How to Cancel Car Insurance

You can cancel car insurance at any time for any reason. However, some insurance companies charge a fee for canceling car insurance early.

Since most states require car insurance, you must have a new car insurance policy in place before canceling your current policy. Failure to do so causes a lapse in coverage, leading to fines, a driver’s license suspension, and higher car insurance rates.

If you want to cancel your car insurance, shop around for new coverage. Compare quotes from multiple companies to find the best coverage and rates available.

Keep reading to learn how to cancel car insurance and find out when switching insurers is a good idea.

How do you cancel car insurance?

Car insurance cancellation policies vary by company. For example, you can’t cancel Progressive car insurance online. And there’s no fee when you cancel Allstate car insurance. However, some companies may let you cancel online or charge a car insurance cancellation fee.

It’s important to follow your insurance company’s cancellation guidelines. For example, if you simply stop making payments without letting your insurer know you want to cancel, they will continue to bill you through your grace period. In addition, failing to make payments can affect your credit score and lead to higher rates.

You should also talk to your insurer about why you’re leaving. For example, if you need lower rates, moving, or buying a new car, your current insurer may be able to help you instead of canceling.

What steps do you need to take to cancel your car insurance?

While each insurance company makes its own cancellation policy, there are some basic steps to take if you want to cancel your coverage.

• Speak with your current insurance company. Find out when your policy expires, if there is a cancellation fee, and if you’ll receive a refund. It may be cheaper to wait until your policy ends to switch insurers.
• Shop around for new car insurance. Each car insurance company calculates rates differently, so compare coverages, rates, and car insurance discounts from multiple companies to find your best deal, then set up your new policy.
• Let your current insurer know you’re leaving. Contact your insurer to cancel coverage. You may need to do so in writing through email, fax, or mail. Make sure your cancellation date is after your new policy goes into effect.
• Follow up with your current insurer. Contact your old insurance company to ensure the policy was canceled and when you’ll receive your refund if one is due.

Remember, you need to find out the specific steps you need to take from your insurer. Since each company creates its guidelines, you can’t assume the process is the same for each company. Not following the process can cost you money in the long run.

It’s also critical to have new coverage in place before your current coverage ends. According to the Insurance Information Institute, driving without insurance leads to fines, a suspended driver’s license, vehicle impoundment, and even jail time.

Do I get a refund if I cancel my car insurance early?

Many car insurance companies offer a refund if you’ve already paid and then canceled your coverage. However, that’s only sometimes the case. In addition, if your insurer charges a cancellation fee, it can be taken out of any refund you might expect.

Before canceling your car insurance, check with your insurer to see if you’ll be charged a cancellation fee and if you’re due a refund. If you are due a refund, make sure to follow up with your insurance company once your policy is canceled.

If your insurer won’t issue a refund or the cancelation fee is high, consider staying with your insurer until your policy expires, then switch companies when it’s time to renew.

When can you cancel your car insurance?

You can cancel your car insurance policy at any time. You can immediately switch to a new company before your policy ends. However, some insurance companies charge a fee to cancel your policy early. If you’re charged a cancellation fee, waiting until your policy expires to change insurers may be cheaper.

Let’s dive into when you need to cancel your car insurance and when you may not need to end your policy early.

What are the reasons people cancel car insurance policies?

You don’t have to provide a reason to cancel your car insurance policy, but there are several common reasons drivers choose to cancel their coverage.

• You find a better rate elsewhere. If you’ve had significant life changes, such as getting married, or if your driving record has cleared, you may get much cheaper car insurance rates. Since insurers charge different rates, you need to compare multiple quotes to get the cheapest car insurance quotes.
• You no longer need the same coverage. As time changes, so do your car insurance needs. For example, you may be able to drop gap insurance or move to minimum coverage as your car’s value decreases. Rates for different coverage levels vary significantly.
• You sold your car and don’t plan to drive anymore. If you aren’t able to or don’t want to drive anymore, you can cancel coverage once you no longer have a vehicle.

While there are many reasons you may choose to cancel your car insurance early, you may not have to. Keep reading to learn if you actually need to cancel your car insurance.

When shouldn’t you cancel your car insurance?

Most states require car insurance, so you need coverage if you plan to drive at all. In addition, you may not need to cancel your car insurance and can make policy changes instead.

You don’t need to cancel your car insurance if:

• You put your car in storage. Comprehensive coverage is still recommended even if you’re storing your vehicle and not driving it. Comprehensive coverage protects against damage from theft, vandalism, falling debris, and acts of nature like floods. While it also prevents a lapse in coverage, you can’t drive with only comprehensive coverage. Learn more about collision and comprehensive car insurance.
• You don’t drive very often. It may be tempting to cancel car insurance if you rarely drive. However, you won’t be insured when you get behind the wheel. Driving without insurance leads to hefty penalties, such as fines, a suspended driver’s license, and higher car insurance rates.
• You sold your car and are buying a new one. If you change vehicles, you probably don’t need a new car insurance policy. Most car insurance companies allow you to transfer your policy to a new vehicle, so you don’t need to cancel coverage.
• You move to another state. Most large insurance companies offer coverage in multiple states, so you may be able to update your policy instead of canceling. Even if you move to a state where insurance may not be required, car insurance keeps you from high out-of-pocket costs after an accident.

Additionally, you may not have to change insurers if you want a lower rate. You may be able to lower your rates with your current car insurance company. For example, if you choose to stay with your insurer, you may be eligible for an early signing car insurance discount if you renew your policy before it expires.

What is the difference between not renewing and the car insurance company canceling your policy?

There’s a big difference between not renewing your insurance and the insurance company canceling your policy.

Your insurance company may cancel your car insurance policy for various reasons, including lack of payment, fraud, or a suspended driver’s license. However, you’ll still be charged through the grace period if you stop making payments. It can also affect your insurance and credit scores, leading to higher car insurance rates.

However, if you choose not to renew, there are no repercussions. Keep in mind that when you switch car insurance companies, you may lose any loyalty discounts you may have with your current insurer.

Read more: Insurance Policy Non-Renewal vs Cancellation

How to Cancel Car Insurance: The Bottom Line

Canceling your car insurance is simple, and you can do it at any time. However, there are specific steps you must take to cancel your policy. In addition, your insurance company may charge you a fee to cancel.

Since each company has its own policy, contacting your insurer is essential to learn about the cancellation process. While you can stop making payments, you can still be charged through the grace period. Additionally, you may lose your refund, and your credit and insurance scores may suffer.

You must also have new coverage before you cancel your current policy. Since most states require car insurance, failing to have coverage leads to hefty penalties, such as fines and higher car insurance rates.

Your car insurance company may be able to help you avoid cancellation. For example, if you move, buy a new car, or need lower rates, your insurer may be able to transfer or adjust your policy without canceling it.

If you are thinking of canceling your car insurance, shop around for new coverage. Find the best deal by comparing quotes from multiple companies.