Here’s the situation…
You have a car insured with a particular insurance company. But you’re planning to trade in your car for something new.
So the question is: “What do I do with my current auto insurance policy?”
Should I cancel it? Should I shop around for a quotes for the new car?
Here’s the short answer: DON’T CANCEL YOUR CURRENT POLICY!!!
Make the switch
Here’s the longer answer: When you replace an existing car, all you have to do is call your current insurance company and ask them to make the switch. They can easily make the switch on your current policy and then send you the new pink slips.
Of course, you could call around to try to get better quotes and, even if you do find a better rate, you still wouldn’t want to cancel your current policy right away. Here’s why – Cancelling a policy before you have the chance to set up a new one might cause a “gap” in your insurance history. Sometimes, those “gaps” might negatively affect your rate.
So, if you do find a better rate and plan to switch insurers, the best thing to do is to set up the new policy and then cancel the old policy, effective the date that the new policy starts. That way, there will be no “gap” and your record will remain intact.
Also note that some insurance companies might charge you a penalty for cancelling a policy early. Be sure to take that potential penalty into account when making your final decision.