When switching policies, why you should cancel your auto insurance and what happens if you don’t.
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.
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