You need to cancel your auto insurance and aren’t quite sure how to move forward. Whether you’ve found cheaper coverage elsewhere, are dissatisfied with the current provider or no longer need a policy, the process is relatively straightforward. This guide explores the reasons why drivers cancel auto insurance policies, the steps involved and other important considerations to keep in mind.
Reasons to Cancel Auto Insurance
Before diving into the step-by-step process to cancel your auto insurance policy, here’s a look at the most common reasons why cancellations happen.
Switching to a New Provider
There’s always a possibility that you’ll find lower premiums elsewhere, or you could be better coverage for what you’re currency paying. In fact, both are relatively common amongst auto insurance providers, as they use these tactics to attract new customers.
Selling Your Vehicle
If you plan to sell your vehicle soon, you’ll need to cancel the policy as soon as you seal the deal. Keep in mind that the insurance provider will likely require proof of sale before approving your cancellation request.
No Longer Driving
You will also need to cancel auto insurance if you stop driving your vehicle. In this case, you’ll also need to return the license plate and registration to your local DMV office.
Dissatisfaction with Current Service
Perhaps you got off to a good start with your current auto insurance provider, but the customer service fizzled out. Or maybe they sold you a dream when you purchased a policy but didn’t quite live up to the hype. Either way, you may want to cancel and take your business elsewhere.
Financial Considerations
Maybe you’ve had enough of your insurance premiums stretching your budget thin. This could also prompt you to start looking for more affordable coverage elsewhere to give your wallet some much-needed relief.
Preparing to Cancel Your Auto Insurance
Before requesting a cancellation with your current provider, here’s what to do first.
Reviewing Your Current Policy
Start by reviewing the details of your current policy, and make note of the coverage limits, deductibles and premium payments. If cancellation fees or penalties apply, write those down as well.
Also, check to see if a notice period is required for cancellation so you’ll know when to reach out. And don’t forget to review the refund policy for unused premiums.
Comparing Alternative Options
The next step is to begin shopping around for alternatives. You can start your search online or reach out to insurance companies directly to find comparable options. Doing the latter could help you find an even better deal, as insurance providers may be able to add discounts to your policy that aren’t included in online quotes.
Ensuring Continuous Coverage
Shopping around is vital to find the best deal. But it’s equally important to time your cancellation to avoid a lapse in coverage. You can do so by setting the start date on the new policy a day before your current policy is set to expire or creating a one-day overlap. Otherwise, you could incur fines, potentially leading to steeper premiums in the future. And you could place yourself at risk if you’re involved in an auto accident.
Steps on How to Cancel Auto Insurance
When you’re ready to cancel your current auto insurance policy, follow these steps to help ensure a seamless process.
Gathering Required Information
It’s best to have your policy number handy before contacting your provider. You should also jot down the day you want the policy to terminate.
Contacting Your Insurance Provider
To notify your car insurance provider of your request, you can reach out by phone, email or through their website. Be sure to inquire about the specifics of the cancellation process and confirm that you meet the notice period requirements, if applicable, and that you won’t incur a penalty.
Submitting a Cancellation Request
The final step is to submit a cancellation request. Many insurance providers ask that you put the request in writing and include your policy number, intended cancellation date and signature. You may request a cancellation through the online portal as well. Check with your agent to confirm.
Confirming the Cancellation
Upon submission of the request, check in with your insurance provider to confirm they’ve received it. Also, ask for a confirmation number or email and keep this documentation handy in case you need it in the future.
Receiving Written Confirmation and Verifying Policy End Date
Once the policy is officially canceled, the insurance provider should send you a notice in the mail or via email. It should include the effective date of the termination.
Potential Fees and Refunds for Auto Insurance Cancellation
As previously mentioned, you could incur fees for canceling your auto insurance policy prematurely. But there’s also a chance that you’re eligible for a refund for a portion of the premium.
Understanding Cancellation Fees
Some car insurers charge a flat fee, while others may assess a penalty equal to a percentage of your remaining premium for an early cancellation. Again, reach out to your provider to inquire about cancellation fees before moving forward so you’ll know what to expect.
Calculating Potential Refunds
If you prepaid premiums and decide to cancel early, you could be eligible for a refund. The amount you’ll receive is for the portion of prepaid premiums you haven’t yet used, minus any applicable fees.
Other Special Considerations
Keep these considerations in mind prior to submitting a cancellation request.
Canceling Before Policy Term Ends
Again, early cancellations could be subject to a fee the insurance provider collects to cover administrative costs. Or you could receive a refund for unused, prepaid premiums.
Switching Insurance From One Car to Another
If you’re swapping out one car for another one, you can contact your car insurance provider to transfer coverage. This process is relatively simple in most cases, but your premiums could change depending on the new vehicle’s make, model, age and condition.
Canceling Due to Selling or Donating Your Vehicle
Selling your vehicle means you’ll need to cancel your policy immediately. The same applies if you donate it, and the insurance company will need proof of the transaction to terminate coverage.
Informing Relevant Parties: DMV/Regulatory Authorities or Lender/Leasing Company
When you cancel your insurance, you may need to inform the Department of Motor Vehicles (DMV) or other regulatory authorities. Some states require proof of continuous coverage.
If you lease or have a loan on your car, you must notify the lender. They have an interest in maintaining coverage on the vehicle until the loan is paid off.
Timing Your Cancellation to Avoid Coverage Gaps
As previously mentioned, you want to create an overlap of at least one day if you’re switching providers. Otherwise, you can request a termination date as soon as you no longer own or plan to operate the vehicle.
Conclusion: Final Tips for Smooth Transition
Switching insurance providers after canceling your current policy doesn’t have to be overwhelming. Visit Experian’s Insurance Marketplace to find the best deal on a new policy. This free online tool does the legwork for you and continues to keep tabs on rate trends in your area, even after you make the switch. Sign up for a free Experian account to get started.
