If you have decided you want to switch insurance companies, can you simply stop paying your old insurance company and hope they will get the memo?
If only things were so easy. You cannot assume that just because you’ve purchased and agreed to a new insurance policy that you are exempt from paying the bill for your other one. Yes, you will technically still be insured by law if you do, but you’ll also still be responsible for the old bill.
Once you have decided you are done doing business with a particular insurance company, it is a good rule of thumb to request a cancellation. Letting a policy cancel without notifying the company can cause problems. Canceling your insurance can be awkward, but it’s pretty straightforward. Below, you can learn how to cancel your car insurance in four easy ways—and learn what happens when a policy is not canceling properly.
- Don’t assume your old insurance is canceled just because you switched to a new carrier.
- Be sure you notify your old provider that you are canceling—whether by phone, mail, fax, or in person.
- Your new agent may be able to assist in the transition and help you cancel your old policy, as well.
- If you fail to cancel your old policy, you might continue to pay premiums or even get hit with penalties from the state for coverage lapses.
4 Easy Ways to Cancel Your Insurance
Call in Request
Calling your agent is probably the fastest way to notify the company of your cancellation. Sometimes a phone call is all it takes, but most of the time a signature is also required for cancellation.
If you are switching solely on the basis of a lower price, it is recommended to call and speak with your agent about canceling before deciding to do so. It is possible additional discounts can be applied or coverage can be changed on your current policy possibly making it so you do not have to switch insurance companies.
Mail or Fax a Written Request
Signing a cancellation request seals the deal when it comes to canceling car insurance. It’s as easy as writing or typing out the date, your name, policy number, and request cancellation on the date you are planning on switching insurance carriers. Sign the document and mail or fax it to your agent or direct to the insurance carrier.
Stop in Personally
It may seem awkward to go into your agent’s office and ask to cancel your policy; however, it is a common occurrence at all agencies. Every agency loses clients from time to time, and unless they are your relative or best friend, they probably won’t take it personally. It is possible your current agent may try to persuade you to stay, but if you politely decline that should be the end of it. Sign the cancellation form and you’ll be on your way.
Ask Your New Insurance Company to Assist With the Transition
Asking your new insurance agent to cancel your old insurance policy is a simple way to complete your cancellation. It’s a great way to avoid any awkwardness with your soon to be ex-insurance company. All your new agent needs are your old policy number, effective dates, and a signature on the cancellation form, then the document can be faxed to your old insurance company.
Can I Cancel My Car Insurance Anytime?
The best time to cancel your car insurance is after you have another policy set in place. Technically, you can cancel your car insurance coverage anytime—but you could have to pay a penalty, for instance, if you cancel within 14 days after purchasing a car insurance policy. Cancellation fees can vary from a set dollar amount up to a percentage of your overall premium cost. The good news is that fees are usually not charged for a standard cancellation, but policies vary.
Talk to your insurer about cancellation and to find out if you’ll be assessed any penalties or still owe money on the policy.
If you cancel car insurance within the grace period, it is very likely you will still owe money on the policy. A grace period provides coverage for a specified number of days past your payment due date, and allows you extra time to get your premium paid. But that doesn’t mean you can get a free few weeks of coverage just by switching insurers. The only way to get out of paying for those days of coverage is to provide proof of coverage through another carrier for that time.
Just because you can cancel your car insurance at any time does not mean you should. Going without car insurance can put you into a high-risk pool in many states when it comes time to purchase car insurance again.
Pitfalls of Canceling Without Notification
You’ll Have To Pay for the Automatic Grace Period
Technically, if you do not request a cancellation and you just allow your policy to cancel on its own, you are canceling for nonpayment. Some policies do cancel automatically at renewal without payment; however, many companies give an automatic grace period. Grace periods are often a 20-day extension of coverage. If your policy is canceled for nonpayment, you will be billed for the grace period.4 If you do not pay or provide proof of another active policy, the auto insurer could send your unpaid bill to a collections agency.
You’ll Leave a Bad Impression
Leaving an insurance company without giving notice can leave a bad impression on an agency. It is a good idea to leave on good terms especially if you ever want to return. Rates are always changing and you may want to go back to your prior insurance company again one day. To prevent future awkwardness, notify your agency of cancellation.
Your Policy Might Never Get Canceled
If you are signed up for automatic electronic payments, your policy will probably continue unless you request cancellation.5 The money will continue to be withdrawn from your account and you will have duplicate coverage. It is possible to get your money back if you provide a declarations page verifying you had duplicate coverage.
Insurance companies are required to notify the state DMV of a lapse in coverage. Certain states levy penalties for a lapse in coverage. It may not be wise to leave it to chance, even though you’ve obtained new insurance. At the very least your state DMV may send you a notice asking for verification that you have coverage. In a worst case scenario, your driving privileges could get revoked and you’ll have to pay a fine and additional fees for getting them reinstated.
In addition, if your car is a leased vehicle, you must make sure that your new insurance lists the leasing company as a loss payee. Otherwise, the leasing company will eventually be notified that there was a lapse in coverage and could begin the process to repossess the vehicle.
Regardless of how you cancel your car insurance, make sure to keep an eye on your mail for a confirmation letter. If you cancel midterm, you could receive a refund depending on if you have any unused premium.6 Be sure to cancel your insurance after you have your new policy set with a new carrier. Canceling your car insurance should be a simple process, just don’t put it off or forget about it entirely.