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The Right Way to Cancel or Switch Your Car Insurance

by EINSURANCE

You want to shop for a cheaper car insurance policy, a different level of coverage or better service. You’re moving to another state. You sold your car. Your marital status has changed. There are all kinds of reasons to cancel or switch your car insurance. There’s also a right way do it. Not knowing it can cost you money or even put you on the wrong side of the law. Here are some things to keep in mind.

First of all, you can cancel or switch your car insurance policy whenever you want. You don’t have to wait for the expiration date or a renewal notice. Most insurance policies do require that you give them notice of your intent to cancel.

While many policies allow you to cancel by phone, it’s always a good idea to confirm your intention in writing (and keep a copy of the letter for your files). Since many policies are continuous, written confirmation assures that you aren’t automatically charged for a policy you thought you canceled. That’s especially important if you’re moving to a different state. It’s easy to lose track of things when you change address and non-payment of an overlooked bill can mess up your credit rating.

Shop for your new car insurance policy before you cancel your existing one. That way, you’ll be assured that there’s no gap in coverage. Use your old policy to comparison shop for cheaper car insurance rates or better coverage. You can get competitive quotes free from top-rated carriers on this website. You’ll get the most accurate auto insurance quote if you know your new zip code.

Every state has different laws about car insurance cancelation. Most of them are an effort to crack down on the growing number of uninsured drivers.  For instance, many states require that your car insurance company notify them when you cancel your policy. Your state may also require confirmation from your new insurer before you’re allowed to cancel your old policy. Or your state laws may require that you inform the DMV of cancelation. Check their website or consult our State Guides to Car Insurance Coverage in the Auto Insurance section of this website.  

Depending on your car insurance carrier, you may be charged a cancelation penalty. Call your agent and ask before you cancel so you can weigh the cost against the advantage of switching, or at least delay the decision.

If you’ve paid your policy in full for the year and decide to cancel or switch before your policy term ends, you are entitled to a refund on the unused balance. Be sure to mention this in your written cancelation notice.

If you’re still making payments on your vehicle, it’s a good idea to let your lien holder know that you’ve changed car insurance companies to avoid a force-placed policy.

Most states require that you register your car within a certain number of days of becoming a resident, at which time you’ll have to show proof of car insurance coverage.

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