Can I cancel my car insurance if I pay monthly?

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Here's what you need to know...

  • You can cancel your current car insurance policy if you pay monthly
  • There are certain steps you must follow if you plan to switch car insurance carriers and policy while avoiding a gap in coverage
  • You can locate a new policy with help from a car insurance comparison tool

If you have found a new, cheaper car insurance policy via a comparison tool, you may be wondering if you can cancel your current policy if you pay monthly.

The short answer is yes. You can absolutely cancel your current car insurance policy and purchase your new policy, but you need to make sure you do it in the correct order.

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Reasons Drivers Cancel Their Car Insurance Policies


Drivers cancel their car insurance policies and switch insurance carriers for a variety of reasons.

The top reason is often listed as saving money on their monthly premium costs. In addition, you may want a car insurance company with better customer service and lower rates.

In addition, your current policy is no longer offered by your insurance carrier.

Finally, you need more or less car insurance due to a change in your personal circumstances.

Reasons Avoid a Gap in Coverage

When you switch car insurance companies or cancel your policy, you want to make sure that you avoid having a gap in your insurance coverage.

A gap in insurance coverage is defined as owning a vehicle with a current registration and plates but not having a car insurance policy.

Many states like New York will outline the consequences of intentionally or unintentionally creating a gap in your insurance coverage.

When you have a gap in your car insurance, you can be declared a high-risk driver.

If you are caught driving without insurance or get into an accident without car insurance, you could be subjected to fines and legal penalties that you cannot afford.

Canceling Your Car Insurance Policy without Purchasing a New Policy


If you just want to cancel your current car insurance policy and not switch carriers, you must turn in your plates and registration to your local DMV if you are not selling your car.

This proves to the DMV that you are not going to drive your vehicle and that you do not need insurance for a vehicle you are not driving.

Once you turn in your plates, you will need to store your vehicle in a storage unit or a private garage. You will not be able to park it in a parking lot or on the street.

If the police drive by and see your car with no plates, it could be towed.

If you decide to go this route, you should understand that it could be vastly more expensive to re-establish your registration plates and a new insurance policy than it would be to purchase a car insurance policy that meets the state minimum.

If you are considering going this route, use a comparison tool to quickly check the rates of the cheapest insurance policy that meet your state’s minimum requirements.

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How to Successfully Switch Car Insurance Carriers

In order to successfully cancel your current policy and switch to a new carrier, you will need to follow these steps so that you do not accidentally cause a gap in your insurance coverage.

Even an unintentional gap could result in your being declared a high-risk driver and subjected to exorbitantly high insurance rates in the future.

  • Call your current insurance provider – It is important that you start the process by calling your current insurance carrier and asking them if there are any penalties or fees associated with canceling your car insurance policy before the end of your current term. While your carrier cannot stop you from canceling, they can charge you an early termination fee.
  • Search for a new insurance policy – Use a comparison tool to find a new car insurance policy that meets your current needs and is offered at a price you can afford.
  • Read the details – Read the details and fine print for each policy that you are considering purchasing. Make sure to read the coverage amounts, listed exclusions, and deductibles, if applicable.
  • Purchase the new policy – Before you cancel your old policy, you will have to purchase your new policy. Thankfully, this can be accomplished online very quickly. After you finalize the purchase, print the associated materials and temporary cards.
  • Determine when your new policy takes place – Your new policy has to be active before you cancel your old policy. You can determine the start date by reviewing your paperwork, looking at your new online account information or by calling the new insurance company.
  • Cancel your old policy – Once your new policy is active, you can call your old insurance company and cancel the policy. Make sure to tell them you have found insurance with a new carrier.

You can successfully purchase a less expensive car insurance policy for your new or used vehicle by using a comparison tool if you pay your car insurance premiums monthly.

All you have to do is purchase and activate the new policy before canceling your old policy. You may even end up with better discounts and better customer service.

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