There are several reasons why you might need to cancel a car insurance policy. For example, maybe you no longer own the car in question. Or you’re moving to another state. Or you want to switch to a less expensive auto insurance policy. Whatever your reason, the process should be relatively straightforward. Here’s how to go about it—and how to avoid some pitfalls.
Key Takeaways
- You can cancel your auto insurance policy whenever you want by getting in touch with your insurance company.
- If you’re keeping your car, you should arrange for other insurance first to avoid a lapse in coverage.
- Almost every state except New Hampshire requires some type of liability coverage for drivers.
How to Cancel Your Car Insurance Policy
Depending on your insurance company’s rules, there are a variety of ways to cancel your policy.
- Call your provider. Most major companies simply ask that policyholders speak with an insurance agent to cancel. The phone number likely will be found on your insurance card, as well as on the company’s website or app. This is often the quickest method, although you still may have to sign a cancellation notice or other documents to make it official.
- Mail or fax your cancellation. If your insurance provider is more old-fashioned, then you may need to send a cancellation letter either to your agent’s office or directly to the company.
- Visit the office. If the insurer has physical locations nearby, you can stop in and handle the paperwork in person.
- Have your new insurer deal with it. If you’re canceling your insurance coverage because you’re switching to a new insurance provider, then the new provider can initiate the process and guide you through it.
What you don’t want to do is simply let your policy lapse and not notify your insurer that you’re canceling. In that case, the insurer might continue to bill you and report your failure to pay to the credit bureaus, potentially damaging your credit score.
Most states require you to have bodily damage and property damage car insurance.
What Happens When You Cancel Your Policy?
When you cancel an auto insurance policy, your insurer will likely notify your state that you and your vehicle are no longer insured. Because almost every state requires a minimum amount of liability insurance for drivers, your state’s Department of Motor Vehicles may ask you for proof that you either sold the vehicle or have obtained other insurance.
If you fail to provide proof of insurance, the state can suspend your car registration. In states such as Nevada, you may be required to return your license plates before canceling your insurance.
If you still have time left on the policy, your insurer may issue a prorated refund of the premium that you paid most recently. However, some insurers also charge a cancellation fee if you want to get out of your policy early.
If you’re switching insurance companies, make sure to have the new policy lined up before you cancel the old one—and tell the new insurer exactly when your old policy is set to expire. Driving without car insurance is illegal in many states and can result in fines. If you have an outstanding car loan or lease, you should also notify your lender that you have changed insurers.
If you’re canceling your policy because you’re moving to a new state, note that you will typically have to show proof of insurance when you register your car there. States have different rules regarding the types and amounts of insurance that you’re required to carry.
What If Your Insurance Company Cancels Your Policy?
You are not the only one who can cancel your auto insurance policy. The insurance company can cancel it, too.
However, that happens only in limited situations. According to the Insurance Information Institute, the insurer can’t cancel your policy if it’s been in effect for 60 days or longer unless:
- You didn’t pay the premium.
- You committed fraud or made serious misrepresentations in your insurance application.
- Your driver’s license has been revoked or suspended.
When Does Car Insurance Become Cheaper?
Car insurance is the most expensive for new drivers due to their inexperience and the higher perceived risk by insurance companies. While auto insurance does come down when you turn 25, statistically speaking, the biggest drops come between the ages of 21 and 24.
What Is the Cheapest Type of Car Insurance?
There is no specific "cheapest" type of car insurance as the cost of car insurance depends on many different factors, such as age, driving history, the state you get your insurance, your provider, and so on. The cost can vary greatly depending on these factors.
How Do You Get Car Insurance?
The best way to get car insurance is to contact specific providers or use online websites that can give you quotes. It's best to always shop around so that you find the best deal. Car insurance costs are unique to every individual so checking with different providers and finding the best deal is the smartest way to go about getting car insurance.
The Bottom Line
If you have a car, you'll likely have car insurance as all states require it except for one, and it's just common sense to have. There may be reasons that come up where you will no longer need your current car insurance, however, such as selling your car, getting a different policy, or moving to a new state. When this happens, you can easily cancel your current policy by getting in touch with your provider.
