UPDATED: Mar 13, 2020
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Canceling your auto insurance coverage might seem like an extreme thing to do, especially because auto insurance coverage is an absolute must-have in the United States. However, there are many legitimate reasons for doing so, such as finding a better deal elsewhere or deciding to bike everywhere rather than driving a vehicle.
While the process can seem daunting for someone doing it for the first time, it isn’t complicated at all, if you know what you’re doing. This article will lay out five steps to help you successfully cancel your auto insurance policy.
1. Determine which auto insurance company you’d like to switch to
Besides the fact that it is mandatory to have auto insurance coverage when you’re driving a vehicle, always being insured will help reduce premiums when you switch to your next auto insurance provider. If there is a gap where you are not insured, auto insurance companies take this as a sign that you are a “high-risk” client, and your premiums may increase.
To ensure that you don’t have any gaps between canceling your auto insurance coverage and the start of your new auto insurance, plan ahead. Shop around and know which new insurance provider you’re going to rely on next. When you make your decision, be sure to note when your new coverage kicks in, so you can arrange to cancel your old insurance accordingly.
2. Determine if your current auto insurance provider has early cancellation charges
There are some auto insurance companies which dictate that their clients must be with them for a certain number of years before they are allowed to cancel their auto insurance policy. If you cancel early, you might be slapped with extra charges. If you are switching to another auto insurer for cost savings, wouldn’t that defeat the purpose?
3. Inform your current auto insurance provider
After completing the previous two steps, you’re now prepared to actually cancel your prior insurance. Start by contacting your auto insurance provider about canceling your auto insurance coverage. If you have an auto insurance agent assigned to you, contact them, and they should help you do the rest. If not, give your auto insurance provider a call. While you can leave a voice mail if no one picks up, they cannot cancel your current auto insurance coverage without verifying who you are. In such a situation, plan on calling them again the next day at a different time to see if you can get ahold of a person.
After the call, you might need to send an insurance cancellation letter for them to document the cancellation. Your current insurance company will tell you if you need to send a letter, and, if so, what you need to include. Thankfully, many companies now allow clients to cancel online or over the phone.
However, should you end up needing to send a cancellation letter without much guidance, the below details should be included:
- Your name, and the names of those that are insured under your current auto insurance policy
- Your auto insurance policy number
- The name of your auto insurer
- When you wish to cancel your auto insurance, making sure it corresponds with the date your new auto insurance coverage starts
- Signatures of those insured under your current auto insurance policy
Keep in mind, each company is different and there may be other steps and procedures unique to that company. That’s why it’s important that you contact your individual auto insurance company so they can help you through canceling your specific policy.
4. Getting Refunds
If you’ve paid your premiums in advance, be sure to ask for a refund when canceling your auto insurance. For example, if you’ve paid for this year in advance, and you decide to cancel your auto insurance coverage after a month, you should be able to get around eleven months worth of premium back.
The best time to do this is while you are talking to your insurance company about canceling your policy. It saves everyone some trouble if you take the time to discuss refunding your premiums while you already have them on the phone.
5. Notifying the DMV
After canceling your auto insurance coverage, you must notify your DMV about this cancellation. Again, the steps and procedures to go about this vary from state to state. Your best choice is to consult with your state’s DMV or ask your insurance agent for help with this step.
One last tip
Canceling your auto insurance coverage isn’t complicated. However, every company has their own procedures to follow. The most important thing you can do is take the time to personally get in contact with your current auto insurance provider to figure out their regulations. For more information about your insurance company, including contact information, visit our Auto Insurance Companies Guide.