Insurance

How to cancel your car insurance

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So you’ve decided to break up with your insurance company.

Hey, no need to justify ending the relationship. Perhaps, you’ve:

  • Bundled all your policies with a single company
  • Changed your marital status
  • Experienced a financial hardship that makes car insurance unaffordable
  • Found a more affordable rate or an insurer with better customer service
  • Moved to a new state or even country
  • Put your vehicle in storage
  • Sold, totaled or otherwise stopped driving your vehicle

Things change, and so too can your insurance coverage if the situation calls for it. If you don’t know if you should stay or go, you can take our quiz.

Now let’s look at a few common questions about canceling your insurance and how to actually do it. Or skip to the inforgraphic at the end for the quick answer!

How does canceling affect your car insurance record?

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If you cancel your car insurance before getting new coverage, your record will show an insurance gap. This insurance gap is referred to as a lapse

Even if you canceled because you sold the vehicle, an insurance lapse frequently results in costlier premiums when you pick up coverage. Our analysis showed an average increase of $218 per year.

If the calculator dictates it, it may be worthwhile to suspend your coverage. Suspending your coverage is like “pausing” your policy, a choice prevalent during the pandemic. Although your vehicle is unprotected, it allows you to keep a record of continuous coverage at a reduced rate. You can check with your insurer if this option appeals to you. 

Some people suspend their policies if they leave home for extended periods (think military personnel, snowbirds and college students). Others who occasionally rent cars or borrow a friend’s car may consider non-owners car insurance

Can you cancel your car insurance at any time?

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Yes, you can kick your car insurance to the curb whenever your heart pleases. However, if you’re switching companies, the best time to cancel is after you’ve found new insurance coverage. Ideally, you’d schedule your old policy to stop coverage on the same day your coverage at the new company starts. That way, you avoid any lapses in coverage.

If you call it quits before your policy renewal date, you’ll likely receive a prorated refund for any unused premium. Just be aware that some companies charge a cancellation fee. Cancellation fees are a fixed dollar amount or a percentage of the total premium. 

You’ll want to contact your insurer and ask about the cancellation process. And when you’re on the phone, inquire about your refund and potential fees.

What happens if you just stop paying your car insurance premiums?

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No one likes the silent treatment, and that includes your insurer. That’s why “ghosting” your insurance company can have a few negative consequences. Here are three potential problems that may arise.

1. You could be charged for the grace period.

When you just let your policy lapse, you’re, in effect, “canceling for nonpayment.” Some insurers end coverage immediately when payments are not received. But many figure you’d prefer to maintain coverage and offer a grace period.

Grace periods often extend your coverage from one to 30 days, depending on the insurer. You’ll likely be billed for the grace period, and any unpaid bills might go to collections, negatively affecting your credit.

Suppose you canceled to switch to another insurance provider. In that case, you can show your new policy to your old insurer to avoid being charged for the grace period.

2. Your policy may not cancel.

In a world where everything is becoming a monthly subscription, it’s easy to forget about automatic payments. So you’ll want to stop online payments through your insurer, bank or credit card just to be sure. Once again, getting a refund may be possible if you prove you replaced your previous coverage with a new insurer.

3. You could have your license suspended or your vehicle repossessed.

When the insurer cancels your policy for nonpayment, they must notify your state’s DMV. Many states penalize lapses in coverage. Those penalties can include fines and even license suspension.

Also, if you have a loan or lease on your vehicle, your bank likely requires you to protect the car with insurance. When your insurance lapses, your insurer or the DMV may alert your lender that you no longer have coverage. Consequently, the lender could repossess your car.

What’s the best way to cancel your car insurance?

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Fortunately, you can skip all the nightmare scenarios above with a simple phone call to your insurance company. It’s usually painless. And while we recommend a phone call, you can also cancel by mail, fax or in-person visit. And some companies even allow you to cancel by email. 

We suggest a phone call because you can ask about the company’s particular process, ensure you get any prorated refunds and verify that the policy is indeed canceled. However, no matter how you choose to cancel, make sure you receive an email or written documentation proving your cancellation date.

Here are further details on how to say “goodbye” in four easy steps.

  1. Call your car insurance company

You can find the phone number online or printed on your insurance card or policy. In addition, insurers with mobile apps, like Allstate, GEICO, Progressive, State Farm or USAA, have an option to dial the company within the app.

  1. Ask about their cancellation process.

When you speak to the customer service rep, bring up your refund and any potential cancellation fees. You’ll also want to determine if they require you to write a cancellation letter. If you switched to a new company, double-check that your cancellation date is the same day your coverage starts with your new insurer. 

  1. Send your cancellation letter, if applicable

This step is becoming increasingly rare, but your insurance provider may require it. If that’s the case, you’ll learn what they need from your phone call with the company. 

The most important parts are stating your policy number, intent to cancel, the effective date of the cancellation and your request for any refunds. Sign it and send it via email, snail mail or fax.

  1. Get confirmation of policy cancellation.

Your confirmation is proof that you’ve canceled the policy. Also, it serves as your record, so you get the appropriate refund. 

And now that you know how to end the relationship, perhaps it’s time to move on. You can compare companies to find a price you’re “head over heels for.” In minutes, you can meet your perfect match at The Zebra. How’s that for speed dating?

Compare insurance rates quickly and easily.

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Courtney RoyInsurtech Writer | Contributor

Courtney Roy is an insurtech writer and expert in multiple lines of insurance. As an insurance agent, he sat across the kitchen table to help people choose the right coverage for their families. Now, he breaks down complicated insurance concepts into actionable content that makes a difference for his readers. He has a P & C insurance license, a life insurance license and a real estate license. His work has been featured by Huckleberry, Liberty Mutual, ReMax, and Benzinga.