How to cancel your auto insurance policy
To cancel your car insurance, you must inform the insurance company and provide the date when you’d like the coverage to end.
You can do this by contacting an agent, calling the insurance company directly, or, in some cases, following the steps online or in the company app. If you’re switching companies, your new insurer might take care of the cancellation on your behalf.
"When we switch one of our clients to a new carrier, we always have them sign a handle form for the old carrier so that we can cancel their old policy in the most formal way possible, to avoid any issues," says Peter Conte, a licensed insurance broker at Honig Conte Porrino Insurance Agency in New York.
Some companies may require written notice of cancellation, which can often be done via email.
Conte recommends emailing the insurance company if you're canceling on your own. He prefers that form of written notice to texts and phone calls.
"I believe it’s best that you do notify your carrier or agent via email so that there is a paper trail," Conte says.
If you send written notice, include the following:
- Your full name
- The policy number
- The date the cancellation should be effective
- The address to which you would like any refund due sent
Are there fees when you cancel car insurance?
Car insurance providers don’t generally charge penalties for switching to a new car insurance policy with a different company. Still, some insurers may charge a car insurance cancellation fee, which varies.
Your policy may also be short-rated if you cancel in the middle of the term. When this happens, the insurance company retains a percentage of the potential refund to compensate for the administrative costs involved in an early cancellation.
Insurance is regulated differently in every state, and companies' policies differ. Make sure you’re aware of any penalties before you cancel.
If you are selling your car, you don’t need to get new coverage; if you still own it, make sure you have a new policy before you cancel.
Will I get a car insurance refund when I cancel?
If you have paid premiums in advance, you will get a refund for any unused amount when you cancel. If you’re paying monthly, there may be little to no refund.
As mentioned above, your refund may be short-rated if you cancel mid-term.
Shopping for car insurance before you cancel
You’re required by law in nearly every state to keep an active insurance policy on your car. If you cancel your insurance, it will be reported to the DMV, and you could face penalties that include license suspension and fines.
Additionally, if you have a loan or lease, you’re required by the agreement to keep full coverage car insurance in force.
If you’re planning to switch insurance companies, you need to have that new policy ready to go before you cancel the old one. That way, you’ll avoid a lapse in coverage that could lead to serious penalties.
When should you cancel your car insurance?
When to cancel your auto insurance depends on the reason for the cancellation. There are two main reasons to cancel car insurance: you no longer own the car, or you are switching insurance companies.
So, when do you cancel car insurance if you’re selling the car? If you have sold the car or transferred ownership in any other way (donating it, for example), you should wait to cancel until the legal ownership of the car is no longer in your name.
Until ownership is transferred, you are legally responsible for anything that happens with the car. The cancellation will also be reported to the state, which could impose penalties.
If you are switching insurance companies, you should schedule the cancellation for the day the new policy goes into effect. You can allow a day or two of overlap to be safe if you like. Make sure that you can show the DMV that there has been no lapse in coverage.
Auto insurance FAQs
What if your insurance company cancels your policy?
If your car insurance company cancels your policy, you must get new car insurance immediately. The company is legally required to give you enough time to get new coverage.
In most cases, the cancellation is what’s known as a non-renewal. That means they will not renew your policy at the end of the term, usually because you have become too risky. In rare instances, the insurance company may cancel your policy mid-term, but they can only do so for specific reasons, like fraud.
Can you switch car insurance when you have an open claim?
You can, but experts recommend against it. As long as your policy was in force when the incident occurred, it will be covered even if you are no longer a customer. You’ll continue to work with the previous company until the claim is closed. However, switching during a claim won’t prevent you from paying higher rates due to the claim, and it may even result in an increase that hits sooner.
When should you not cancel your car insurance?
You should never cancel car insurance if you still own the car and don’t have new coverage in place. If you don’t plan to drive the car anymore but still own it, you might be able to register the car as non-operational and then cancel, but make sure you follow the proper steps.
Can you cancel your car insurance if you pay monthly?
Yes, regardless of how you pay, you can cancel your car insurance at any time.
