Don’t worry, we don’t recommend canceling your car insurance as a matter of routine! We’ve all been in situations where our car insurance premiums start to squeeze our wallets. It’s not uncommon to think of taking a newer, more comprehensive yet cost-effective policy when it does turn up. If so, you will likely choose to cancel the previous car insurance policy. This article is intended to help you understand the mistakes to avoid when you cancel car insurance.
When can you cancel your car insurance?
The common situations when anyone would cancel car insurance are:
- Switching between insurance companies and moving to a cheaper policy
- Selling your car and don’t plan to drive in future
- Canceling unnecessary coverage
It’s important to remember that if you intend to own a car at some point in the future, buy a new policy before you cancel the existing car insurance policy. This will help reduce any out-of-pocket costs in case you get into an accident in the interim.
When is not a good idea to cancel car insurance?
Unless it’s for the three reasons stated above, we wouldn’t recommend canceling your car insurance – especially if you still own a car. Most states have legally mandated minimum car insurance requirements that you always need to have. This usually includes Personal Liability Coverage and Personal Injury Protection. Driving without insurance, then, can be a punishable offense.
Tips to go about
Most insurers have a simple process for canceling your car insurance. Though it varies between companies, the simplest way to do so would be by contacting their agent and notifying your intention. If you are tech-savvy, several companies have the option to cancel car insurance via an app. Mailing a signed request for cancellation of your policy along with details like the policy number is also acceptable. You can also ask your new insurer to facilitate the cancellation process from their side.
Some details may vary, such as the notice period of cancellation and cancellation fee. While some companies charge a ‘short rate’ for cancellation, others offer free cancellation if you wait till the end of the policy term.
Can you cancel car insurance at any time?
The majority of insurers provide customers the option to cancel coverage at any time. Cancellation usually requires a signed form or written notification of cancellation, which indicates the policy’s desired end date. It’s possible that you’ll have to pay a cancellation fee as well. However, be sure to notify your insurer of your cancellation, as non-payment may result in further charges.
Can you cancel without informing your insurer?
This essentially means you stop paying premiums without giving an adequate explanation. Most insurers provide a few days’ grace period for customers to pay the defaulted amount. However, after the grace period, you may be charged for coverage extension as well as penalties for non-payment.
This is also not a viable option if you use automated bank transfers to pay your premiums. It may not be possible to stop payments without informing the insurer.
Insurers are also required to inform the state DMV in case of any lapse in coverage. Since insurance is a legal requirement in most states, you might get a notice from the DMV asking you to prove you have coverage. In extreme cases, they may even revoke your driving license. Why go through all that trouble – inform your insurer and cancel to be safe.
Will canceling car insurance hurt my credit score?
No, your credit score will not be harmed if you cancel.
How do I find the best car insurance for me?
It’s important to do your research thoroughly before choosing car insurance. The easiest way to do that is by comparing car insurance quotes from various insurance providers online. You can start your research on car insurance rates by getting free insurance quotes on Way.com.