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Can You Cancel Your Car Insurance Anytime? A Total Guide

Canceling your car insurance policy is simple. This guide provides all the details you need to know if you plan on cancelling your car insurance due to any reason. Read on to know more!
cancel car insurance
Can You Cancel Your Car Insurance Anytime? A Total Guide
It is advisable to research before canceling right away to avoid undesirable consequences and regretting your decision later. Here's what you need to know before deciding to cancel your auto insurance!
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Car owners may decide to cancel their car insurance policies abruptly in response to a variety of situations. It can vary from moving to a different state where the insurer does not operate to finding a better rate through another company. Many-a-times, you decide to cancel your car insurance due to dissatisfaction with the insurer’s service.

If you are an insured car owner, you can cancel your car insurance policy anytime, regardless of your reason. Of course, you are within your rights to discontinue your coverage before your renewal date or after your policy takes effect. If you cancel your car insurance before the renewal date, you might be eligible for a refund of some or all of the premium you paid in advance.

How to Cancel Car Insurance?

It is advisable to research before canceling right away to avoid undesirable consequences and regretting your decision later. You see, a last-minute cancelation of car insurance coverage can lead to hefty cancellation fees (usually between 10% and 15% of any unused premium) and penalty rates on future insurance premiums due to a lapse in coverage.

Until you request a cancellation and it is confirmed, insurance companies will continue to deduct payments automatically from your account if you pay premiums using a bank transfer. Ask your insurer if you can get a prorated refund on your premium prepayments or use them to pay any cancellation penalties.

  • When canceling your auto insurance, notify your insurer of the cancellation. Confirm whether your policy will be terminated immediately or after one month, as some insurance providers demand 30 days’ notice to terminate your auto insurance without incurring any fees. Obtain confirmation of your policy cancellation after your request has been processed.
  • Many insurance companies offer an automatic grace period, extending coverage past your policy’s expiration to give you more time to make late payments. In contrast, some carriers will cancel your auto insurance policy at renewal if you don’t pay. However, if the grace period expires without your payment, the insurer may also impose late payment fees in addition to the cost of extending your coverage.
  • As rates are subject to change at any time, you should settle any unpaid balances and cancellation fees to end your relationship with your existing insurer on amicable terms. The insurance company may offer lower rates in the future, and having a good payment history will help you get the best deal.
  • Also, if your reason for canceling is to switch to a cheaper policy, you can check with your agent once again to see if getting a lower price on your current policy is possible. You may be eligible for discounts or consider changing the coverage limits to reduce your premiums.
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Mistakes to Avoid When Canceling Car Insurance

Canceling your car insurance policy is simple; in most cases, it’s just a matter of one phone call, which makes it easy to overlook some details that could create unnecessary problems for you later. Following are some of the most common mistakes that policyholders make when canceling their car insurance policies and must avoid.

Not Notifying Your Insurer

When you find a better offer elsewhere, you could get too eager to sign up for the new insurance even before canceling your existing policy. This could result in you paying for two car insurance plans simultaneously instead of one. To avoid this, make sure to inform your insurer of your intention to terminate your coverage and follow the required steps for the same.

Not Checking Your Insurer’s Cancellation Process

You can call your insurance provider to cancel a policy, though some insurers require a signed document to make it official. Asking your insurer about their cancellation process can assist you in ensuring to meet all the requirements and sign off on a good note. You can also ask about their cancellation fees, refunds, and renewed premiums and discounts.

Incurring a Coverage Lapse Between Your Old and New Policies

A coverage lapse occurs when you cancel your old policy before your new one begins, which is risky because it leaves you uncovered by either insurer for that duration and also creates a reason to increase your premiums in the future due to a coverage lapse. A standard practice to avoid this is to let your new insurance go into effect at least one day before your cancellation becomes official. You and your insurer can work together on this.

Also Know About: Why you should take cancel for any reason insurance

Deciding on a New Policy Without Shopping Around

Remember to compare quotes from different providers if your premium is expensive and you want to look into other insurance solutions. To achieve an exact comparison while gathering estimates, you should offer the same details to every provider. You should explore at least three to four quotes before deciding which one to get.

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When Not to Cancel Car Insurance

It is inadvisable to cancel car insurance coverage if you own a car. Nearly all states mandate car insurance coverage for car owners and drivers to drive on the road legally. All states mandate personal liability insurance except New Hampshire, and many states also require personal injury protection.

Even in states without car insurance, you should have some level of coverage if you plan on owning a car. Furthermore, keeping coverage will help you avoid paying significant out-of-pocket expenses in the event of an accident. Personal liability coverage protects you against damages filed by a third party for which you are at fault. In contrast, personal injury protection covers when you or your passengers are injured in an accident. You should always check your state’s minimum car insurance requirements before canceling your car insurance.

Also know about: Premium Checking Account

Conclusion

There’s no one-size-fits-all best way to cancel car insurance. Consider your needs and check with your insurer to learn about their cancellation rules when deciding whether and when to end your policy. If you still need clarification or clarification, check with your insurer to know its specific cancelation guidelines and review your policy’s fine print.

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Author

Picture of Aniket Kulkarni

Aniket Kulkarni

A seasoned Product Manager specializing in car insurance content, Aniket has a passion for simplifying complex insurance concepts. His strategic approach to content development reflects years of experience in the product development industry, coupled with a commitment to providing accurate, reliable information.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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