How to Cancel Your Car Insurance Policy

Canceling your car insurance policy requires careful consideration and proper timing to avoid coverage gaps and potential penalties. Enter your zip code below for a free quote and see how much you can save by switching to A-MAX!

Canceling a car insurance policy can be a straightforward process, but it’s essential to do it correctly to avoid any issues. You may need to cancel your auto insurance policy for various reasons, such as switching to a new provider or no longer owning a vehicle. It is important to make sure that you do not create a lapse in your insurance coverage by canceling your current policy before your new one takes effect.

When to Cancel Your Car Insurance

Before you cancel your car insurance policy, make sure that you have replaced your coverage with a new auto insurance policy first. To avoid a lapse in your coverage, it is best to secure your new auto insurance policy first and then notify your existing insurance carrier and ask that your policy be canceled as of the same day. Do not consider yourself insured with your new auto insurance company until you have received a copy of your new policy and the insurance identification card for your car. Be sure to review the entire auto policy and make sure that your liability coverage limits and comprehensive and collision deductibles match those that your new insurance provider quoted you.

Should I Cancel My Policy if I Sell My Car?

If you sold your car and have no plans to get another one any time soon, then you should cancel your auto insurance policy. But, if you plan to get a vehicle in the near future, it may make more financial sense to keep your policy active until you get your new car. If you cancel your policy when you sell your old car, you will have a lapse in continuous car insurance coverage, which can make it more difficult and more expensive to obtain a new policy when you purchase another car. Not all car insurance companies will write a policy if you have had a lapse in coverage. If you do opt to cancel your policy until you buy another car, know that the number of car insurance carriers available to you may be more limited, and be prepared to pay higher insurance premiums on your new car when you buy it.

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Canceling Your Policy with the Insurance Company

Contact your insurance company or agent to verify its cancellation process. You may be asked to put your cancellation request in writing for their records. Request a policy cancellation notice confirming that you canceled your policy. It’s wise to have documentation on hand if you need it.

Do I Need to Notify My State's DMV When I Cancel My Car Insurance?

When you purchase a new car insurance policy, your new insurance company will electronically notify your state's Department of Motor Vehicles that your vehicle is now insured with them. The DMV will make sure that the liability insurance that you purchased is at least the state's minimum required coverage. Similarly, your current insurance company will electronically notify your state's Department of Motor Vehicles when you cancel that policy. This is why you must have your new policy start on the same day that you cancel your old car insurance policy. If the DMV gets notification of a cancellation but does not get notification of a new policy, or the new policy has a later effective date than your canceled policy, you could face fines and repercussions from your state's DMV, including the potential suspension of your vehicle's registration and possibly even your driver's license.

Car Insurance Refunds and Consequences After Cancellation

If you paid your premium in advance and cancel your policy before the end of the term, the insurance company might refund the remaining balance. Most auto insurers will prorate your refund based on the number of days your current policy was in effect. Depending on the insurance carrier, canceling your policy before the end of its term may result in a cancellation fee.

Canceling your car insurance policy can have consequences, such as fines and jail time for driving without insurance. It can also be difficult and expensive to find new car insurance if you have had a lapse in your coverage. Make sure to have a new policy in place before canceling your current coverage.

Canceling Your Car Insurance FAQs

Q: When should I cancel my car insurance policy?

A: You should cancel your auto policy on the same day that your new policy takes effect to avoid a lapse in continuous auto insurance coverage.

Q: Will I get a refund if I cancel my auto policy?

A: Most insurance companies will refund you for the unused portion of your premium, but you may have to pay a cancellation fee. It is best to check with your current insurance provider or your insurance agent to find out if you will be responsible for a cancellation fee and how much of a refund you can expect to recover from your policy once it's canceled.