Can You Cancel an Auto Insurance Claim?

If you’ve recently made an auto insurance claim but then you have realized that you shouldn’t have claimed it in the first place. Whether it’s because the deductibles are higher than the repair cost, or it’s a minor repair expense that you can easily pay out of pocket.

Regardless of whether either of these are the reasons, or it’s something else, it is possible to cancel an auto insurance claim. So yes, the good news is, you can cancel an auto insurance claim, but you need to act fast.

If your auto insurance has already been approved, processed, and most importantly if the compensation has already been transferred to your bank account, then it’s too late. But if it hasn’t gotten to that point yet, you can talk to your insurer and come to a mutual agreement to cancel the auto insurance claim.

Although it’s not as easy and straightforward as it seems, there are conditions that you must abide by, and steps that you need to take to cancel an auto insurance claim.

When it is Possible to Cancel an Auto Insurance Claim

Once you make an auto insurance claim, you’re entitled to receive financial compensation unless you’re unable to pay your deductibles, or you have violated the insurance agreement.

Given the benefit of the doubt, let’s say your auto insurance claim is legit, and you’ve either already paid your deductibles, or you can pay it in due time. In this case, you’re due to receive the compensation once your insurer approves it and transfers the compensation to your bank account.

Now, amidst this processing phase, it is possible to cancel an auto insurance claim if you meet the conditions as follows.

You’re the One to File the Auto Insurance

Here’s a universal rule when it comes to cancelling an auto insurance claim. The claim can only be cancelled by the individual who has filed it. So, if you have filed the auto insurance then you can cancel it. But for that, you must contact your insurance company and inform them of your decision to cancel the auto insurance claim before it gets processed.

The Insurance Claim Didn’t Get Approved or Processed Yet

If the insurance claim hasn’t been approved or processed yet, then you or the other driver can request the insurance company to cancel it. Remember, as was mentioned before, only the one to claim the insurance can cancel it. So, if you’ve claimed it then it is up to you to cancel it, and if it was the other driver then it is up to them. If it’s the other driver that has made the insurance claim, then you can talk to them, if they agree and take prompt steps to cancel it then it’s still possible.

You Haven’t Cashed the Cheque You Received from Your Insurer Yet

As long as the financial compensation does not hit your bank account, it is still possible to cancel it. Some insurance companies issue cheques, so if you received one from your insurer then you should return it if you haven’t cashed it yet. However, if they do a direct transfer to your account, you can offer your insurance company if you can return the money to their account to cancel the auto insurance claim. If they agree to it, then yes, it’s still possible to cancel the auto insurance claim.

You Can Pay for the Damages Out of Pocket

If you can pay for the damages out of pocket and if that’s what you’re willing to do to cancel the auto insurance claim, then you must inform your insurer as soon as possible. Here’s the catch though, even if your insurance claim gets cancelled, the insurance claim will still be on the record. So, cancelling an auto insurance claim and paying it out of pocket wouldn’t erase the claim, it will always be there on the records, and it can influence your future insurance premiums.

When it is Not Possible to Cancel an Auto Insurance Claim

Regardless of whatever your reason is, and no matter how logical it is, there are situations where it’s no longer possible to cancel the auto insurance claim. The biggest challenge of cancelling an auto insurance claim is, it’s literally a race against time, and in some cases, the decision isn’t yours to make.

The following includes situations when it's not possible to cancel an auto insurance claim.

The Insurance Claim Has Already Been Approved and Processed

Insurance companies need to maintain various regulations when it comes to auto insurance claims. They cannot just cancel it suddenly, especially when it has already been approved and processed. However, it depends till which extent the insurance claim has been processed. If the payment has already been issued, then it is difficult to have the claim cancelled at this point. You can still try informing your insurer of your decision to withdraw the claim, but there’s a very low chance of cancellation.

You’ve Already Received the Money in Your Bank Account

If the financial compensation has already been transferred to your bank account, this means that the insurance claims process is complete. At this point, it is no longer possible to cancel it. But what you can discuss it with your insurer and come to a mutual agreement to return the money and pay for the damages out of pocket.

Even if the withdrawal of the claim is mutually agreed, it will still remain in your insurance claims history. Although you’ve returned the compensation, it wouldn’t make any difference as the record will still show that you claimed the insurance and got compensated. So, if it’s possible, it would be a better choice not to withdraw the claim.

The Auto Insurance Claim Was Filed by the Other Driver

If the other driver has filed an insurance claim for an accident in which you were at-fault, then you cannot cancel the claim. As the other driver is the one to claim the auto insurance so only they can cancel it. In this case, your only option is to contact the other driver and request them to cancel the claim. If they agree to it and contact their insurance company in due time, then it’s possible to have the auto liability insurance cancelled. However, if they don’t agree to cancelling it, there is nothing that you can do.

The Other Driver is Due to Receive the Liability Compensation

When it comes to processing auto liability insurance claims, it is relatively more complex, as it involves two insurance companies processing the claim; the other driver’s insurer and your insurer. So, when the other driver makes the auto liability insurance claim against you, their insurance company will process it and coordinate with yours. Your insurance company will verify and process the claim and then compensate the other driver the amount up to your auto liability insurance coverage limit. Now, if a bank transfer has been made or if a cheque has been issued to the other driver, it may not be possible to cancel it at this point, especially because the entire claims process is officially complete.

5 Common Reasons for Cancelling Auto Insurance Claim

Although claiming auto insurance is necessary to cover a multitude of accidental damages and compensations, it may not always be a feasible choice, especially when your deductibles are higher than the repair costs.

Well, this is one concerning, and a common reason to cancel your auto insurance claim. Apart from this, it could be due to various other common reasons such as changes inability to afford deductibles, wanting to avoid potential premium increases, or simply realizing that it was a mistake to file the claim, etc.

If you’re willing to cancel your auto insurance claim, it is crucial for you to know the common reasons why many other drivers do the same in the following points below.

• Deductibles Are Either Equivalent or Less Than Repair Expenses: It would be financially impractical to have an auto insurance claim the deductibles from out-of-pocket expenses to cover the damage. This nullifies the whole point of claiming the auto insurance, so that’s why it’s logical to cancel the claim if that’s still an option.
• Inability to Afford Deductibles: The condition of getting insurance coverage is, you first need to entirely pay your deductibles out of pocket, and then you will get access to your auto insurance coverage. If your repair costs are within an affordable range out of pocket, and if you can’t pay your deductibles now, then that’s a legitimate reason to cancel the auto insurance claim. Insurance has been designed to provide financial relief, not the other way around.
• Avoiding Future Premium Increase: Every time you claim your auto insurance; it automatically increases the chance of paying higher insurance rates in the future. This is mainly because insurance companies use your insurance claims history as a metric to determine how much they need to cover you in the future. So, the more auto insurance you claim and the more they compensate you, the higher your future premiums are likely to be.
• A Decisive Mistake: If you weren’t aware that it was a financially impractical decision to file the auto insurance claim then it’s logical for you to try cancelling it. Many drivers aren’t fully aware of the do’s and don'ts of making auto insurance claims, so it could lead to such mistakes. But when you get to know that it’s not financially feasible, it’s logical for you to cancel the auto insurance claim if it’s still possible.
• Private Agreement with the Other Driver: If you have filed an auto liability insurance claim against the other driver for causing the accident, and now if you’ve voluntarily agreed to cancel it honoring their request. So, if you and the other driver have mutually settled the issue privately, then there’s no need to proceed with the insurance claim, rather it’s better to cancel it.

Step by Step Process of Cancelling an Auto Insurance Claim

Getting your auto insurance cancelled is quite simple, but it’s important to follow the right steps to ensure a smooth cancellation as it’s suggested below.

Determine the Reasons to Cancel Your Auto Insurance Claim

It is crucial to determine the exact reasons why you want to cancel your auto insurance claim. Although, if the insurance hasn’t been processed yet you should be able to cancel it yet justifying it with strong reasons can increase the chances of a quicker and smoother cancellation.

Contact Your Insurance Company

After determining the reasons, you need to contact your insurance company to inform them of your decision to cancel the auto insurance claim. Specify the exact reasons why you want to cancel it, and if your reasons seem viable to your insurer. This will increase the chances of cancelling the auto insurance claim.

Fill Out a Written Form to Officially Cancel Your Auto Insurance Claim

Most insurance companies have online forms for voluntary cancellation of auto insurance claims. Carefully fill that out by providing the necessary information, and your reasons for cancellation of the claim. Once you submit the form, your auto insurance claim will get cancelled within a few days if it’s still possible. Don’t worry, the insurance agent will inform you and guide you accordingly. If it’s needed, you can always call them and follow up.

What Happens After Your Auto Insurance Claim Gets Cancelled?

After your auto insurance claim gets cancelled, you will have to pay for the damages out of your own pocket. But your auto insurance claim will still be on the record. So, there is still a high chance that your auto insurance premium might increase in the following year or so when it’s time to renew your policy.

Even if you switch to another insurance company, the insurance claim will still reflect on your insurance claims history, and there’s no way you can change that. So, that’s why before claiming auto insurance, it is crucial to ensure whether it’s necessary, and will it be beneficial for you.

Worried about paying higher auto insurance rates? If you’re located in Michigan whether it’s Flint, Saginaw, Mt. Pleasant or any other location nearby, we provide cheap and affordable auto insurance rates for a wide variety of auto insurance coverage.

Bottomline: Is Cancelling an Auto Insurance Claim Worth It?

When you’re dealing with auto insurance everything comes down to finance. So, calculate whether the cost of cancelling the auto insurance claim exceeds the benefits. If it does, then the logical decision would be to go for the cancellation.

Every action has consequences, so as you have claimed the auto insurance in the first place even if it was a decisive mistake, you will have to bear the risk of an increased auto insurance premium in the following year.

But it is still better than unnecessary spending on deductibles and minor repair costs that you can easily spend from out-of-pocket expenses. Remember the main reason you acquired the auto insurance is to protect your finances, not to add greater financial strain.

If you’re worried that your auto insurance premiums will increase for the claim in the following year, don’t worry. You can contact us for a free quote and discuss your auto insurance requirements. Our insurance agent will offer you an affordable rate within your budget with the best coverage options.

FAQ

What happens if I cancel my auto insurance claim?

If you manage to successfully cancel your auto insurance, you won’t have to pay the deductibles if there’s any left, and you won’t get any financial compensation for the damage incurred. However, the insurance claim will stay on the record which might lead to higher premiums in the following year.

Can you withdraw a car accident claim?

Yes, you can withdraw a car accident claim before the settlement gets finalized, particularly during the investigation phase and before it gets approved. If the financial compensation gets processed and transferred to your bank account or if a cheque is issued, then it may be too late to cancel the claim.

What happens if I withdraw an auto insurance claim?

When you withdraw an auto insurance claim it will stay on the record with zero payout as compensation. So, your auto insurance claims history will still show that you’ve claimed the insurance which might influence higher premiums in the future.

Is it possible to cancel an auto insurance claim that’s under investigation?

Yes, during the investigation phase the legitimacy of the claim is verified. As your claim hasn’t been processed yet so you can cancel the auto insurance claim by just informing your insurer. You may be asked to fill out a voluntary cancellation form.