Auto Insurance: Can It Be Cancelled?

Yes, you can cancel your auto insurance at any time. However, there are some important things to keep in mind. Firstly, check your provider's cancellation policy to avoid unnecessary fees and to ensure you receive any refunds you may be entitled to. Some companies require a notice period of 15 or 30 days, and you may need to submit a formal cancellation letter. It's also important to have a new policy in place before cancelling your existing one to avoid a lapse in coverage, as this may result in fines and increased premiums in the future.

Cancellation fees

Most auto insurance companies do not charge a cancellation fee, as it is generally not worth the lower customer satisfaction scores and bad reviews that may result. Instead, you will usually receive a prorated refund for the portion of your premium that you have already paid for but will no longer be using. However, it is always a good idea to check with your insurance provider before cancelling to understand their specific cancellation policy and any associated fees.

To avoid cancellation fees, you can wait until your policy is close to expiring before cancelling, or simply allow it to expire without renewal. It is important to note that not renewing a policy is different from cancelling it, and insurance companies cannot charge a fee for non-renewal. Additionally, insurance companies cannot charge a fee if they drop you as a customer due to non-payment or traffic incidents, but they also do not have to provide a refund in these cases.

Cancellation letter

Yes, you can cancel your auto insurance at any time. However, it is important to follow the correct cancellation process to avoid unnecessary fees and maintain continuous coverage. Here is a step-by-step guide to writing a cancellation letter for your auto insurance policy:

Step 1: Finalize Your New Policy

Before cancelling your current policy, it is highly recommended to have another auto insurance policy in place. This ensures that you do not have a lapse in coverage, which could result in higher future rates and claim denials.

Step 2: Gather Information

You will need to include relevant information about your current and new policies in your cancellation letter. This includes your personal information (full name, address, phone number, email address), policy numbers for both policies, and the effective dates of the new policy and cancellation of the current policy. Make sure that the cancellation date is the same as or after the start date of the new policy to avoid a coverage gap.

Step 3: Contact Your Current Insurer

Different insurance companies have varying requirements for cancelling a policy. Some may accept a phone call or email, while others may require a written request. Contact your insurer to understand their specific cancellation process and any associated fees. Ask about their preferred method of delivery (certified mail or email) and confirm whether they will provide written confirmation of the cancellation.

Step 4: Write and Send Your Cancellation Letter

Use the template below as a guide when writing your cancellation letter. Send the letter to your insurance company by the method they specified. Be sure to keep a copy of the letter for your records.

[Date]

To Whom It May Concern,

I am writing to request the cancellation of my auto insurance policy, [policy number], effective [date new policy begins]. As of that date, I will be covered by [new insurance company name], with policy number [new policy number]. Please discontinue all automatic payments or debits from my account as of that date.

I kindly request written confirmation of the cancellation and a timely refund of any unused premiums. Please send the confirmation and refund to the following address:

[Your name]

[Your address]

[City, State, ZIP]

If you have any questions, you can reach me at [phone number] or [email address].

Sincerely,

[Your signature]

[Your full name]

Step 5: Follow Up as Needed

If your next auto premium is withdrawn from your bank account after you have cancelled, you can request a refund from your previous insurer by providing proof of your new policy. Remember to cancel any automatic payments to your previous insurer to avoid duplicate coverage and unnecessary charges.

Notice period

The notice period for cancelling your auto insurance depends on the state you live in and the reason for cancellation. Most states require car insurance companies to give at least 10 days' notice before a non-renewal, but cancellation notice requirements for other reasons can range from 20 to 75 days. For example, in California, insurance companies must give 10 days' notice for cancellation due to non-payment of premium and 30 days' notice for all other reasons. On the other hand, in New York, insurance companies must give 45 days' notice of non-renewal and 10 days' notice prior to cancellation due to non-payment.

It's important to check with your insurance provider and state department of insurance to understand the specific notice requirements for cancelling your auto insurance. Failing to provide proper notice may result in fines and other penalties. Additionally, it's illegal to drive without insurance in every state except New Hampshire and Virginia, so it's crucial to have continuous coverage to avoid legal and financial consequences.

Contacting your insurance company

• Call your insurance company: Many insurance companies allow you to cancel your policy by calling their customer service line. You can find the phone number on your insurance card or their website. When you call, ask to speak with an agent about cancelling your auto insurance. Be prepared to provide your policy number and other relevant information.
• Contact through their website or mobile app: Some insurance companies may offer the option to cancel your policy through their website or mobile app. Look for a customer portal or account settings section to manage your policy. You may be able to submit a cancellation request online, but you may still need to speak with an agent to finalise the process.
• Send a written request: In some cases, your insurance company may require a written request to cancel your policy. This can be done by mailing a letter to their office or submitting a request through their website. The letter should include your name, policy number, and the date you want your policy to be cancelled.
• Visit a local agent or office: If you prefer, you can often cancel your policy in person by visiting a local insurance agent or office. They will be able to guide you through the process and provide any necessary paperwork. Be sure to bring relevant information, such as your policy number and proof of identification.

It is important to note that each insurance company has its own cancellation policies and requirements. Some companies may charge a cancellation fee, so be sure to clarify this with your provider. Additionally, it is recommended to have a new policy in place before cancelling your existing coverage to avoid a lapse in insurance, which can result in fines and increased premiums.

Refund eligibility

Yes, you can generally cancel your auto insurance at any time. However, you may be charged a fee or receive a reduced refund for your policy.

If you cancel your auto insurance before the end of your policy term, you may receive a refund if you paid your premium in advance. Whether you get a refund, and how much, will depend on why you're cancelling the policy, how much of the premium you paid in advance, and the rules of your insurance company and the laws of your state.

If you pay your full premium upfront, you'll typically get a refund when you cancel your policy. If you pay your premium monthly, you may or may not get a refund, depending on when you cancel. If you cancel in the middle of a billing cycle, you may get a small refund for the remaining days of the month.

If you switch insurance companies, you can get a refund. Depending on your insurer, you may have to pay a cancellation fee.

If you move out of state, your insurer will cancel your old policy and issue you a new one. Since insurance premiums are partially determined by where you live, you may get a lower rate on your new policy if you move to an area where rates are cheaper, and your insurer may refund part of your insurance premium.

If you sell your car and no longer need coverage, your insurance company may send you a refund check if your policy is cancelled before the end of your term. Note that you may have to pay a cancellation fee in this scenario too.

If you make changes to your policy, such as decreasing policy limits or removing a vehicle from your policy, you may get a refund. However, you may receive a credit on your account instead of a refund, depending on your insurer.

If the insurance company cancels your policy, you'll usually receive a car insurance refund unless they cancel the policy for non-payment. If non-payment occurs, you will not receive a refund and will continue to owe the insurer any unpaid premiums.

There are two main reasons why a company will cancel your policy in the middle of the term: non-payment, or if the insurance company believes you've become too risky to cover. This could happen after you get a serious ticket, like a citation for reckless driving or a DUI, or if you let your car's registration expire.

Frequently asked questions