Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Apr 14, 2022

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In a nutshell...

When you go shopping at small retail stores you’ll see “No Refunds” signs plastered all throughout the store. While it’s not a good policy, it’s one that retailers can follow if they desire.

The problem with not allowing customers the option to return or exchange items that they buy is that you’re not going to retain clients.

When an insurance company sells insurance to consumers, they have to allow the client to “return” their policy if they want to cancel it.

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You Can Cancel Your Policy Whenever You Want


You’re required by law to buy insurance. You’re also required to keep an insurance policy active on the vehicle at all times.

Even though you have to have insurance it’s not the insurance company’s job to monitor the status of your coverage so that you don’t break the law.

You are allowed to cancel your insurance whenever you want and for whatever reason that you see fit.

The worst thing that could happen is that your insurer asks you to submit a written request instead of canceling your insurance by phone.

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Understanding How Auto Insurance Payments Work

You have several different options when you’re paying your policy premium.

These options include:

  • You can pay monthly
  • You can pay quarterly
  • You can pay every six months
  • You could pay for a whole year of premiums at once

How you pay is what will dictate how much you’re entitled to receive back after you cancel your insurance.

After calculating the daily charge, the company will calculate how many days are left on the contract.

If you’re canceling a policy that has 68 days left on the term, then the daily charge will be multiplied by that number. The final figure is called unearned premiums in insurance terms.

Can you get your full refund when you cancel your insurance?


If you’re paying about $3 per day for coverage and you have 68 days left on the contract, you’d expect that you’ll get the entire $204 that you’re due back in the form of a refund.

If the company says they will process a prorated cancellation, you’ll get all of the unearned premiums back after the cancellation is processed.

A short-rate cancellation is one where the insurer will charge you a fee for deciding to terminate your policy before the term expiration date.

The fee will either be an administrative type of fee that’s deducted from the check or a percentage of the check you’re owed.

How will you receive your refund?

Your refund isn’t going to just be electronically transferred to your account.

After all of the necessary changes are made to the system, a check will be cut. Most companies say that it takes anywhere from a week to a month to send you a refund.

If you can wait and avoid the fee, it is something to consider. Make sure that you account for the time it will take to get your refund.

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