Cancel Your Car Insurance and Get a Refund
When switching policies, why you should cancel your auto insurance and what happens if you don’t.
Cancelling your car insurance the right way.
If you’ve switched auto insurance policies, it’s time to cancel your old car insurance policy. After all the hard work of shopping, quoting, and buying a new policy, you’re not finished with the process until you’ve cancelled your old policy. But why is it a big deal? More on that below.
Switching Auto Insurance Policies
You finally have that new policy where you’re saving hundreds of bucks on your car insurance. You might think that’s all there is. After all, don’t all these insurance companies talk to each other? Once you buy a policy from Company B, doesn’t Company B’s agent give Company A’s agent a call and tell them you switched your policy. If only things were that easy. Insurance companies are not responsible for that part – you are.
Fact is, once you switch policies, the old company doesn’t know anything about it. That means you’ll be double-covered, paying double premiums if you don’t cancel your old policy. One problem with this situation relates to the insurance companies. They don’t like it when there’s double coverage. If there’s an accident, there could be an issue about who will pay for the accident.
Worse yet, if you don’t pay the other premium, then the old company will cancel you for non-payment. That event goes on your credit report. Essentially, if you don’t cancel your old policy, it could affect your credit, your ability to get a MasterCard, finance a car, or even buy a new home. It’s that important. Bottom line – don’t let the policy cancel itself.
How To Cancel Your Old Auto Insurance Policy
It’s easy to cancel your auto insurance policy. Simply call your old insurance company and request to cancel your auto policy. Give a specific date for the end of your coverage. There’s no need to overlap coverage from the old policy to the new policy. For instance, if you have a new policy starting on February 25, then cancel your old policy effective February 25.
Each company operates differently. They may require you to sign a cancellation request, or they may allow you to just cancel it over the phone. It sometimes depends on your relationship with the company or agency. Check over the paperwork, sign whatever they want you to sign, then you’re done with the insurance company. If you’ve financed the car, make sure you update the bank with your new insurance company information.
By the way, insurance companies handle these things every day. Don’t feel bad about switching companies. After all, if they would have given you a better price or provided better service, then you wouldn’t be cancelling.
Get A Refund on Your Car Insurance Premium
Since auto insurance policies are six or twelve month contracts, you might be switching policies in the middle of the policy period. If you’ve prepaid for the policy either on a monthly, semi-annual, or annual basis, then they owe you some cash. When you’re on the phone with the old company, ask them about a “return on unearned premium”. That’s the money you’re owed for not finishing the contract. The good news is that most consumers have that money coming to them.
Don’t Drive Uninsured
Whatever you do, don’t drive uninsured. Make sure your new policy is in force before cancelling your old policy. It would be a shame to have an accident between policies. Don’t be a statistic – make sure you always have coverage if you’re driving a vehicle.
Was this article helpful? If so, leave a comment. If not, tell me what other consumers should know about cancelling their auto insurance.
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Reviews (28)
Michele Wilmonen
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If you paid a month in advance, you should get a refund for any future insurance coverage you paid for but did not use. You would need to contact the insurance company for the amount and if they charge any cancellation fees.
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Elaina
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I paid 320.00 down as a deposit because ive never had insurance and im only 18 so the company which i used (progressive)didn’t have any thing to go off of paid the 320 on march 22nd and then my first month was due on april 11th which i paid i am canceling my policy tommorrow which is april 22nd should progressive refund me money
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Michele Wilmonen
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Cancellation fees vary from one insurance company to the next, and many do not charge any at all. You would have to check with your specific carrier.
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Harry
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I’m switching policies mid-term from AAA to Geico for a better rate, I think I may switch just before completion of 6 months with my current insurer. Is there typically a cancellation charge that my current insurer may charge me? If yes, how much do they normally charge? Im a resident of Maryland.
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Melissa
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Ok I will do that. Thanks
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Michele Wilmonen
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Hi Melissa,
Honestly, I can’t answer your question. What I can tell you is that you need to contact your insurance company and ask them for a breakdown of your billing. You need to know exactly to what date you were paid through before cancelling your policy.
For example, if you were paying month to month, more than likely you were paid a month ahead. So if your monthly coverage started on the 28th of the month that you first started your insurance with your old policy, than most likely you are owed money back. Because you were paying for coverage from the 28th of one month to the 27th of the next month.
However, you need to talk to your old agent or insurance company to find out the details of what you were paying for each month.
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Melissa w
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If I pay 140 a month & I paid it on the 28th & switch companies on the 12th am I owed a refund or do I owe my old company?
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Michele Wilmonen
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That down payment you make on your insurance policy is usually to pay for the first two month of insurance. So usually you are paid ahead, unless you missed a monthly payment.
If the insurance company is refusing to give you a breakdown of what coverage you actually paid for, you need to contact the Insurance Commissioner of the state you had the policy in. Tell them that your old insurance company is refusing to give you a refund for coverage you didn’t have, and that they refuse to give you a breakdown of how your premium was applied to the coverage that you did have.
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