insurer will start considering you a high-risk customer. This may tempt you to change car insurance after an accident because you may think that it will save you money. 

But in reality, that is not the case. Right after an accident, switching car insurance providers will still result in a higher premium being charged. Because your new insurer will consider you as a high-risk customer too. That is why we recommend that you stick with your current insurance plan after an accident. 

Because your current insurer will not update your new premium until the renewal cycle comes around. Whereas a new insurer may increase your premium immediately. Thus, consider switching your insurance plan after approximately a year. By then the hike in premium rates would have come down.

When should I not switch car insurance?

Although more often than not switching car insurers may save you money on your policy premium, in some cases it may be better to stick with your current plan. As previously mentioned, in the context of accidents, it may be more beneficial to stick with your current plan and choose another plan after the duration of a year. That way you will be able to save money and select a more suitable car insurance policy.

Things to know about car insurance cancellation

If you are looking to switch your car insurance, below are some points you need to keep in mind regarding car insurance cancellation.

• If you decide to discontinue your car insurance policy, you should inform your insurer as soon as possible. The cancellation process may take up to 5-7 days.

• An executive may be allotted to you to guide you through the process. Sometimes, you may have to sign a document or send an email to initiate the cancellation.

• Make sure that your car insurance certificate is returned. That certificate may be crucial for preserving your accumulated No Claim Bonus (NCB).

• Check if you are eligible for any refunds. Usually, if you have pre-paid the entire policy premium, you may receive a refund on a pro-rata basis.

• Choose a new car insurance policy meanwhile. Failure to possess one may result in incurring legal penalties.

Things to know before switching car insurance after an accident

Below are some of the things you should know before switching your car insurance.

• Review coverage: When buying car insurance, it is important to choose a plan that offers sufficient coverage. We recommend a Comprehensive Car Insurance Plan as it offers coverage for own damages, as well as third-party liabilities.

• Compare plans: You can browse online, compare car insurance plans and select a policy that has the best cost-to-benefit ratio. You can also check out the social media handles of a prospective insurer to get an idea of their customer perceptions and ratings.

• Check insurer’s claim settlement ratio: In insurance, a claim settlement ratio refers to the percentage of claims settled by an insurer over a particular duration. So, choose an insurer that has a high claim settlement ratio.

• Find out about the claim settlement process: It is important to choose an insurer that has an easy claim settlement process. That way, you don’t have to stress out while raising a claim. Usually, online insurers have an easy process.

• Check for necessary add-ons: With a Comprehensive Car Insurance Plan you can also select add-ons. Add-ons offer additional coverage to the base plan. Make sure that the plan you choose has the add-ons you require.

• See the number of Network garages: Usually, car insurers have tie-ups with certain garages. If you avail of repairs at these garages, the expenses will directly be paid by your insurer. Check if your prospective insurer has sufficient and accessible garages.

To sum up

Switching car insurance can be profitable in most cases. However, if you raise a claim for an accident, it may be better not to switch your plan immediately. Doing so may increase your policy premium payable. Therefore, wait for around a year. By then the rates incurred due to the accident may have come down. After that choose a suitable plan and enjoy the savings.

Frequently asked questions

Below are some of the frequently asked questions regarding switching car insurance after an accident.

Is it possible to switch car insurance in the middle of a policy term?

Yes, it is possible to switch car insurance plans in the middle of a term. However, it may not always be beneficial. Some insurers may charge a cancellation fee for ending a policy before renewal time. Thus, check if you may incur such charges before making a switch.

Will I lose discounts and other perks after switching car insurance?

No, certain benefits like a No Claim Bonus can be carried over. Provided you get back your car insurance certificate during cancellation and share the same with your new insurer. However, there may be some benefits that are insurer or plan specific. You may not be able to transfer such benefits.

When to switch car insurance?

It may be most advantageous to switch at the end of a policy term. That way, you may not incur any cancellation fee. However, you may consider switching your insurance in the following scenarios.

• When including coverage for a new driver

• If you buy yourself a new car

• If you relocate to a new city

• If your insurer suddenly increases your premium

Can I renew my car insurance policy after the policy renewal deadline?

Yes, you can renew your car insurance even after the policy renewal deadline. Usually, insurers provide a grace period after the policy renewal deadline. During this time you can renew your policy. However, you may not be protected under any coverages until the policy becomes active.