When you sell a car, are undergoing some major life changes or have received a better rate from a competing auto insurance provider, it may be time to cancel your auto insurance policy. The cancellation procedure and requirements vary by insurer so you will need to make sure you follow all the steps listed in your insurance agreement. Every insurance company will handle the cancellation process differently, and you may need to take extra steps to ensure that there are no lapses in coverage. Here’s what you need to know about canceling your auto insurance policy:
Reasons to Cancel Your Auto Insurance Policy
You might choose to cancel your auto insurance policy for a number of reasons. These include:
- Finding a better price for your premium or insurance package from a competitor
- Buying a new car that needs additional coverage your current provider doesn’t offer at an affordable price
- When an owner passes away and you need to halt coverage
- Leaving the country for more than a year and no longer needing insurance
- No longer having a car after an accident or other incident
- Reducing coverage and shopping for another provider
- You’re moving out of state and want to do business with a local insurance company
Steps to Cancel Your Auto Insurance Policy
The general steps to cancel your auto insurance policy are as follows:
- Contact your insurance provider. You will need to call, email or write to your insurance agent with a professional letter explaining that you want to cancel your coverage.
- Continue making payments on your existing plan. Unless you receive written confirmation that your policy has been canceled, you will need to continue making payments on your policy or your account would be marked as unpaid. The cancellation process may take some time, so you will need to make sure your account stays current or it could go to collections.
- Complete all required paperwork. Some companies require you to fill out a formal cancellation form, while others can coordinate the cancellation over the phone and provide you with a confirmation number. Find out what the cancellation process is with your current provider so that everything runs smoothly.
- Request a refund of unused premiums. If the cancellation has gone through and you had pre-paid your annual premium, don’t forget to ask for a refund of the remaining premium. Your insurance company will likely issue you a check for the remainder.
- Inform the DMV about any changes. Your registration needs to reflect the new insurance company’s contact information. Some states require you to update your registration information with any changes. Call your local DMV to find out what the process involves so that all of your records are up to date.
Sources:
AutoInsurance.org — How to Cancel Your Auto Insurance Policy
Auto Insurance Compendium — Auto Insurance: How to Cancel without Regrets
DMV.org — How to Cancel an Auto Insurance Policy
