How to Cancel an Auto Insurance Policy

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In a nutshell...
  • Anyone who is listed as a named insured on an auto policy is free to cancel their auto insurance at any time during the policy period. This is a right that’s granted under all Consumer Bill of Rights
  • Before you request a cancellation, you should call the company and find out if you’re charged a cancellation fee.
  • Some companies charge a fixed short-rate fee and others will charge you for a percentage of the premiums that have yet to be earned.

There is a right way and a wrong way to cancel your auto insurance policy.

If you’re no longer in need of coverage or you’re planning to switch to a new provider, it’s important to take action so that your policy doesn’t cancel for non-payment.

Canceling your auto insurance isn’t all that difficult.

It’s the research that you need to conduct before you put through your cancellation request that can take some time. Enter your zip code above for FREE car insurance quotes today!

Can you cancel your auto policy whenever you want?

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Auto insurance is sold in terms to protect the consumer.

The terms will last for either 6 months or 12 months at a time. After the term, the policy renews and the insurer is free to raise the rates for the coverage as they see fit.

Just because you have a 12-month insurer term doesn’t mean that you’re locked in for a whole year.

Under each state’s Consumer Bill of Rights, which must be sent to you when you apply for insurance, it’s clearly stated that the policyholder can cancel their insurance at any time.

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Does the company charge a cancellation fee?

You may be allowed to cancel your policy, but the insurer could charge you a cancellation fee for processing the request.

Some states allow insurers to charge fees to recoup some of the money they are losing and some allow fees to cover administrative costs.

Before you assume that it will save you money to switch to another carrier, you should estimate how much your fee is going to be and factor it into the savings equation.

If you’re switching insurers, the insurer will probably charge the fee if it’s under the contract.

What do you need to do if you’re selling a car?

If you’re selling your car or giving it away to someone, there’s an extra step in the process that you can’t ignore.

Since you’re the liable party when a vehicle is registered in your name, you need to submit a release of liability request to the DMV.

Make sure that you find out how you have to release any legal liability that you have through the DMV so that you’re not fined when you request to cancel your auto insurance.

What do you do if you’re putting your car in storage?

If you’re putting your car in storage and you don’t want to continue paying your auto insurance premiums, you could surrender your plates and file the vehicle as non-operable.

You have to turn the plates in and then fill out an application so that it says that you won’t be driving your vehicle at all.

You can cancel your insurance without any complications or penalties as long as you don’t drive the car when you’re not legally allowed to.

Surrendering your plates before you cancel insurance is a must.

What could happen if you don’t take the right steps before canceling your insurance?

If you don’t sign a release or surrender your plates, you will be seen as one of the many people who own an uninsured vehicle.

If you’re not caught, the DMV can still suspend your plates or your driving privilege.

You can even be ordered to do community service or spend time in jail.

How do you request an auto insurance cancellation?

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Most insurance companies require their customers to cancel their insurance policies in writing.

This protects the company if the named insured claims the cancellation was a mistake. Always cancel automatic payments days before they are due to prevent overpaying.

As you’re drafting your request, be sure to include all of the information that you need. Here’s what the request should have:

  • The name of the policyholder
  • The policy number
  • The date the policy should cancel
  • Your new mailing address
  • Your phone number
  • Reason for the cancellation
  • A signature

Make sure to call the company and verify the request has been sent.

Use an online quote shopping tool, compare rates, and if you switch, prepare a cancellation request so that you’re not paying two companies at once. Enter your zip code below to get FREE car insurance quotes today!

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