If you decide to switch your auto insurance to a new company, you will need to cancel your existing auto insurance policy. It’s not difficult to cancel a policy, and there are four different ways you can get it done.
Why cancel your auto insurance policy?
There are several reasons you may need to cancel your current auto insurance. There may be times in your life where something has changed that could significantly impact your rates.
The most common reasons you would cancel your current policy include:
Moving to a new area
Getting married or divorced
Changing how vehicles are used
Becoming a carless household
Large change in credit score
Significant change in rates
You may also decide to change your insurance carrier because you’ve had a bad customer service experience. Or, maybe you filed a claim and had a rough time getting it covered properly.
Or you may switch insurance companies because another one offers different or better discounts.
4 ways to cancel auto insurance
There are four ways to cancel your auto insurance policy.
Call your agent.
Send a written request to your agent or insurance company.
Visit your agent’s office.
Ask your new insurer to send the cancellation request.
Call your agent
You can call your insurance agent directly and let them know you're taking your business elsewhere. They may require a signature, but it's often the case that just a phone call will do. If you call, the agent will likely try to convince you to remain a customer.
For example, your agent may find a way to reduce your rate enough that it’s worth it to leave your policy where it is.
Send a written request
You can email or physically mail a cancellation request to your agent or insurance company. The request should include your name, policy number and the date you want the insurance policy to end. If you email it, send the cancellation request as an attachment so you can sign it.
Visit your agent's office
If your agent has an office nearby, you can stop by their office and request the policy is cancelled. Doing so shouldn't be awkward as agents lose customers from time to time for any number of reasons, so it's unlikely they'll take it personally you're going elsewhere.
Ask your new insurer to send the cancellation request
Insurance agents and companies are happy to have you insure with them, so they will assist you in cancelling your old insurance policy. They'll have you sign a cancellation request and handle all the details of getting it filed with your old insurance carrier.
Why notify your insurance company you're cancelling?
The most important thing to know is you shouldn't assume your current insurance company received notice that you bought insurance elsewhere. Notifying your insurance company that you're cancelling avoids some difficulties.
First, there's an automatic grace period on cancellations. If you don't notify your insurance company you went elsewhere, your policy technically cancelled for nonpayment of premium. As a result, you can be charged for the grace period. You can provide documentation to remove these charges, but it's easier to handle the situation ahead of time.
Another reason to let your current insurer know you want to cancel your policy is if you have automatic payments set up to pay your monthly bill. The charges will continue until the insurance company is notified you want to cancel. You can get your money back but, again, this is more painful to deal with then giving the insurance company a date you don't want to be covered by them any longer.
Can you cancel car insurance anytime?
You can cancel your auto insurance at any point in time. You don't need to wait until your renewal date. You can cancel in the middle of a policy period and receive a refund on any "unused" premiums you may have already paid.
Just make sure that the date your existing policy cancels and the date the new policy begins are the same date. This will avoid a gap in coverage where you don't have insurance with either company. Strangely enough, it's during this type of gap where people tend to have an accident as fate is not kind.
Is there a fee when cancelling?
Most car insurance companies don't charge a cancellation fee. Some, though, charge anywhere from $25 up to 10% of the remaining premium in your policy period.
Whether you need to pay a cancellation fee or not also depends on the state you live in. Some insurance companies require 30 days notice of cancellation, while with others you cancel the policy as soon as the day you call.
If you're proactive in cancelling your auto insurance, it's a simple and painless process that will get you off to a great start with your new insurance carrier.