How does one go about canceling an auto insurance policy anyway? Canceling a car insurance policy is an action that all car owners are likely to take at some point—in many cases, more than once—over the course of their driving life.
Perhaps a car no longer needs the comprehensive policy taken out when it was new. Maybe the driver is moving to another state. Maybe the reason for cancellation stems from dissatisfaction with the insurer, or a better price found elsewhere. In fact, it is a wise decision to periodically compare car insurance rates to find the best one.
The price of a policy can vary widely from insurer to insurer, and the company with the best rate one month may not necessarily be the same bargain next month. Changes in a driver’s history and lifestyle can have a have a huge effect on how much he pays for his policy as well. All told, it is a common and useful practice to alter car insurance policies as the situation dictates. Why not enter your zip code in the free quote box to the right and start comparing car insurance today?
Being in the “Drivers Seat” When Canceling a Policy
If you want to cancel your car insurance policy, be sure that you are in control from the beginning. It is widely accepted that canceling one’s policy at any point is permissible as long as you provide written notification that includes the date of cancellation. The process will be different if you are canceling your policy to switch to another or if you would like to cancel coverage completely. In both cases, you will need to notify your insurer that you are canceling your policy. You can initiate this process over the phone, and then follow up with a letter or via a cancellation form that you will be sent by your insurer. Read the form carefully, with attention to the fine print, before you sign away your coverage.
You may be entitled to a refund for a portion of your policy if you paid in full for the year. The rules guiding refunds differ with each insurer and from state to state. In almost all cases, there will be a fee for cancelling early. The fee, which will be taken out of the refund, will often equal your insurance payment for one month. Make sure you are aware of your company’s guidelines for refunds so that you can get all the money you have coming to you.
Canceling Your Car Insurance Policy to Switch to Another
Before you cancel an existing policy, be sure you are ready to go with your new provider. You should have approval and, ideally, have paid in full for your new policy. The cancellation date for your old policy should be the day before your new policy officially goes into effect. This will ensure that there is no lapse in coverage when you cancel with your initial provider.
One thing you should never do is assume that your policy terminates at the end of the term. If you do not notify the insurer of a cancellation, many companies will automatically continue your policy. Failing to make a payment on an existing policy can lead to the insurer canceling on you, which is vastly different from you canceling the coverage yourself. When an insurer cancels your coverage, your credit report will bear the brunt of the damage. You will risk higher premiums in the future because you will be considered more of a risk. The cost could extend to higher interest rates on loans and credit cards as well.
There may be other entities you need to alert of your changed insurance status. Each state requires that its department of motor vehicles be notified of any changes in insurance. If you have a loan on your car, the lien holder must be informed as well. If you are cancelling insurance completely, you will need to make these notifications yourself. If you are changing insurance providers, your new company may or may not take care of it for you. Be sure you know what is expected of you when you take on your new policy.
Comparing Car Insurance Policies
Before you make the decision to cancel your insurance policy, it is always the best course of action to find out what different providers offer in terms of coverage and rates. Whether you are looking for a new comprehensive and collision policy or are considering downsizing to liability-only coverage, you are throwing away money if you don’t find the best policy out there for your situation. Online rate comparison tools make the process simple. Compare car insurance quotes today!
