Can You Get a Refund on Car Insurance? (2024)

Your insurance company may issue a refund if your policy is canceled, and you've paid your premium in advance. Receiving an insurance refund will largely depend on why you're canceling the policy and how much of the premium you paid in advance. If you pay your full premium upfront, then you'll typically get a refund when you cancel your policy. If you pay your premium monthly, then you may or may not get a refund depending on when you cancel.

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If I cancel my auto insurance, will I get a refund?

If you cancel your auto insurance before the end of your policy term, you may receive a refund if you paid your premium in advance. There are a few scenarios where canceling a policy may qualify you for a car insurance refund.

Switching insurance companies

If you switch car insurance companies and find better rates with a different insurer, you may want to cancel your existing policy before it expires. In this case, if you switch insurance companies you can get a refund. Depending on your insurer, you may have to pay a cancellation fee.

Moving

If you move out of state, your insurer will cancel your old policy and issue you a new one. Since insurance premiums are partially determined by where you live, you may get a lower rate on your new policy if you move to an area where rates are cheaper, and your insurer may refund part of your insurance premium. Learn about state car insurance requirements and how moving affects car insurance.

Selling your car

If you sell your car and no longer need coverage, your insurance company may send you a refund check if your policy is canceled before the end of your term. Note that you may have to pay a cancellation fee in this scenario too. Learn when to cancel your insurance after selling your car.

Removing coverage

You might also qualify for an insurance refund if you make changes to your policy, such as those listed below. However, you may receive a credit on your account instead of a refund, depending on your insurer:

It may no longer make sense to carry certain types of coverage. For example, if you don't have an auto loan and your vehicle isn't worth much, it may make sense to drop comprehensive and collision coverage.

Decreasing policy limits

Typically, higher insurance coverage limits result in higher premiums. If you reduce the amount of coverage you have, you may get an insurance refund.

Removing a vehicle

If you remove a vehicle from your policy, your rates will typically decrease, which could result in a refund. Before you cancel your auto insurance, check your insurer's rules regarding cancellations. Some insurers may charge a cancellation fee that could offset your refund amount.

Pro tip:

If you sell your car and buy a new one, you'll still need coverage because most states require drivers to have auto insurance. Be sure to add the new car to your policy so you have the coverage you need.

How does your payment schedule affect your car insurance refund?

If you choose to cancel your policy, or your insurance company cancels it, you typically won't get a car insurance refund unless you've paid the premium in advance. For example, let's say your policy term is 12 months, and you pay the premium for the entire year upfront. If you cancel your policy after only three months, your insurer will issue an insurance refund for the remaining nine months.

If you pay in monthly installments and cancel your policy at the end of the month or billing cycle, you probably won't get a refund. But if you were to cancel your policy in the middle of the month or billing cycle, then you may get a small refund since you've already paid your premium for the full month.

Important note: Whether you pay monthly or upfront, you may have to pay a cancellation fee when you cancel your policy — depending on your insurer.

Will I get a check for my insurance refund?

Insurance refunds are typically issued through the same payment method you use to pay for your insurance. So, if you pay your premium with a check, you'll usually get an insurance refund check. Likewise, if you pay with a credit card, your refund will appear as a credit on your card balance. However, the exact method of distributing refunds may vary by insurer.

Will I get a refund if the insurer cancels my policy?

If the insurance company cancels your policy, you'll usually receive a car insurance refund unless they cancel the policy for non-payment. If non-payment occurs, you will not receive a refund and will continue to owe the insurer any unpaid premiums.

There can be multiple reasons why an insurance company cancels your policy, including having too many accidents or tickets on your driving record, getting a DUI, or failing to pay your premium.

How should I cancel my auto insurance policy?

If you're going to cancel your existing policy and you plan to continue driving, don't cancel your old policy until you find a new one. When you have the effective date of your new policy, you can ask your current insurer to cancel your existing policy effective the first day of your new policy.

It's essential that there are no gaps in your coverage because even a small one could create problems. If your car is stolen, damaged, or involved in an accident while you're uninsured, you could be responsible for repairs and medical bills. Any gaps in coverage could also raise your insurance rates, even if it's just for a day.

Looking for more information about auto insurance? Our car insurance resource center has you covered.

Can You Get a Refund on Car Insurance? (1)

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Can You Get a Refund on Car Insurance? (2024)

FAQs

Can You Get a Refund on Car Insurance? ›

Your insurance company may issue a refund if your policy is canceled, and you've paid your premium in advance. Receiving an insurance refund will largely depend on why you're canceling the policy and how much of the premium you paid in advance.

Can you get a refund if you cancel your car insurance? ›

If I cancel my auto insurance, will I get a refund? If you paid your premium in advance and cancel your policy before the end of the term, the insurance company might refund the remaining balance. Most auto insurers will prorate your refund based on the number of days your current policy was in effect.

Can insurance be Cancelled and refunded? ›

If you still want to cancel the policy, the process of policy cancelation will be initiated. Based on the tenure for which you were insured, the insurance company will deduct the premium amount and send you the refunds. An official cancellation letter/email will be sent to you by the insurer.

How do I get a refund on my insurance premiums? ›

Communicate with Your Insurer: If you need to request a refund, contact your insurance company promptly and provide all necessary documentation. Clear communication will help expedite the refund process and minimize any potential issues.

Can we refund insurance? ›

In short – the answer is yes. You can get a refund on your insurance, but conditions do apply depending on the type of insurance you have. One of the main reasons people want a refund on their insurance is due to being sold junk insurance or dodgy unnecessary insurances.

How much does it cost to cancel car insurance? ›

Car insurance cancellation fees

If you cancel at renewal: You shouldn't have to pay any fees. This is called 'lapsing' the policy. If you cancel within 14 days of starting a policy: You may have to pay an admin fee.

How long does an insurance company have to refund your money? ›

The Commissioner's Bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible, and no later than August 2020.

What is the best reason to cancel an insurance policy? ›

Reasons to consider canceling your insurance policy:

You believe you're paying too much for insurance. Your business has changed, and you need different coverage. You're moving out of state, and your current insurer doesn't offer policies in your new location. You're unhappy with the service your insurer provides.

Is there a penalty for cancelling insurance? ›

Canceling your policy before your renewal date may trigger early cancellation fees. Depending on your provider and other factors, you may be charged either a flat or short-rate fee.

Can you dispute insurance cancellation? ›

Your right to appeal

Internal appeal: If your claim is denied or your health insurance coverage canceled, you have the right to an internal appeal. You may ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.

What is a premium refund in car insurance? ›

A premium refund is a clause in some insurance policies that grants the beneficiaries a refund to the total amount of premiums paid to date. Depending on the contract and type of insurance, it will grant a refund of the premiums you paid if you die before that term runs out or if you voluntarily end your coverage.

Can I cancel my insurance policy at any time? ›

Yes, you can kick your car insurance to the curb whenever your heart pleases. However, if you're switching companies, the best time to cancel is after you've found new insurance coverage. Ideally, you'd schedule your old policy to stop coverage on the same day your coverage at the new company starts.

What are the different types of cancellation in insurance? ›

There are three common cancellation methods of cancellation: pro-rata, short-rate, and flat rate. Pro-rata cancellation refers to policy termination earlier than its maturity, either at the request of the insured or at the behest of the insurer.

Which insurance policy is refundable? ›

All about Refund under Insurance

Most insurance companies typically will refund the unused portion of the money that the insured paid when he cancelled insurance policy. Only home insurance is subject to proration while car insurance is short.

Can I cancel my car insurance? ›

While car insurance policies are usually taken out for 12 months and paid either upfront or through monthly premiums, you can cancel at any time. However, cancelling doesn't come without consequences. Cancelling before the end of your policy's term may result in paying a cancellation or administration fee.

Is liability insurance refundable? ›

You have the right to cancel your policy at any time. Your policy will tell you how the insurance company will figure out (calculate) the premium amount that will be refunded back to you.

Can I cancel my insurance policy and get my money back with GEICO? ›

If you have a GEICO auto insurance policy and decide to cancel it before the policy term ends, you may be eligible for a refund. GEICO's cancellation policy for auto insurance allows policyholders to cancel their policies at any time, regardless of the reason.

Does it hurt to cancel car insurance? ›

If you cancel your car insurance before getting new coverage then your record will show an insurance gap. This insurance gap is referred to as a lapse. Even if you canceled because you sold the vehicle, an insurance lapse frequently results in costlier premiums when you pick up coverage.

How long does it take to get a refund from Progressive? ›

Customers who pay for their policy with a check, through the online portal, or by phone will generally see their refund from canceling a policy after about 12 business days.

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