Whether you want to sell your car or switch car insurance companies, you can cancel your current car insurance policy anytime you want. Whatever the reason you want to cancel, the process is straightforward. However, you will need to consider potential fees and timing before terminating your auto insurance policy.
Follow this article to the end to learn how to cancel your auto insurance. And there is more information you need to know before taking this step.
How to Cancel Car Insurance
To cancel your car insurance, contact your insurer or agent and let them know when you want the cancellation to take effect. Your insurer might ask for the request in writing.
Make sure to get a cancellation notice as proof that your car insurance has been canceled. Typically, you’ll receive a pro-rated refund for the remaining policy term. While there usually isn’t a cancellation fee, if there is one, it will be deducted from your refund.
Here’s how to cancel a car insurance policy and switch to a different insurer.
Know when to terminate your auto insurance policy
When changing insurance providers, avoid any gaps in coverage by making sure your new policy starts the day your old one ends. To do this, buy your new policy before canceling the old one.
If you’re selling your car, keep your coverage until the sale is finalized. This usually involves completing the bill of sale, transferring the title, and possibly submitting a Notice of Release of Liability to your state’s Department of Motor Vehicles.
Most states require you to maintain at least the minimum coverage on your vehicle, even if it’s not being used. Canceling insurance too soon can lead to fines, license suspension, and being responsible for any damages if an accident occurs.
Be aware that your insurance company may need 30 days notice to cancel your policy, so factor this into your timeline.
Shop around for a new policy if you need one
The next thing to do is to buy new car insurance. Think about how much coverage you need and what types of protection to include. Opting only for the state minimum might save you money upfront, but it can leave you financially vulnerable. If you’re financing your car, your lender will likely require you to have comprehensive insurance.
After deciding on your coverage needs, collect quotes from different providers. Your choice of insurer will be influenced by your situation. For example, Geico is known for its affordability and customer service, making it a great option for budget-conscious shoppers. If you have a less-than-perfect driving record, State Farm may be a good choice because it offers competitive rates for drivers with previous infractions and has high customer satisfaction ratings. Once you’ve compared options, reach out to your preferred provider and secure your new policy.
Contact your current insurance provider
After arranging new coverage, you can go ahead and cancel your old policy. Most insurance companies require a phone call to start the cancellation process, and some may ask for a written request for their records. In exchange, ask for a policy cancellation notice to keep as proof that your policy has ended.
When can I Cancel my Car Insurance?
You can stop your current car insurance policy whenever you want. Before canceling, be sure to have a new policy lined up to avoid any gaps in coverage, even for a short time. To avoid potential fees, you might choose to cancel your policy at the end of its term. Once you have a confirmed start date for the new policy, you can end the current one. Just make sure there’s a brief overlap in coverage to avoid being without insurance.
What happens after I Cancel my Car Insurance?
When you cancel your car insurance, you might receive a refund if you prepaid for your coverage and are switching to another provider. If you remain with your current insurer, they might offer a policy credit instead. However, refunds and credits vary depending on your provider and policy terms.
You could also face a cancellation fee, depending on your insurer. Some companies don’t charge this penalty, but others may require a flat fee of under $100 or around 10% to 15% of your remaining premium.
Reasons to Cancel Auto Insurance
There are various reasons why you might want to terminate your auto insurance and choose another insurer. This includes;
- If you move to another state, auto insurance requirements may vary by state. So, you may need to purchase a new policy to abide by the state law.
- You move to another place within the same state. Although moving within the same state does not require you to change. But insurers partially set their rates based on where you live. You may want to switch companies if you want to find a good rate with another company.
- If you want to change coverage, such as by increasing liability coverage or dropping comprehensive coverage,.
- Find an insurer with better rates; auto insurance companies do not have the same rates. So you may be able to find an insurer that charges lower rates than the others. That’s a very good time to switch to the company. But you need to take the right steps to avoid being uninsured.
Keep in mind that canceling your auto insurance without securing new coverage can create a gap in your insurance history. This can often result in higher premiums when you seek insurance later, even if you cancel because you no longer own a vehicle.
If you want to halt coverage but still own a vehicle, consider temporarily suspending your insurance. This option may be available to snowbirds, military personnel on deployment, or others who will not use their car for a long time.
Can the Insurance Company Cancel my Policy?
You might think it’s easier to just stop paying your insurance premiums and let the company cancel your policy for you. After a grace period of up to 30 days, your provider might end your coverage due to non-payment.
However, this approach is not advisable. Cancellations for non-payment can lead to higher rates when you seek new coverage. If you keep an uninsured vehicle, you’ll face financial and legal liability if you cause an accident. Additionally, driving without insurance can result in a license suspension, and your car lender could repossess your vehicle.
In short, avoid this method. Stay on top of your insurance payments, and if you need to cancel, talk to your insurer. Canceling and switching car insurance is straightforward and can be done quickly and correctly.