How to cancel my car insurance early in the United States?
You may have various reasons for not continuing an insurance policy, you may be moving to another state or selling your car, for example.
Regardless of the reason, there is a procedure you must follow to cancel your car insurance early.
If you do not want to continue with your policy, you should not disengage from the case and simply stop paying it. You must cancel it, if you do not, you could damage your credit history.
Most car insurance contracts state that you can cancel your policy at any time, you just have to send a written notice with the effective date of cancellation.
It’s always a good idea (and in most cases a requirement) to notify your old insurer when you switch to another company.
Although leaving your current insurance for another can be somewhat uncomfortable, the process is usually quite fast.
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How to cancel my car insurance early in the United States?
Canceling your car insurance is usually a simple process. Depending on the company with which you are insured, you may be able to cancel it online, this being the simplest way to do it.
However, many insurance companies prefer to speak with the policy holder at the time of cancellation, if that is the case, keep in mind the following:
- Have your documents and policy number handy.
- Call your insurance company (you will need to be the policy holder to make the call).
- Inform that you are going to cancel your car insurance (they may ask you why, you should not worry about that).
- They will explain the costs to you and may ask you to return the car insurance certificate to them (they will explain how to do this).
- Obtain a cancellation confirmation from your insurer or agent
How do I cancel a car insurance contract?
1. Through a phone call
Calling your agent is probably the fastest way to ask the company to cancel your insurance contract. Although it can be done by phone call, most of the time a signature will also be required for cancellation.
If you’re thinking of changing policies because you’ve gotten a better price, it’s a good idea to call and talk to your agent about canceling before deciding to cancel.
Your agent may offer you additional discounts or suggest changing coverage under your current policy. If this were to happen, you might decide to keep your policy.
2. By mail or by fax
This procedure is as easy as writing a letter with the date, your name, the policy number and the request to cancel the insurance on the date you plan to change companies.
Then, sign the letter and mail or fax it to your agent or directly to the insurer.
3. Personally at the agency
It may seem awkward to go to your agent’s office and ask to cancel your policy; however, it is something common that happens in all agencies.
Insurers lose clients from time to time, and unless it’s a relative or her best friend, they probably won’t take it personally.
What can happen is that your current agent tries to persuade you to stay, but if you politely refuse, it will be enough. Sign the cancellation form and you’re done.
4. Through your new insurance company
Asking your new insurance agent to cancel your old insurance policy is a fairly convenient way to complete the process.
This way, you will avoid any discomfort with your soon to be ex-insurance company. All your new agent needs is the old policy number, effective dates, and a signature on the cancellation form.
Finally, it will be faxed to your old insurance company.
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IMPORTANT: Always start the cancellation process after having a new policy in force.
Always read the fine print when canceling car insurance in the USA
Most insurance companies make canceling a car policy a fairly easy process.
However, others may require some attention to detail.
Here are some things to consider:
Cancellation fees: Some car insurance companies charge a cancellation fee. The fee can range from $25 to a “short fee,” which breaks down to 10% of the remaining policy premium.
For example, if you buy a 12-month policy and cancel it after nine months, you will have to pay 10% of the remaining three months.
Notice: The notice period can range from immediate cancellation to requiring 30 days notice to revoke your policy.
Cancellation Letter: As mentioned above, some insurers 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.
Disadvantages of canceling car insurance without notification
You will have to pay the automatic grace period
Technically, if you don’t request cancellation and let your policy cancel itself, you will actually be canceling for non-payment.
Some policies automatically cancel at renewal if payment is not made. However, many companies grant an automatic grace period.
These grace periods are often a 20-day extension to allow extra time to get the premium paid. If your policy is canceled due to non-payment, you will be billed for the grace period.
If you don’t pay or provide proof of another active policy, the auto insurer may send your unpaid bill to a collection agency.
You will leave a bad impression
Leaving an insurance company without warning can leave a bad impression on the agency. It’s always a good idea to leave on good terms, especially if you ever want to come back.
Rates are always changing and one day you may want to go back to your old insurance company. To avoid future inconveniences, always notify the insurance cancellation to your agency.
Your policy may never be canceled
If you are enrolled in automatic electronic payments, your policy will likely continue unless you request cancellation.
The money will continue to be withdrawn from your account and you will have duplicate coverage.
You may get your money back if you present a document that certifies that you have another insurance policy.
Insurance companies are required to notify the state Department of Motor Vehicles ( DMV ) when there is a gap in coverage. Some states impose penalties for that gap or period of time without coverage.
It is not wise to leave it to chance, even if you already have new insurance.
Please note that your state DMV may send you a notice requesting verification of your coverage.
If you don’t , your driving privileges could be revoked and you’ll have to pay a fine and additional fees to get them back.
Also, if your car is a rental vehicle, you should make sure that your new insurance lists the rental company as the beneficiary of the loss.
Otherwise, the leasing company will be notified that there was a gap in coverage and may initiate a process to repossess the vehicle.
Regardless of how you cancel your car insurance, be sure to keep an eye on your mail for a confirmation letter.
If you cancel in the middle of your policy term, you could receive a refund depending on whether you have any unused premium.
Make sure you cancel your insurance after you have the new policy active with another company. Canceling your car insurance should be a simple process, just don’t put it off or forget it.
How to cancel my car insurance early in the United States:
Frequently asked questions
Should you cancel the policy when selling the car?
This is possibly the simplest reason why car insurance is cancelled.
After you sell your vehicle you are no longer the owner;
therefore, all you have to do is call the company with which you have contracted the car insurance and tell them that you are no longer the owner of the car and that you need to cancel the policy.
They will send you a copy (either on paper or by email) of your No Claims Bonus (NCB).
Make sure you keep the NCB receipt somewhere safe, the next company you take out insurance with will probably want to see a copy of it as proof.
However, if you sell your car and buy a new one, you don’t need to cancel your old policy.
You can call your car insurance provider to report that you have another car or, from your computer, you can exchange the car you sold for the new one.
The premium could go up or down for the remainder of the policy, depending on the risk of the new car.
If the premium increases a lot, you will have to take into account the possible cancellation costs and the loss of the NCB as part of the cost of changing the car.
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Can I cancel the policy if I want to change the renewal date?
If you have multiple cars in your home, you may want to change your insurance renewal month so they renew at the same time of year.
To break the renewal cycle at a certain time, you can take out new car insurance on the date you prefer and then cancel the old one.
However, if you decide to do this, you will lose the current year of NBC that you are accumulating.
When comparing quotes, make sure you haven’t added another year’s NBC, as you’ll lose it when you cancel your current policy.
What is the car insurance reflection period?
The reflection period is the one within which you can decide that you do not want the policy and you are free to return it.
When you take out a new car insurance policy, like any other insurance, you have a cooling-off period.
You shouldn’t have to pay a cancellation fee if you decide to return the policy, although some companies may try to charge you. However, you will have to pay for the days you have been insured.
If you paid for the policy in a single installment, the rest of the money will most likely be returned to you, less the cost of the days you were insured.
If you were going to pay monthly, it is most likely that they will return part of the money and cancel your direct debit.
To be sure that the direct debit has been cancelled, it is advisable to call your bank and ask if they have.
What happens if I cancel my car insurance?
If you do it correctly, following the steps that we have described above, you will not have problems. You should not have to pay any fees or penalty fees;
however, it is always a good idea to carefully read your policy contract.