Auto Insurance: When To Cancel

Yes, you can stop your auto insurance, but it's not as simple as cancelling a subscription service. The process depends on your insurance provider and your state's laws. While you can cancel your auto insurance at any time, it's important to understand the implications and follow the correct procedure to avoid unnecessary fees and higher future rates.

If you're not planning on driving for a while, you have the option to reduce your coverage or remove liability coverage. Alternatively, you can suspend your insurance policy, which essentially pauses it without cancelling it. However, this option is not always available, and you'll need to meet certain requirements, such as filing an affidavit of non-use and ensuring your lender allows it.

Before cancelling your auto insurance, it's recommended to get another policy in place to avoid a lapse in coverage, which can result in higher future rates and possible fines. You'll also need to notify your state's Department of Motor Vehicles (DMV) and provide proof of your new insurance or sale of your vehicle.

Cancelling your auto insurance policy

Reasons for Cancelling

First, it's helpful to understand some common reasons for cancelling an auto insurance policy. You may want to cancel because you're switching to a new provider, moving to a different state, or selling your car. Other reasons include finding a cheaper policy or no longer needing the coverage. Remember that almost every state requires some form of liability coverage for drivers, so ensure you understand the requirements in your state before cancelling.

Timing

You can cancel your auto insurance policy at any time. However, it's essential to have a new policy in place before cancelling your current one to avoid a lapse in coverage. This is especially important if you still own a car, as future insurers may see the lapse and consider you a high-risk driver, which could raise your rates. Try to have at least one day of overlap between the end date of your old policy and the start date of the new one. Policies typically start and end at 12:01 a.m., so even a single day's gap could leave you uninsured.

Contacting Your Insurer

Cancelling your policy usually just involves a quick call to your insurer. You can find their contact information on your insurance card, policy documents, or their website. Some companies may also offer the option to contact them through a mobile app. When you call, ask about their specific cancellation process, including any fees, cancellation letters, or notice periods they require.

Cancelling the Policy

Once you understand your insurer's process, follow their steps to cancel your policy. This may include signing and sending a cancellation letter, providing notice, or both. Your insurer may also ask you to confirm the desired end date of your policy.

Confirmation and Refunds

After processing your cancellation request, your insurer will send you a notice of policy cancellation. They will also refund any prepaid premiums, minus any cancellation fees or penalties. If you've prepaid your premiums, ask about receiving a prorated refund.

Alternative Options

Before cancelling your policy, consider other options that could help reduce your costs. You may be able to reduce your coverage limits, remove add-ons like roadside assistance, or switch to usage-based insurance if you're driving less. You can also explore discounts, shop around for cheaper insurance, or remove yourself from a shared policy if you're not the primary driver.

Remember that cancelling your auto insurance policy should be a well-informed decision. Understand the requirements in your state, avoid lapses in coverage, and carefully follow your insurer's cancellation process to ensure a smooth transition.

Reducing your coverage

You can reduce your auto insurance to the minimum car insurance requirements. Almost every state requires liability insurance, and some mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

If you are storing your car, consider keeping comprehensive insurance, which covers non-driving problems such as fire, animal damage, vandalism, and theft. Ordinarily, you must buy comprehensive insurance along with collision coverage, but your insurer may make an exception and let you keep a comprehensive-only policy, sometimes known as "car storage insurance". If you have a car loan, your lender may require you to keep both comprehensive and collision coverage.

If you decide to reduce your coverage, make sure you are still complying with your state's insurance laws, as well as any coverage requirements from your lender or lessor.

You can also lower your policy limits or remove add-ons like roadside assistance and collision insurance. If you own an old car that isn't worth very much, you might consider dropping collision and comprehensive coverage.

If you have a good driving record, you can also ask for higher deductibles, which will lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30%.

Suspending your coverage

Suspending your car insurance coverage can be a good way to save money if you have an out-of-use vehicle. However, it is not as simple as cancelling a subscription service and your options may be limited depending on your reason for taking a break from driving, or whether you have a car loan.

When to suspend your car insurance coverage

You may be able to suspend your car insurance coverage if:

• Your car is in long-term storage
• You're travelling abroad
• You've been deployed overseas
• You're unable to drive due to illness or injury

Pros and cons of suspending your car insurance coverage

Pros

• You won't have to pay for coverage you're not using
• Your vehicle is still protected from damage
• You can avoid a lapse in coverage, which can increase future rates

Cons

• You assume the cost of all liabilities if you decide to operate your vehicle without liability coverage
• Drivers with auto loans or leased vehicles may not be eligible for suspended coverage
• Insurance suspension is not offered by many auto insurers
• You'd probably be breaking the law by driving without liability insurance

If you won't be operating your vehicle for 30 days or more, you may be able to suspend your liability coverage, so you won't be paying for insurance while your car is not in use. However, you should still keep comprehensive coverage to protect your vehicle from non-driving perils like fire, falling objects, vandalism and theft. Not every insurance company will allow you to suspend your liability coverage; this option may only be available for drivers who are putting their cars into storage and won't be driving their vehicles at all.

Alternatives to suspending your car insurance coverage

• Reducing your coverage: Try lowering your liability limits or removing add-ons like roadside assistance and collision insurance from your policy.
• Switch to usage-based insurance: With usage-based insurance, you can pay for the miles you actually drive.
• Remove yourself from coverage: If you're on a shared policy, the primary named insured can remove you from the coverage, which may remove your demographics from the averaged auto premium and lessen the costs. However, you may not be able to drive the car once you've been removed from the policy.
• Take advantage of every available discount: Most insurance companies offer a wide range of discounts, such as for students and certain professions.
• Shop around for cheaper car insurance: If your policy is up for renewal, or if you just want to find better rates, you can shop around for cheaper car insurance and secure the coverage you need at an affordable price.

Removing yourself from a policy

Removing yourself from a car insurance policy is a relatively straightforward process. However, it's important to note that the specific steps may vary depending on your insurance company's rules and your location. Here are some general guidelines to follow:

• Be the primary named insured: To remove yourself from a car insurance policy, you must be the primary named insured on the policy. If you are not the primary insured, you may not have the authority to make changes to the policy. In this case, you can choose to remove yourself from the policy and take out your own separate insurance.
• Obtain consent: If you are removing someone else from the policy, you will need their signed consent. This is especially important if you share the same home address, as your spouse or family member will need their own insurance policy to continue driving legally.
• Provide proof of change: When removing yourself or someone else from the policy, you may be required to provide proof of certain changes. For example, if the person has moved out, you may need to provide proof of their new residence, such as a utility bill or a copy of their lease or mortgage agreement. Similarly, if the person has obtained their own insurance policy, you may need to provide proof of their new insurance coverage.
• Contact your insurance company: The process for removing someone from a car insurance policy can vary. Some companies may allow you to make changes online or through an app, while others may require you to contact a representative directly. It's always best to check with your insurance provider to understand their specific requirements and procedures.
• Understand the implications: Removing yourself or someone else from a car insurance policy can have implications for your coverage and rates. Ensure you understand how the change will affect your insurance situation, especially if you are excluding a driver from your policy. Excluding a driver means they are not allowed to drive any of the cars on the policy, even in an emergency.
• Consider alternative options: Before removing yourself or someone else from the policy, explore alternative options that may be available. For example, if you are temporarily away or not using your vehicle, you may be able to suspend your coverage or reduce your insurance to the minimum requirements instead of completely removing someone from the policy.

Cancelling your policy when you no longer have a car

If you no longer have a car, you may want to cancel your auto insurance policy. This is a fairly straightforward process, but it's important to follow the correct steps to avoid unnecessary fees and penalties. Here's what you need to do:

• Check your provider's cancellation policy: Different insurance companies have different requirements for cancelling a policy. Some may require you to give 15 or 30 days' notice, while others may allow you to cancel over the phone or online. It's important to review the cancellation requirements to avoid any penalties or fees.
• Contact your insurance provider: Get in touch with your insurance agent or company to initiate the cancellation process. They will guide you through the necessary steps, which may include filling out paperwork or submitting a signed cancellation form.
• Purchase a new policy before cancelling: If you're switching insurance companies or getting rid of your car, it's a good idea to secure a new policy before cancelling your existing one. This will help you avoid a lapse in coverage, which can increase your future insurance rates.
• Ask about refunds: If you've paid your premiums in advance, you may be entitled to a refund for the remaining balance. However, cancellation fees may apply, so be sure to clarify this with your provider.
• Submit a cancellation letter: In some cases, your insurance company may require a written request to cancel your policy. This letter should include your policy number, name, and the date you want your policy to end.
• Request a policy cancellation notice: Once your policy is cancelled, ask your insurance carrier for a written confirmation. This will serve as a record of the transaction.
• Notify the DMV: Depending on your state's requirements, you may need to inform the Department of Motor Vehicles (DMV) about the cancellation. They can also advise you on any specific steps you need to take, such as surrendering your license plates.

Remember, it's important to maintain continuous auto insurance coverage to avoid being considered a high-risk driver, which can lead to higher rates in the future. If you're temporarily not using your car, consider reducing your coverage or removing yourself from the policy instead of cancelling it entirely.

Frequently asked questions