In certain situations, you may need to cancel your auto insurance policy. This can happen if you no longer own a car, move to a different area, change coverage, or change carriers. know and how to cancel your policy is not always clear. If you need to cancel your auto insurance policy, Bankrate’s guide can help you through the steps to do so.
how to cancel your car insurance
Google “how to cancel my insurance policy” or “how do I cancel my car insurance” and you’ll get a variety of results. however, the process is relatively easy. Bankrate’s insurance editorial team compiled the following list of best practices:
- Buy a new policy before you cancel: Buying a new auto insurance policy before you cancel your existing policy will protect you from a coverage gap. a lapse in coverage could cause your insurance rates to go up, since driving without insurance is illegal in most states.
- Contact your insurance provider: To cancel your existing insurance policy, you can call your insurer, contact an agent through the company’s mobile app, submit a cancellation request by mail or speak to an agent in person. depending on your carrier options.
- Ask to speak to an agent about cancellation: Each provider may have different requirements for canceling a policy. for example, some providers may require you to pay a cancellation fee or to give 30 days’ notice of the cancellation date. it may be beneficial to speak directly with an agent to be clear about what steps are required.
- You may need to sign a cancellation letter: Cancellation letters are not as common as they used to be due to the convenience of email and online forms; however, some auto insurers may still require you to send a letter requesting that your coverage be terminated. The letter usually includes your policy number, name, and the date you want to cancel your policy. If you prepaid your policy and have months of coverage remaining, you can also choose to include a request for reimbursement for the unused portion of your policy.
- Once finalized, request a policy cancellation notice from your auto insurer: Companies will usually send a notice to confirm that your policy has officially been cancelled. If you don’t get a notice, you can ask your insurer to provide one to make sure you have a written record of the transaction.
when should you cancel your car insurance
You may need to drop your car insurance for a number of reasons, but it’s important to consider your plan to go without coverage beforehand. For drivers changing carriers, buying a new policy before the current one expires is a good practice. If you’re making a permanent cancellation, consider discussing your situation with an insurance agent to make sure the lack of coverage doesn’t put you at legal or financial risk.
when you move
If you move to another state where your current insurance company doesn’t offer coverage, you’ll need to obtain a policy from an auto insurer that offers coverage in your new location. arrange for the new policy a few weeks before your current policy ends to avoid a lapse in coverage.
when you don’t have a car
When you sell a vehicle with no plans to replace it, you can cancel your auto insurance. however, it is generally a good idea to postpone the break in coverage until the new owner takes possession and title has transferred.
when you want a better deal
You may decide to change your auto insurance provider to get a better rate. Again, it’s usually a good idea to switch to a new policy before you drop your current coverage. Nearing the end of a policy term is often the best time to switch insurers. You should start looking for a new insurance company at least six to eight weeks before the policy term ends, so you have plenty of time to get new coverage.
when you want to reduce coverage
If you have an older vehicle that you own, you might consider dropping the optional comprehensive and collision coverages. consider the risks before dropping any coverage. It’s important to note that if you drop collision and comprehensive coverage, you’ll likely have to pay out of pocket if your car is damaged or stolen, so be prepared financially.
when you shouldn’t cancel your car insurance
While you can cancel your auto policy at any time, it may not always be necessary. Before you drop your coverage, it can help to think about why you no longer need insurance and create a strategic approach to avoid potential legal or premium issues.
when will you drive
Closing coverage on a vehicle you still plan to drive may not be the best idea, as it could put you at financial risk and potentially violate state law. Talk to a licensed insurance agent to learn more about how driving your vehicle without insurance could affect you.
when you move
Moving doesn’t automatically require you to get a new auto policy. Before you move, contact your current auto insurer to find out if you can transfer your coverage to the new state. moving may cause your rate to change because location is a factor in determining premiums. If your current insurance company operates local agencies, you may also need to choose a new agent.
when you have changes in life
You may want to keep your auto insurance policy when you get married or divorced. You can add a new spouse to your current auto policy and sometimes even get a discount for getting married. You may also qualify for a multiple policy discount if you and your new spouse have insurance with the same company. If you get divorced, you can usually remove your former spouse’s name from your current policy instead of canceling the policy entirely.
when temporarily not driving
If you take a break from driving for an extended period, some car insurance companies will allow you to suspend your car insurance. however, be sure to check state requirements. In some states, you will need to submit a request for suspension in writing, while in others you can simply call your agent. If you cancel your insurance policy instead of suspending it, your insurance company will likely view this break as a gap in coverage and your insurance premium may increase.
when your premium is high
A high premium doesn’t necessarily mean you should drop your coverage. Most auto insurers offer various types of discounts. You may qualify for a discount for driving safely, taking a virtual driving course, or reporting your car’s safety features like air bags or anti-lock brakes. Contact your agent to find out how discounts can lower your rate and if there are any discounts you’re eligible for that you’re not currently taking advantage of.
If I cancel my auto insurance, will I get a refund?
if you paid your premium in advance and canceled your policy before the end of the term, the insurance company must refund the remaining balance in most cases. most auto insurers will prorate your refund based on the number of days your current policy was in effect.
The insurance industry is highly regulated and each state has insurance statutes that govern how companies must handle reimbursements. In Nebraska, for example, an auto insurer must contact you within 15 business days of cancellation to inform you of eligible refunds. In many states, like Texas, if you finance your premium through a premium finance company, the insurance company may return the unused premium to the finance company, not to you.
Unless otherwise stated in a statute, auto insurance companies are generally not required to pay you back within a certain period of time. most insurance contracts generally state that the company will issue a refund “within a reasonable time.” To avoid reimbursement headaches, it’s best to notify your auto insurer of your cancellation plans when it’s time to renew your policy. Check with your operator before canceling to find out what the cancellation terms of the policy are.
car insurance cancellation fees
Depending on the auto insurance company, canceling your policy before the end of your term may incur a cancellation fee. State laws may determine if a fee is allowed, and if so, it is up to the insurer to set that fee, which is often deducted from the prorated reimbursement. Knowing if your state allows the fees could help you prepare for any cancellation fees in advance.
what happens if you stop paying your premiums without canceling your auto insurance policy?
If you wish to discontinue your coverage, you will need to contact your insurer or their agent. If you stop paying your premiums, but don’t cancel your policy, your insurer may continue to require payment from you during the term of your policy. you may be charged for the time your policy was active without payment.
If you don’t properly notify your auto insurer that you want to drop coverage, it may even affect your experience of finding auto coverage in the future. Even if you intend to find a new auto insurance company, a complete lack of payments could lead to a poor payment history and make it difficult to find affordable rates. Similarly, if you have automatic withdrawal enabled from your bank account to pay your premiums, you can continue to pay for coverage you don’t intend to keep.