Whether you’re looking for better insurance rates or you’re unsatisfied with another aspect of your auto insurance policy, canceling or switching to a new insurance company can be a good option. Are you thinking about canceling your auto insurance policy but have questions about what’s involved? Maybe you’re not sure if you can cancel your policy at any time. Here’s what you need to know and consider before canceling an auto insurance policy.
Common Reasons for Canceling an Auto Insurance Policy
There are several reasons drivers cancel their auto insurance. One of the most common ones is moving to another state. Some drivers drop their insurance because they’re not driving anymore. Sometimes, people decide to give up their vehicles when moving to a big city or to an area where it can be too expensive to own a car.
Selling a vehicle could be a reason for stopping an auto policy. However, if this is the case, wait until your vehicle is sold, and you don’t own the title. Furthermore, some people change auto insurance providers because their policies are limited, regarding repairs and maintenance.
Why You’re Allowed to Cancel Your Auto Insurance at Any Time
State officials who regulate the insurance industry publish a Consumer Bill of Rights that give drivers the right to cancel their auto insurance at any time. Besides this right, drivers are also given the right to make changes in their coverages and limits.
Although you can cancel your policy at any time, it’s best to do so at your renewal time or once you’ve bought another policy. If you cancel your policy before its renewal date, you’ll probably have to pay a penalty. But after paying the penalty, your insurer refunds you for overpaid premiums.
Steps for Cancelling a Policy
- The first step is to call or visit your insurance provider. In most cases, cancellation needs to be the form of a written request, including contact information.
- Ask your insurance company if they have a standard form that contains policy information.
- Before signing the form to confirm the cancellation, be sure the cancellation date is correct.
- You could also mail or fax a cancellation letter to your insurance company. Just be sure the letter includes your name, phone number, address, policy number and the date of the cancellation.
- Follow up with a phone call to ensure your cancellation letter has been received, and be sure you get a written cancellation letter.
Other Considerations and Warnings
- Most auto insurance policies last from six to 12 months.
- When switching to a new insurance provider, be sure there aren’t any gaps in your coverage.
- Consider that different factors can affect the cost of a policy and that some of these factors may not pertain to you.
- If you pay on a monthly basis, the best chance for receiving a refund is to cancel your policy in the mid-billing cycle.
- The odds of getting a refund when paying in full are greater when you’ve paid further in advance. You’re also more likely to get a refund when you move to a lower-risk area or remove coverage from a vehicle or remove a vehicle itself.
- A good credit score could mean getting more discounts.
- Check for any hidden fees or costs when changing to a new auto insurance policy.
- In order to drive, you must buy auto insurance as well as maintain continuous cover.
- Check the cancellation laws pertaining to your state.
- Different states have different penalties for uninsured drivers.
- The insurance company you choose has to be licensed by your state’s Department of Insurance in order to buy it in the state in which your vehicle is registered.
- Before making a change in your insurance provider, consider several basic factors, such as the perks of a new policy. Besides lower rates, another benefit could be offering a discount for bundling an auto policy with a homeowner’s or rental insurance policy, as Allstate does.
If you’re shopping for the best policies at the best rates, you can depend on the insurance pros at Insurance Connection USA to help you make the best choice. Please contact us for a free, instant auto insurance quote.