Is It Possible to Cancel Your Car Insurance at Any Time?
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You can cancel a car insurance policy at any time. You may even get a partial or full refund of any premiums you’ve prepaid. However, it’s a good idea to do a little research before canceling your insurance to avoid consequences, such as a coverage lapse. A lapse can lead to increase premiums for you in the future.
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Key Takeaways
You can choose to cancel your car insurance policy at any time, regardless of your reason, but it’s a good idea to know about any fees or consequences this could cause.
If you cancel your car insurance before its renewal date, you may get a refund for some or all of your unused premium if you have prepaid. Depending on the cancellation used by your insurer, you may receive a full or a partial refund.
There’s no one-size-fits-all best time to cancel car insurance. Consider your insurance needs, rates in your area and possible fees when making a decision about canceling.
How Soon Can You Cancel Your Car Insurance?
There’s not a one-size-fits-all best time when you can cancel your car insurance. Consider your needs and check with your insurer to learn about their cancellation rules when deciding whether and when to end your policy.
You can request to cancel your policy at any time. You’re within your rights to discontinue your coverage before your renewal date or right after your policy takes effect. However, you should know that a last-minute cancelation can sometimes lead to fees or future penalty rates.
The best way to determine whether your insurer has specific cancelation guidelines is to contact your insurer or review your policy’s fine print.
Depending on your policy, your insurer may use short-rate cancellation. This means your insurer deducts a percent (usually between 10% to 15%) of any unused premium before refunding the remaining amount.
For example, let’s say you paid $1,200 for a 12-month policy and decided to cancel after the sixth month. You would have $600 of unused prepaid premiums remaining. An insurer using short-rate cancellation might deduct 10% from the $600, which would bring your refund to $540.
What Happens When You Cancel Your Car Insurance?
Although you can choose to cancel your policy at any time, you should be aware that several things could happen when you do. For example, many insurers don’t charge a cancellation fee, but some do. It’s a good idea to find out what’s stated in your policy so that there won’t be any surprises.
You’ll usually get a refund of your unused prepaid premiums. To ensure you have a favorable outcome, you’ll want to follow your insurer's cancellation process. You may end up purchasing coverage from the same insurer in the future, so you don't want to leave a negative impression.
Your insurance company can readily answer most, if not all, of your questions. Reaching out to them may seem intimidating, but they should be able to help you with your concerns. You can usually contact your insurer using phone or email.
Why People Cancel Their Car Insurance Policies Abruptly
There are certain situations where a cancelation — especially a sudden one — may not be your best course of action.
For example, if you’re going for an extended vacation, it may be better to suspend your coverage rather than cancel. There are other reasons you may want to cancel your car insurance policy.
You may have found a better rate through another company, or maybe you're not happy with the service you're getting. Moving to another state is another common reason you may want to cancel your coverage.
They're moving to a different state.
Not all insurers offer policies in all states. If someone moves to an area their current insurer doesn’t cover, they'll need to cancel their current policy and open a new one.
Another provider offers lower rates.
Comparing quotes between insurers may help people find a company that offers lower premiums. In that case, they may want to switch providers, which will lead them to cancel their policy with their current provider.
They're dissatisfied with their insurer’s service.
It’s not all about cost. Even if someone pays the lowest available rate with their current insurer, they might be frustrated with how their provider handles claims or other service needs. In this case, they may want to cancel their policy and switch to a different insurer.
They're selling their car.
Someone may choose to cancel their car insurance policy if they're selling their vehicle and don't have plans to buy a new one. However, if they replace their vehicle with a new one, it might be better to transfer coverage instead of canceling it.
Mistakes You Should Avoid When Cancelling Your Car Insurance Abruptly
Canceling your car insurance policy isn’t a complicated process. That’s why it can be easy to overlook some things that could result in unnecessary problems for you.
These can include having a coverage lapse, incurring fees or penalties or failing to compare quotes in advance to get the best rate. The section below explores the mistakes policyholders sometimes make when canceling their car insurance policies and how to avoid these situations.
Forgetting to notify your provider that you want to cancel your car insurance.
When you find a better deal elsewhere, you may get so excited that you sign up for new insurance and forget to cancel your original policy. This could result in you paying for two car insurance plans simultaneously.
To prevent this, be sure to notify your insurer about your intent to cancel your policy.
Not checking your insurer’s cancellation process.
You can call your insurance company to request a policy cancellation, but some companies require a signature to make it official. Asking your insurer about their cancellation process can help you ensure you meet all the requirements. You can also take this opportunity to ask about their cancellation fees and refunds.
Incurring a coverage lapse between your old and new policies.
A coverage lapse occurs when you cancel your old policy before your new one begins, creating a coverage gap of a day or longer.
A common practice to prevent this is to have your new policy take effect at least one day before your cancellation becomes final. You can coordinate this with your insurer.
Deciding on a new policy before shopping around.
If your premium is high and you want to explore other insurance options, don’t forget to compare quotes from multiple providers. You’ll want to provide the same information as you gather estimates to get an accurate comparison. Ideally, you should look at three to four quotes before deciding which one to get.
Frequently Asked Questions
The process may be easy, but you may still want details about canceling your car insurance policy and the best timing for doing that. Here are the most commonly asked questions about it.
About Mark Fitzpatrick
