Ending Auto Insurance: A Guide To Cancelling Your Policy And Seeking New Coverage

Ending your auto insurance coverage is a simple process that can be done at any time, but it's important to understand the implications and potential costs. Depending on your reason for ending your coverage, you may want to reduce or suspend your coverage, or remove yourself from a policy temporarily. If you're selling your car or switching providers, you can cancel your policy by contacting your insurer or agent. However, you should be aware of potential cancellation fees and ensure you have alternative coverage in place to avoid a lapse in insurance.

Cancelling your auto insurance policy

• Determine when to cancel your car insurance. If you're switching insurance providers, you'll want to avoid any lapse in coverage. Ideally, your new policy should begin on the same date that your old policy ends. If you're selling your car, you should maintain coverage until you've completed the sale. Remember that most states require you to have at least the minimum coverage for your vehicle, even if you're not driving it.
• Shop for a new policy. Think about how much insurance you need and which types of coverage to include in your policy.
• Contact your current insurer to cancel your existing policy. Many insurance companies require you to submit a request for cancellation in writing for their records. You can also request a policy cancellation notice for your own documentation.
• Expect a refund or a cancellation fee. When you cancel your car insurance, you might be eligible for a refund, especially if you paid for your coverage in advance and are switching providers. However, you might also be charged a cancellation fee.
• Notify your lender. If you have a car loan, you'll need to inform your lender of your new insurance coverage.

Remember, it's always a good idea to initiate a new insurance policy before cancelling your existing one to avoid being uninsured.

Reducing your coverage

• Lower your policy limits: Nearly every state requires a minimum amount of car insurance, but your coverage might include more than what is required. If this is the case, consider lowering your liability insurance limits to reduce your premium.
• Drop unnecessary types of coverage: For example, if you own an old car that isn't worth very much, you might consider dropping collision and comprehensive coverage. Collision coverage covers damage to your car if you're involved in a crash, while comprehensive coverage includes damage caused by acts of nature, vandalism, theft, and fire. As your car gets older and its value decreases, the cost of these coverages may no longer be justifiable. However, check with your lender or lessor to see if they require these coverages.
• Remove extra coverage options: Evaluate your insurance policy line by line and consider removing any coverage you don't need. For example, if you already have roadside assistance through another service, you can remove this option from your auto insurance policy.

Suspending your coverage

Suspending your auto insurance coverage is a way to pause your policy without cancelling it, thus avoiding a coverage gap. However, this option may not be available to you. If you are leasing a vehicle or have a loan on a vehicle, your lessor or lender likely requires you to have a certain amount of coverage, typically including comprehensive and collision insurance. Additionally, many insurance carriers do not allow for this option, and many states require your vehicle to be insured even if it isn't being driven.

There are some exceptions to this. Some insurance companies allow military members to suspend their coverage when they store their car for 30 days, but this varies by state. For example, in Connecticut, you must demonstrate that your vehicle will be stored where no one can access it. In California, you will be required to file an Affidavit of Non-Use (ANU).

Removing yourself from a policy

Removing yourself from a car insurance policy is a straightforward process, but there are a few things to keep in mind. Firstly, check if there are any cancellation fees involved and whether you need to provide proof that you no longer live with the policyholder. This may be in the form of an affidavit of non-use, which you may also need to submit to your state's Department of Motor Vehicles.

Secondly, consider whether you will need to be added back onto the policy at a later date. If you are going away for a period of time but will be returning, it may be more convenient to remain on the policy. If you are moving out permanently, then removing yourself from the policy is a good idea, especially if you are a riskier driver than the other drivers, as this may reduce the overall insurance rate.

Thirdly, remember that if you are not listed on the policy, you can still drive the car. However, if you are specifically excluded as a driver, you will not be covered to drive the vehicle.

Finally, contact your insurance company to find out their specific process for removing a driver from a policy. Some companies allow this to be done online or through an app, while others require you to speak to a representative and provide proof that you no longer live with the policyholder.

Cancelling without notifying your insurer

Cancelling your auto insurance without notifying your insurer can lead to several issues. Firstly, if you have set up automatic payments, your insurance company will continue to withdraw money from your account until you officially cancel your policy. This can result in duplicate coverage if you have already purchased a new policy, and you may be able to receive a refund for this period by providing a policy declarations page.

Failing to notify your insurer of your intent to cancel can also lead to additional costs. Insurers often offer an automatic grace period, which extends coverage beyond the end of your policy to give you extra time to pay missed bills. If the grace period passes without payment, you may be charged for the coverage extension as well as non-payment penalties.

Not informing your insurer of your cancellation can also lead to a lapse in coverage, which can increase your future insurance premiums. It is illegal to drive without insurance in almost every state, and your insurance provider usually notifies the local Department of Motor Vehicles (DMV) when you cancel your policy. The DMV will then contact you to ask for proof of new insurance or confirmation that you have sold your car. If you do not respond, the state may suspend your license and registration.

To avoid these issues, it is best to notify your insurer of your plans to cancel. This will allow them to follow the appropriate cancellation procedures, such as notifying the DMV of the cancellation and starting any refund processes.

Frequently asked questions