How To Cancel Car Insurance

You might need to cancel car insurance for various reasons, such as selling the vehicle, finding a better price for coverage, or wanting to switch providers. While canceling car insurance is relatively simple, a few mistakes can lead to long-term consequences, most commonly an unintentional lapse in coverage. 

Learn how to cancel car insurance with simple steps to protect your car and insurance premiums with the necessary vehicle liability insurance. Also, keep reading to see how you can get personalized offers from our trusted partners through MoneyLion!

How to cancel your car insurance

There are a few key initial steps to consider to cancel car insurance. The main points (or potential pitfalls) to keep in mind are:

• Contact your insurance provider immediately if you’re planning to move to a new state to ensure that your policy aligns with the car insurance policies for that state. If needed, plan to change policies or insurance providers. 
• Have another policy in effect before canceling your existing coverage to avoid insurance premiums increasing or fines from your state’s Department of Motor Vehicles (DMV).
• If you won’t be driving for an extended period of time—for example, due to an injury or a long-term trip—you can opt to suspend your car insurance instead of canceling; this will help avoid issues later.

Ready to cancel your car insurance? Follow these four simple steps. 

Step 1: Evaluate your insurance coverage

If you’re canceling because you think you can get better premiums elsewhere, the first key step is to evaluate your current insurance coverage. Compare total insurance premiums, additional fees, coverage amounts, and deductibles to select the best insurance options. To be prepared for your research, you can learn more about what to consider when shopping for car insurance. 

Step 2: Shop for a new policy

When looking for a new auto insurance policy, compare the total rates and coverage amount. For this, you’ll usually need to input the make and model of your vehicle and may need to provide information about your driving history, such as accidents or driving penalties within a certain number of years. 

Look at deductibles, what’s covered, and whether any extras, like roadside assistance, are included. You can also check out comprehensive car insurance and see the breakdown of what influences your car insurance premiums, and then find the best offers below. 

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Put the brakes on high premiums: Compare offers and see how much you can save on auto insurance.

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Step 3: Determine when to cancel your policy

Determining when to cancel your policy is crucial to avoid fees or rising premiums from lapses in coverage. Schedule your new policy to begin before your old policy is officially terminated. This will often involve speaking to both insurers to schedule the dates for starting and ending the next coverage with an overlap to avoid any lapses. 

Step 4: Contact your current provider

Once you have a new policy, you’ll have to contact your existing car insurance provider. Each company has different policies for cancellation. Some may charge a cancellation fee, while others may require a 30-day notice before cancellation. Speaking to an agent from the company can help clarify the necessary steps.  

Call, mail, or fax your provider

The simplest option to cancel your car insurance policy is to call the insurer. If your insurer has an app, you can request cancellation in the app or on a website. 

However, some insurers will request a written cancellation request. While these have become less common, you’ll need to include key information if you have to provide a letter requesting your coverage to end. 

The letter should include your full name, the policy number, and the date you want to cancel the policy. If you paid for the full policy upfront and a few months of coverage remain, you can request a refund for the unused part of the policy. You may be able to fax this letter or be required to mail it.  

Visit your provider’s office

If you prefer to do things in person and your insurance provider has a local office, you can visit the office and request cancellation. The provider can clarify any additional steps needed, such as whether you need to sign a cancellation request or submit a letter requesting cancellation. 

Let your new provider handle it

Sometimes, after signing up for a new auto insurance policy, the new provider will cancel the old policy for you. They can get confirmation of cancellation from the old provider. You can also request a policy cancellation notice directly from your previous insurer. If you do not receive a notification, you can ask them to provide one as a written transaction record.

Reasons to cancel your auto insurance

There are so many reasons to cancel auto insurance, such as relocating across the country or overseas, changing insurance companies, or no longer using your vehicle for driving. Even a short move could mean canceling auto insurance. For example, if you’re moving to New York City from upstate New York, you might decide to sell your car and cancel the auto insurance policy. 

Likewise, a move just across state borders could mean a change of auto insurance if your existing provider doesn’t cover your new state. Of course, if you sell a car without plans to replace it, you should cancel your auto insurance policy. And if you own an older vehicle, you might weigh the risks and decide to drop optional collision and comprehensive coverage. 

What happens after you cancel your policy?

After you cancel your auto insurance policy, you should receive a statement or confirmation of cancellation from the auto insurance provider. Whether you get a refund or must pay additional fees when you cancel depends on the insurer’s policy and what you’ve already paid. 

If you paid your premium in advance, for example, for a year, and canceled before the term ended, the insurance company might refund the remaining balance. Many auto insurers will prorate your refund by calculating the days your current policy was in effect and refund the difference.

However, each state has its own statutes and regulations about how insurance companies handle refunds. Check your state policies and contact the insurance company to confirm refund eligibility. If you can switch plans close to when it is set to renew, you can notify the insurer and switch without worrying about recovering a refund. 

You might also have to pay a cancellation fee. Each state determines whether a cancellation fee is allowed. If fees are allowed in your state, the insurer will set the fee and deduct it from any prorated refund. If no refund is owed, you’ll receive a bill. 

Some insurers charge what’s called a short-rate fee. In that case, they charge a percentage of the unearned insurance premium, usually around 10% of the refund amount. Other insurers charge a flat fee. Knowing your state’s requirements can help you be prepared for the cancellation fees.   

What if your insurance provider cancels your policy?

There are car insurance cancellation laws to prevent the insurer from dropping your policy for no reason. However, in some cases, your insurance provider may also cancel your policy. For example, if your driver’s license has been revoked or you regularly miss payments. 

You should never “cancel” your insurance by just not paying. That can lead to a host of complications down the road. While the provider will eventually cancel a policy for nonpayment, you’ll have to pay charges for coverage up to that point and possible additional fees. 

It can also make securing car insurance in the future more difficult. If you plan to find a new car insurance company, the missing payments could make securing affordable rates more difficult. But even in that case, you should be able to get auto insurance in the future.

The revocation of a license is permanent, so you will not be able to get auto insurance after your license is revoked. However, if your license is suspended, you may still be able to get insurance, but you might have to pay a higher premium. 

Final tips on canceling car insurance

Canceling car insurance isn’t difficult, but requires some attention to avoid common mistakes. If you’re switching to a new policy for any reason, the key is to ensure an overlap between your new and old policy. If you cancel the insurance because you will no longer drive, cancel the policy only after you sell or stop using the vehicle. 

Communication is key to ensuring you don’t get hit with unexpected fees. Start by speaking with your existing insurance provider, understand the terms of the new insurance provider, and set the dates for cancellation. If you’re looking for a lower monthly premium, you can also check tips to lower your car insurance to potentially save more. 

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