When it comes to auto insurance there are many factors that play into finding a plan, as well as cancelling it. You’re selling your car, you’ve become fed up with your current policyholder, or you simply found a better rate.
No matter what the reason, there is a process you should follow when cancelling your policy to ensure a quick, smooth and painless transition, without being charged for something you aren’t using anymore.
Any standard auto insurance policy contains a provision allowing you to cancel at any time, but before you cancel in the middle of a policy period always ask your auto insurance company about their cancellation policy.
Below are a few guidelines to properly cancelling your car insurance policy.
Have a Replacement Policy in Place
You want to avoid a gap in coverage when switching from one insurance company to another. Any period of time that you were supposed to have auto insurance and didn’t can result in higher rates.
Make sure your new insurance company gives you the effective date of your new policy, you will need this when you go to cancel your old policy.
Call Your Current Carrier
Call your insurance company and let them know you plan to cancel your policy and will be writing a follow up letter. They will ask you why you’re canceling and try to get you to change your mind. Be prepared for this before you call.
Draft an Insurance Cancellation Letter
Every insurance company has a different cancellation policy and for some of them a phone call is not enough. Some companies may require you to fill out a form they provide or in most cases, writing an insurance cancellation letter will suffice.
Even if you can cancel over the phone it is best that you write a letter just to avoid any complications in the future. The letter should simply to state that you wish to cancel your policy and the effective date of your new coverage.
Be sure to include your policy number along with your contact information, and sign the letter. Some insurance companies will even provide you with a pre-written letter to send to your former carrier.
Get Your Money Back
Although many people pay their insurance premiums on a monthly basis, paying in full is an option. So, if you have paid for the entire policy period in advance and decide to cancel before the policy period ends, you are due a refund.
Ask the customer service representative about this when you call to cancel, and mention it in your insurance cancellation letter.
Notify your Lienholder
If you’re still making payments on your car, it is probably a requirement to maintain full coverage on your vehicle until it’s either paid off, or you sell it. The bank may also have certain requirements about the amount of your deductible.
Keep the bank informed when canceling insurance, and make sure the new coverage meets the lienholder’s requirements.
Notify the DMV
Check your state’s DMV guidelines, or ask your agent when setting up your new policy if you need to notify your local DMV. Some states require that you inform them when canceling your auto insurance.
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