For some reason you have thought about canceling your car insurance policy before it expires, either because you found a cheaper rate with another insurance company, you are going to sell or replace your car, you are moving out of state, or you want to reduce the number of cars at home, whatever the situation, you must take into account certain procedures before canceling the auto insurance.
How to cancel an insurance policy?
If you have already decided not to continue with your current policy, you must first contact the insurance company and cancel. Do not simply stop paying, because it can affect your credit history.
Although many insurers in their contracts indicate that you can cancel your auto insurance policy at any time, you always have to send a written notification with the date you want the cancellation to take effect or in some agencies you can do the process online on their website.
However, some insurance agencies prefer to speak with the policyholder at the time of cancellation, if that is the case, keep the following in mind:
- The policyholder must call the insurance company
- Have the corresponding documentation and the policy number on hand
- Inform that you are going to cancel your car insurance
- They will explain the costs and may ask you to return the car insurance title
- Be sure to get confirmation of the cancellation from your insurer.
Factors to disable the auto insurance policy that you should assess
If you still owe money on your car. Your lender will require you to have collision and comprehensive coverage. If you cancel or lose these coverages, your lender will purchase a self-interest auto physical damage coverage and add the cost to your loan payment. This coverage is expensive and only protects the lender.
- Cancellation fees. Some insurers charge a cancellation fee. The fee may vary. For example, if you take out a 12-month policy and cancel it after nine months, you will have to pay 10% of the remaining three months.
- The notice period can range from immediate cancellation to the 30-day notice requirement to revoke your policy.
- Cancellation letter. As mentioned above, some insurance agencies require a cancellation letter while others may settle for a verbal cancellation over the phone. Your policy should detail what you have to do to cancel it correctly.
Importance of notifying the car insurance company of your cancellation
Not notifying your insurance company of your cancellation and letting your policy “cancel itself” will not really happen, it will only be canceling due to non-payment by the insurer.
Your policy may never cancel, and if you subscribe to automatic electronic payments, your policy will likely continue unless you request cancellation directly with the insurance company. The money will continue to be withdrawn from your account and you will have duplicate coverage.
Remember to take these suggestions into account before canceling your auto insurance policy, to avoid headaches and possible loss of money.
