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How to Cancel Car Insurance

Knowing how to cancel insurance the right way is a very important thing for auto insurance policy holders. There are many reasons why people might choose to cancel their coverage. Perhaps they are switching companies because of a better deal available elsewhere. Maybe some are getting rid of a vehicle and thus do not need to insure it any longer. And there are some who choose to give up driving altogether. Whatever the reason may be, it is critical to know and understand how the process of insurance policy cancellation works so that things go quickly and smoothly and that you don't end up getting charged for something you don't need or want.

Auto Insurance Policy Cancellation Provisions

Standard auto policies contain provisions allowing insured customers to cancel their coverage at any time. But this does not mean there won't be consequences. Different companies can vary on this, so it is important to know about the specific terms and provisions included in your coverage agreement that pertain to customers canceling prior to the end of the policy period when you're trying to find the best auto insurance. Some companies include a monetary charge for canceling early. If your company does this, as a customer you can find out how long you need to wait to cancel without paying a fee. It might mean waiting it out until the policy expiration because it could actually be cheaper since you'll save yourself from having to pay that fee.

Get Replacement Coverage before Canceling

Drivers who are switching auto insurance companies for better rates, to buy cheap car insurance online, or for whatever reason need to make sure they have replacement coverage lined up before they cancel. Make sure you have a start date lined up and that your new plan will be in force when the old one is canceled. This is important because even just a short gap in coverage could come back to haunt you. First of all, there is always the possibility of getting into an accident during this time period, which has obvious enough consequences. But second and perhaps not so obvious to many people, even just a period of a day or two is technically a lapse, and your new company could wind up charging you more for that lapse if they find out about it after the fact. A driver may jump to a new company for the sake of savings and wind up paying more than the old rates because of a move like this. The effective date of the new plan and the expiration or termination date of the old have to match up.

Auto Insurance Cancellation Letter

When you've made the decision to cancel, you need to call your insurance agent or company representative and let them know about your intent to cancel the policy. Let them know what is going on and inform them that you'll be sending them written notice of your desire to cancel coverage. When you speak to an insurer they'll usually try to get you to change your mind, and don't be afraid to hear them out. But be firm and resolute if this is really what you want to do. The letter needs to specifically address your intent to cancel. In some cases companies may also require you to fill out a specific form they'll provide to detail the reasons for canceling and the effective date, but in most cases a letter will be sufficient. That phone call to the insurer will provide you with all the information you need. Some drivers simply call and ask what they need to do to cancel and take it from there.

If the company representative says phone cancellation is acceptable, it is still smart to follow up with a letter. Send a copy and keep one for yourself. A letter increases the likelihood that the appropriate parties on their end will be apprised of your decision and that you won't be billed for any more coverage. It also helps in cases when a refund is due for prepaid coverage.

Explain Reasons for Policy Cancellation

The letter does not have to explicitly state the reason or reasons for your decision, but this information can sometimes be helpful to the insurer. If it is high rates or poor service, it's a different kind of situation than if it's because your car is paid off or you're moving out of state. It's a matter of courtesy, really, to indicate a reason. If you're writing the letter anyway, you might as well include this information even if you're under no obligation to do so.

Knowing how to cancel car insurance the right way helps you to avoid hassles and troubles down the line. Avoid incorrect charges and get back refunds you have coming by properly canceling your policy and terminating your auto insurance relationship.


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