How to Cancel Auto Insurance?

Are you thinking of cancelling your auto insurance? Regardless of whatever your reason may be, whether it’s moving to another state or country, selling off your car, or switching to another insurer, you can cancel your auto insurance at any time.

The best part is the process of cancelling auto insurance is pretty straightforward. So, if you’re concerned about lengthy official processes, or certain complications there isn’t much you should worry about.

Apparently, there are a few different ways to cancel your auto insurance. So, all you need to do is to follow some simple processes to initiate and confirm the cancellation of your auto insurance.

This article explains the steps to cancel your auto insurance, auto insurance cancellation policies, the factors you should consider before cancelling your auto insurance, reasons to cancel your auto insurance, and a brief discussion on whether you can cancel your auto insurance at any time.

How to Cancel Auto Insurance?

The main step is to contact your auto insurance company and inform them of your decision to cancel your auto insurance. Now depending on your preference, there are a few different ways you can contact your auto insurance company and initiate the cancellation process as follows.

Call Your Insurance Company

You will find the contact number of your auto insurance provider on your insurance card, and even the company’s website or the official app. So, once you call your auto insurance company and inform them your decision to cancel your auto insurance, they will document it and immediately start the cancellation process.

Their insurance agent will guide you through the steps and ask you to sign documents such as a cancellation letter to make it official. Depending on your insurer’s cancellation procedures you can either sign the documents virtually, or by visiting their office in-person.

Make an Email Application

If you want to keep your auto insurance cancellation documented, and on the record, you can email your insurance company and inform them of your decision to cancel your auto insurance.

Similarly, their agent will communicate with you via email, or they may even call you to proceed with the cancellation process. The advantage of an email application is that it’s much more organized, and it’s a written document it can be used for any official purpose or application in the future.

Visit the Insurance Company Office

If you don’t prefer the virtual methods, you can always visit their office in-person, and directly engage with your auto insurance company to initiate and process the cancellation of your insurance policy.

This is in fact a better way, as you can directly communicate with them, and promptly comply with them by signing the cancellation letter, and any other required documents. Also, as the insurance agent will be dealing with your cancellation application upfront, you can even point out any concern or query regarding the entire cancellation process.

Ask Your New Insurer to Process the Cancellation (if you’re switching)

If you’re switching auto insurance companies, then you can ask your new insurer to handle the entire cancellation process with your existing auto insurance provider. Then your new insurer will initiate the process, and accordingly guide you through.
This will help you save time communicating and dealing with two insurance companies. Rather you can just let your new insurer handle the cancellation process while doing your part such as signing the cancellation letter and any other required documents.

Get a Confirmation of Policy Cancellation

You should automatically receive a confirmation email of the policy cancellation. But if you haven’t received any confirmation email, you should contact your auto insurance company immediately and request it.

Some auto insurance companies can take up to 30 days to process the cancellation of your auto insurance. So, contact your insurance company and ask them to specifically inform you how long it will take to get confirmation of your policy cancellation.

Redeem Your Refund, or Pay Any Cancellation Fee

If you’re cancelling weeks or months before the expiration of your auto insurance policy, you should get a refund for a specific period. That also depends on the auto insurance agreement you have signed before purchasing your insurance policy.

So, if you’re eligible for a refund your insurance company should inform you upon making the cancellation request. In case if they don’t, you can ask them to know whether you’re eligible for the refund, along with the amount that you will be refunded.

In general auto insurance cancellations are usually free, but if there’s a small fee it will either be deducted from your refund, or you will have to pay them a small fee.

Understand Your Auto Insurance Cancellation Policy

Before you apply for the cancellation of your auto insurance make sure to go through your auto insurance company’s cancellation policy. If you don’t have access to your auto insurance provider’s cancellation policy, contact your provider directly to request it.

Or you can even discuss it with their insurance agent, but it’s always best to carefully go through the document so that you’re clear on what it actually specifies. While reviewing your auto insurance cancellation policy make sure you pay close attention to the following points.

Cancellation Fees

While there are many auto insurance companies that don’t charge any cancellation fee, there are some companies that do. Don’t worry, it’s generally a small fee that varies between $0 and $50, or usually 10% of the unearned premium.

So first it’s important to identify whether your auto insurance company charges any cancellation fee, and if so, how much. It’s also important to know how this fee is charged. Usually, insurance companies deduct it from the refundable amount.

But if your insurance is about to expire soon, let’s say in a few days then you may not have the provision to any refund. So, in that case you may have to pay the fee using your credit card, or any other payment method accepted by the insurance company.

On the other hand, if they don’t charge any cancellation fee then you have nothing to worry about.

Refund Policies

Most auto insurance companies issue a prorated return. This is basically the amount of money that you will be refunded based on the number of days you were insured compared to the number of days left on your insurance plan. So, you will get a refund for the remaining insurance premium.

For example, if you’ve paid an annual insurance premium of $1,000, and if you’re cancelling after 6 months. Then you’re supposed to get a refund of $500, which is your remaining premium.

Some insurance companies may short rate your return by charging a higher percentage for the first month. So, if they charge 60% more for the first month, and if your annual insurance premium is $1000, then it should cost you $83.33 for the first month (1000/12).

But as they’re short rating the first month’s insurance, they will be charging an additional 60% of the first month’s insurance premium, and that would be $50 more (83.33 x 60%). In the first month you would be paying $133.33, and for the remaining 11 months it would be the standard rate of $83.33 per month.

Your total short-rated insurance premium would be $133.33 + (83.33 x 11) = $1,049.96. So, if you cancel after 6 months, then you would get a refund of $524.98.

On the other hand, there are auto insurance companies that don’t provide any refund upon cancellation. All of these should be clearly specified in your insurance agreement. Yet if you’re unsure, it’s always best to contact your insurance company to know their refund policies.

P.S. usually it takes 7 to 10 business days for auto insurance companies to process a refund upon cancellation but in some cases, it can take up to 60 days. So, if you’re expecting a refund, you should also clarify how much time it may take for the refund to hit your bank account.

Notice Period

There are many official procedures to initiate, process and effectively cancel your auto insurance. So, that’s why it’s ideal to give at least a 30-day notice period upon your cancellation request.

While some auto insurance companies can process your cancellation request immediately, or within 7 to 10 business days, there are others that require more time, usually up to 30 days.

If you are cancelling your auto insurance, it’s best to expect the due processes to take a month or so. In this way, it will be easier for you to allocate time and proceed with the necessary steps of the cancellation process accordingly.

Plus, if the reason for your cancellation is to switch to another insurance company, you can use the buffer time to evaluate which auto insurance company policies work best for you.

What Should You Consider Before Cancelling Your Auto Insurance Policy

Before you decide to cancel your auto insurance it is important to be aware of the possible consequences. While there are valid reasons for you to cancel your auto insurance, it is also crucial to reflect on the risks associated with being uninsured.

Cancelling your auto insurance may seem like a simple decision but it can lead to serious legal consequences, plus it can impact your financial stability, and future insurance rates. So, that’s why it’s important for you to consider the following factors mentioned below before considering cancelling your auto insurance policy.

Legal Requirements

Apart from New Hampshire, it is legally mandatory for all vehicle owners to have auto insurance. If you own a vehicle, or drive without auto insurance, you can get arrested, jailed, fined, and your driver’s license may also get suspended.

If you’re living in any state other than New Hampshire, then you need to transfer ownership or sell your vehicle before cancelling your auto insurance. So, unless you plan to no longer own a vehicle, switch to another insurer, or move to another state or country, it's best to reconsider your decision.

Financial Consequences

Unless you’re switching to another insurer, being uninsured has a lot of financial consequences. Let’s say you run into a car accident in which you’re at fault, so in that case you will have to pay compensation for the other driver’s medical bills, vehicle and property repair expenses.

Now let’s add another point to this case, what happens if you get injured as well, and your vehicle gets damaged too? So, that instantly doubles the cost. Plus, if you’re severely injured then you may not be able to attend work so that can result in a loss of income, and you may even lose your job in the process.

Now ask yourself, can you afford the financial cost? On top of that, if you are caught owning or driving a vehicle without auto insurance you can even face lawsuits. So, that adds another financial cost of dealing with court proceedings and the possibility of paying a substantial fine.

Future Insurance Rates

When it comes to determining the auto insurance rate, insurance companies also consider examining your lapse in coverage. Lapse in coverage is basically the gap between having an active insurance policy and having no insurance.

Insurance companies use this factor to evaluate whether you’re a long-term customer, and how much premium they can expect from you within a forecasted period. So, if you have a longer lapse in coverage that means you have remained uninsured for a long time, this makes you a riskier customer to the insurance company.

They may assume that you may not be able to afford the insurance premium, delay payment, or cancel your auto insurance suddenly. So based on all these risk factors, you may get fewer or no discounts, and your future insurance rates might be significantly higher.

Reasons to Cancel Your Auto Insurance

While there are substantial financial and legal risks with cancelling your auto insurance, you may also have strong reasons to even consider this decision. If these reasons have a rational alternative, then it may be necessary for you to cancel your insurance.

When it comes to such dilemmas, it can often get confusing. So, that’s why it’s important to know that it can be necessary and beneficial for you to cancel your auto insurance if any or all the following reasons checks out with yours.

Moving to Another State or Country

If you’re planning to move to another state or country, then it’s necessary for you to cancel your auto insurance, especially if your insurance company only provides insurance services within a particular region or state.

For instance, PLPD Insurance only provides insurance services in Michigan. So, if you’re moving to another state or country then you should cancel your auto insurance policy with us. This is especially because our insurance coverage doesn’t apply anywhere outside Michigan, and so you won’t get any coverage if you get into an accident in New York, or a foreign country.

So, we would recommend cancelling your auto insurance with us and switching to another insurer that provides auto insurance in that particular region.

Selling Your Car or No Longer Owning One

There is no point in having auto insurance if you don’t own or drive a car. But if you are selling your car, it is recommended that you wait until the ownership is transferred. This is because if you own a vehicle, it is a legal requirement for you to have auto insurance.

On the other hand, if you drive a vehicle that is owned by your spouse or someone else, then you should consider getting auto insurance with non-owner policy. By doing so, you can easily avoid the lapse period, so your future insurance rates won’t be affected. Plus, if you consider buying a car again in the future, you can seamlessly convert back to a standard auto insurance policy.

Again, if you don’t own a vehicle, and don’t intend to drive anymore then you can consider cancelling your auto insurance. But be wary of the lapse period, because it will affect your future auto insurance rates, and discount policies.

You’re Covered By Someone Else’s Policy

If you’re already covered by someone else’s insurance with adequate coverage, then you don’t need to spend extra money on your own auto insurance policy.

To be more specific, if you’re already enlisted in your spouse’s insurance policy whether it’s a separate insurance policy or a joint one, you’re already abiding by the legal requirements, and you’re financially protected.

Also, if you both share the same vehicle, and let’s say your spouse is the owner of the vehicle, even on that note the spousal auto insurance policy should be enough.

Yet again, you should re-evaluate whether the coverage is enough to financially protect you if you ever get involved in a motor vehicle accident. So, if the other auto insurance policy is adequate then you can consider cancelling yours.

Switching to Another Insurance Provider

It’s not feasible to pay premiums for the same auto insurance policies to two different auto insurance companies. So, if you’re planning to switch to another auto insurance company then you should consider cancelling your existing auto insurance policy.

The cancellation process can take a while, so during the buffer period you may not be covered by your existing auto insurance policy which can lead to both legal and financial consequences.

So, if you’re planning to switch, it’s recommended that you first purchase an auto insurance policy from another insurer and then proceed with the formalities to cancel your existing auto insurance.  In this way, you will have an active auto insurance policy which will keep you safe both legally and financially.

Can I Cancel My Auto Insurance Policy at Any Time?

As a customer you have the right to cancel your auto insurance policy at any time. There are no conditions that bind you to stay committed to any auto insurance policies.

But yes, as it was mentioned before, if you own a vehicle and drive on the street you need to have an auto insurance policy. This is legally mandatory in every state in the USA except New Hampshire.

Ideally, if you don’t own a vehicle, and if you don’t drive anymore then you’re not legally required to carry an auto insurance policy. So, if that’s the case then you can cancel your auto insurance and even stay uninsured.

But to stay financially secure against road accidents you should consider purchasing a non-owner auto insurance policy whether you drive occasionally or ride as a passenger. It will also help you avoid insurance rate hikes due to policy lapse.

Bottomline: Should I Cancel My Auto Insurance or Not?

Whether you should keep your current auto insurance policy or cancel it totally depends on your situation. If you’re traveling to another state or country, and if your auto insurance policy does not cover that region, then it’s no use to keep that auto insurance policy.

If you no longer drive or own a vehicle then auto insurance isn’t necessary, either. Plus, if you’re already covered by someone else’s auto insurance policy such as your spouse then you don’t necessarily need an auto insurance of your own.

So, these are valid reasons to cancel your auto insurance policy. On the other hand, if you plan to own a vehicle or drive regularly any time soon then you should reconsider cancelling your auto insurance or at least switch to another insurance company.

If you’ve read this far, you are aware of the benefits and risks associated with the cancellation of your auto insurance policy. So, based on your situation you should cancel your auto insurance if it no longer benefits you, or if it’s an added cost that you need to carry. But if it’s still necessary then you shouldn’t cancel it.

Sometimes it can get pretty confusing to decide, so if you need help, or if you’re considering switching to an auto insurance company in Michigan, please book a free consultation with us. Our auto insurance agent will answer all your questions and guide you through.

FAQ

How to cancel your auto insurance?

You need to contact your auto insurance company either by directly calling them or by emailing them. You may need to sign a cancellation letter and pay a small fee depending on your auto insurance company’s policies.

Can I cancel my insurance policy at any time?

Yes, as a customer you can cancel your auto insurance policy at any time. You are not obligated to keep your auto insurance policy if you don’t want to.

Is cancelling car insurance easy?

Yes, cancelling car insurance is easy, and straightforward. All you need to do is contact your auto insurance company and they will initiate the cancellation process and guide you through.

How much does it cost to cancel car insurance?

Most car insurance companies don’t charge any cancellation fee. But some auto insurance companies charge a small fee that varies between $0 and $50, or usually 10% of the unearned premium.