UPDATED: Apr 9, 2020
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There are a number of reasons why you might want to cancel your car insurance. Some people are switching to a new insurance provider. Others are getting rid of a vehicle altogether. Some are just tired of paying the insurance premiums or dealing with a disreputable carrier. When you cancel car insurance, however, you may have to pay a fee.
Do you have to pay a fee to cancel car insurance? What kinds of fees will your insurance company charge to cancel car insurance? Today, we’re explaining everything you need to know about canceling car insurance.
Some Insurers Charge a Fee, While Others Do Not
Most insurance companies make it easy to cancel car insurance. Depending on your state and your insurance company, however, you may have to pay a fee.
Fees vary widely between insurance companies.
Some insurers charge no fee whatsoever, allowing you to cancel car insurance without penalty in minutes online. Other insurance companies charge fees to cancel your policy. Some charge a flat rate fee of $25 to $50. Others charge a fee based on a percentage of your policy – like 10% of your remaining premium.
Today, most of America’s largest car insurance companies no longer charge cancelation fees.
How Cancelation Fees Work
There are a few different types of cancelation fees in the car insurance world today, including all of the following policies:
- Flat rate fees of $25 to $50, regardless of when you cancel your insurance contract or how many months are remaining on your policy
- Hidden fees that aren’t transparently disclosed until you actually cancel your policy, although typically these are small fees of under $50
- No fee whatsoever, regardless of when you are canceling your policy
- A fee of 10% of your remaining insurance premium
- A flat rate cancelation fee only if you owe more than a certain amount on your car insurance – say, $300 or more
Which Insurance Companies Charge Cancelation Fees?
Auto insurance cancelation policies vary widely across the industry. Depending on your state and your insurance company, you could pay hefty cancelation fees or no fees whatsoever. Some of the major insurance companies and their cancelation policies include:
Many of America’s biggest car insurance companies, including Allstate, GEICO, Liberty Mutual, Nationwide, State Farm, The Hartford, Travelers, and USAA, do not charge a cancelation fee, although you may have to pay pro-rated premiums over the next 30 days until your policy is officially canceled
Mercury’s cancelation fee is 10% of your remaining premium, plus an additional $30 penalty if you still owe $300 or more on your policy
GMAC has a cancelation fee of $0 to $50, depending on your state
Most Insurance Companies Want at Least 30 Days Notice
Most of America’s largest car insurance companies do not charge insurance cancelation fees. However, there’s a small catch: most insurance companies also want at least 30 days notice before officially canceling your policy.
Let’s say you’re in the third month of a six-month insurance contract with GEICO. You want to cancel your car insurance policy because you found a new provider. GEICO may cancel your policy without penalty, although you will need to pay pro-rated car insurance premiums for the next 30 days until your policy is officially canceled.
If you have paid for your car insurance upfront, or if the insurance company does not have a 30 day waiting period, then your insurance company might actually give the money back to you. You might receive a refund on any premiums paid after you no longer needed coverage.
Other Things to Know When Canceling Car Insurance
- Don’t cancel your current car insurance until you have a new policy picked out; you don’t want your insurance coverage to lapse. Most car insurance companies allow you to choose the date your new policy goes into effect.
- Once you cancel your current auto insurance policy, it may expire immediately. Or, you may have to wait 30 days. Make sure you’re not doubly insured, paying for two insurance policies at the same time while you wait for your current policy to get canceled.
- Don’t forget to get your money back. Most car insurance companies will refund any money pre-paid towards your car insurance premiums, although some car insurance companies might ‘forget’ to send the money to you.
Ultimately, most of America’s largest car insurance providers have no cancelation fees, making it easy to switch to a new provider if you find a cheaper rate.
However, some insurance companies continue to charge cancelation fees. And, most insurance companies will require at least 30 days notice. You may have to continue paying for your current car insurance policy for the next 30 days even after you cancel your policy. Insurers will pro-rate this amount over a 30 day period.
Overall, it’s easy to cancel car insurance. Depending on your state and your insurance company, you may not even pay an auto insurance cancelation fee.