Are you thinking of canceling your car insurance policy? Here’s how to do it, how much it costs, and when to avoid it.
If you want to switch to a new insurance company or get rid of your auto insurance altogether, you’ll have to cancel your existing policy. You can do this by requesting a cancellation from your current insurer. If you don’t notify your current insurance company, you could face high fees and a bad reputation with future insurers.
That’s why it’s important to know how to properly cancel your car insurance policy. This article outlines the steps you need to take to cancel your policy, as well as:
So, you’ve decided you want to cancel your car insurance policy. What next? These are the steps you’ll need to follow to cancel your current policy:
You’ll need to purchase a new auto policy before canceling your current one. Unless you’re giving up driving altogether. Driving without insurance is illegal. You can get hit with a hefty fine for doing it. Each state issues different fines and penalties for driving without insurance. Check with your state department of insurance for more information.
Before canceling your coverage, read the fine print of your car insurance contract. Is your policy expiring in a month? Or is it expiring in six months? If it’s the former, you probably should hold out another month—especially so you don’t have to pay a fee.
But if it’s the latter, don’t feel obligated to stick with your current plan. It’s easy to remove yourself from your current policy. Just take into consideration the fee you’ll most likely have to pay.
Also, look into whether you’ll need to fill out a cancellation form or craft a letter of resignation. Your provider may only require filling out a form. However, it’s always best to write a letter or stop into your agent’s office. It’s much more personal and clears up any questions either of you may have.
Also, keep in mind you may need to give at least a 30-day notice, depending on the insurer.
Most insurers will provide a pro-rata cancellation refund, or a short-rate fee.
When you receive refund, it might come as a check in the mail. Or it may be directly deposited into your account. The amount of time it will take to receive it depends on your provider and when you cancel it. Most insurers send out refunds within two or three weeks of cancellation.
There are several reasons you may want to cancel your auto insurance policy. Scenarios that would lead someone to cancel their policy include:
If you’re getting rid of your car, you may consider getting rid of your insurance policy. If you’re giving up driving entirely, you won’t need to have another policy waiting.You can always change your insured vehicle on the policy and stay with the same company if you got a new car. But if you find that your insurance rates will drop with a different company, it's easy to make that move. Make sure you have insurance when you switch, otherwise you could face a lapse in coverage.
Maybe you found a better deal elsewhere and want to change your policy to a different car insurance company. In that case, you’ll have to purchase your new plan before you cancel your current one. That’s because you run the risk of facing a lapse in insurance if you don’t have a policy in line.
If something major changes in your life, it could impact your rates, for better or for worse. These are some changes that may make you reconsider your auto insurance policy:
If you’re unsure about whether you could be saving money on auto insurance, shop around by comparing quotes from different insurance companies. Things like buying a safer car or moving to a different location could cause your prices to decrease, and you want to make sure you’re getting the best deal.
Car insurance companies have different policies surrounding cancellation fees. Many carriers charge a fee when canceling a policy early. It ranges anywhere from no charge, to 10 percent of the cost of the policy, to a flat rate of $50 or more. These charges vary depending on the state you live in, as well as your specific policy and situation. Be sure to check with your insurance agent to verify how much you’ll be charged for canceling your policy. In general, this is what you should expect for cancellation fees if you’re insured by one of these top companies:
Curious to know how much you’ll have to pay? Check with your insurer or read your contract. Each company charges a different amount.
If you’re considering canceling your policy, it could be tempting to just stop paying for it. There are several reasons why you shouldn’t go down that road. If you’re thinking of canceling your current auto insurance policy, you’ll have to let them know before you just up and leave. Fortunately, it’s easy to remove yourself from your policy.
Leaving without informing your insurer could cause lasting consequences. Even if you’ve already purchased a new policy at a different company, you’re still obligated to pay for your previous policy. If you don’t, they’ll cancel your policy. And that increases your risk level in the eyes of insurers. That, in turn, can make car insurance companies charge you higher rates.
You’ll need to wait until you pay your deductible and your claim is paid out with your old company. The reason being because new insurers won’t want to pay out an old claim. They don’t want the financial burden of paying for your losses.
Don’t cancel your old car insurance policy until you buy a new one. Driving without insurance is illegal.
Another reason not to cancel your old policy before you get approved for a new one? The new company may reject you and you’d be left without coverage.
Also be weary of canceling a car insurance policy right after you buy it. There are often increased fees for canceling it early in the term.
The best time to switch policies is during the renewal period, rather than mid-term. Just remember to notify your insurer that you aren’t renewing.
Forget to do this and your policy may automatically renew. Also, fail to pay because you thought you canceled, and it’ll be canceled for non-payment. That will go on your record, and it can affect your insurance score. To avoid this, stay on top of the cancellation process and all due dates.
QuoteWizard.com LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions. All content and services provided on or through this site are provided "as is" and "as available" for use. QuoteWizard.com LLC makes no representations or warranties of any kind, express or implied, as to the operation of this site or to the information, content, materials, or products included on this site. You expressly agree that your use of this site is at your sole risk.