Don’t pay more to cancel your car insurance. Find out how to cancel the right way.
Are you wondering if it’s time to break up with your car insurer?
After having a bad experience with your car insurance provider over a claim or billing issue, you might be thinking of switching car insurance to a new company. But not every provider will let you go easily.
Here’s everything you need to know before canceling your car insurance to avoid surprise fees and a lapse in coverage.
Can I cancel my policy at any time?
Yes. If you want to cancel your car insurance, an insurer can’t say no.
Contact your insurer and tell them you want to cancel your policy. Find their details online and send a letter, fax, or email outlining your intention. If you’re not sure what the best option is, call your insurer first and ask. You might also need to provide a written notice, depending on your state’s laws.
Have your documentation ready when you speak to an agent. You might be asked for information including:
- Policy number
- Personal info including name, date of birth and Social Security number
- Your new insurance details including provider, policy number and effective date
- Proof of plate forfeiture or bill of sale if you’re getting rid of your car
Cancellations via phone are usually effective immediately, but ask for confirmation and written notice to prevent any fees or complications in the future.
Cancellation guides by provider
Each car insurance company has slightly different requirements, fees and processes for canceling your policy. Check out comprehensive guides for canceling your insurance from these popular providers.
Will I pay any cancellation fees?
It depends on the insurer. There may be some cancellation fees. If your insurer offers prorated premiums, you may also get a cancellation refund for unused portions of your premium. Check with your insurer on how they handle prorated charges.
Cancellation fees can vary from $25 up to a percentage of your overall premium. Most companies that charge a fee will either bill you for $50 or 10% of your remaining premium if you need to cancel before your renewal period is up.
The good news is, fees are usually not charged for cancellation, especially for the major providers.
When would I not be able to cancel my policy?
There are no situations where you cannot cancel your policy. If you want to cancel your coverage, an insurer cannot say no.
However, canceling your policy doesn’t necessarily get you off the hook for any payments you owe to an insurer, and will not necessarily entitle you to any refund.
What are the consequences of canceling a policy early?
The main downside of canceling a policy early, other than losing your coverage, is that you may not be getting everything you paid for and may need to pay additional cancellation fees.
But there are still valid reasons for doing so. You may consider canceling your coverage if:
- You only want short term car insurance (cover for less than a year).
- You’re switching car insurance.
- You’re selling, gifting or trading in the car, moving overseas or don’t need to maintain your current car insurance.
One thing to consider is the cost offset of canceling. Let’s say you’re switching from GMAC to Geico. GMAC might charge a cancellation fee, depending on the state. If GMAC charges you $30 but you’ll be saving $10 a month by switching to Geico, it’s probably worth it financially to go ahead and pay the fee to switch now rather than wait for your renewal period.
Can I transfer car insurance policies to another person?
Generally no. A new person will need to take out their own policy, so they can get their own pricing based on risk.
Can I transfer my policy to another car?
Yes. Many insurers will let you transfer your current policy to another car, although this may vary between insurers, and insurers are free to decline to cover your new car at their discretion.
If you do transfer your policy to another car, you can expect your prices to change accordingly. For example, let’s say you trade in your older Honda Accord for a new Toyota Prius. You might get some discounts for driving a hybrid with new safety features while also adding extra coverage for a newer car, so you’ll probably end up paying more.
Generally insurers want to keep customers, so transferring your policy to another car can be done easily. Simply contact your insurer and ask.
Can I just wait for my policy to lapse?
Yes, you can switch to another provider when your current coverage runs out. Sometimes this may be better to avoid paying cancellation fees.
But if you’re doing this, you need to know whether or not your policy will automatically renew. If it does, then you may try asking your insurer to simply not renew it, or remember to cancel your policy immediately before the renewal date.
What are the alternatives to canceling my coverage?
If you want to switch car insurance, change your type of coverage or otherwise discontinue your policy, then canceling is probably the way to go.
However, if you’re looking to reduce the cost of your current coverage or want to make adjustments, then you will not necessarily need to cancel it first. Depending on what you want to change, an insurer may tell you to cancel your current policy and then take out a new one with different terms.
Some of the things you may be able to change without canceling your policy include:
- Your coverage options and extras
- Your deductibles
- Your vehicle
- Your covered modifications and accessories
Other times, an insurer may be willing to waive your cancellation fee if you’re changing policies but not insurers. For example, if you want to upgrade from third party car insurance to comprehensive car insurance, an insurer may be happy to cancel your current policy and give you a new one without charging any fees.
If you’re looking to switch providers or cancel your car policy, you do have options for canceling your car insurance. Talk to your provider about cancellation fees and the best process to cancel.
Compare car insurance alternatives and see how much you could save by switching.