How to Cancel Car Insurance: An Expert Guide (2024)

Whether you want to change your car insurance or end the policy entirely, there are times when you need to cancel your coverage. While most companies don’t charge a car insurance cancellation fee, figuring out how to cancel your policy can be a bit confusing.

However, canceling your car insurance is relatively easy. While there are scenarios where canceling your insurance isn’t the right choice, ending your current coverage can help you save money. However, you should ensure you have a new policy started before ending your current coverage to avoid future rate increases.

Read on to learn how and when to cancel your car insurance. Then, compare rates with as many car insurance companies as possible to find the best policy for your needs.

How do you cancel your car insurance?

When you want to cancel your car insurance, you should first understand how your company handles early cancellations. Most companies allow customers to cancel whenever they like without paying a cancellation fee, but that’s not always the case. For example, Progressive car insurance often comes with a cancellation fee in the first term.

Companies that have cancellation fees usually don’t charge too much. However, it might be worth waiting to cancel if your policy ends soon — that way, you can avoid a cancellation fee.

Once you know if there will be a cancellation fee, there are a few ways to cancel car insurance:

• Speak with a representative. One of the easiest ways to cancel your insurance is to call your company and speak with a representative. A representative can help you cancel your car insurance quickly.
• Visit a local office. If your car insurance company has a nearby office, you can visit your local representative for help.
• Mail or fax your cancellation. Most insurance companies accept a cancellation notice via regular mail, email, or fax.
• Ask your new company. Some companies will handle your cancellation for you. As long as you sign up for a new policy before your old one expires, your new company might be able to help.

These are generally your only options when you’re ready to cancel your insurance, but you can always check with your current company. Your company might offer alternative car insurance cancellation policies you can take advantage of.

Read more: What is the process for canceling my car insurance policy with Mercury Insurance?

What should you do before canceling your insurance?

When you’re ready to cancel your car insurance, there are a few things you should make sure happen before your policy is officially done. When you cancel your policy, make sure to do the following:

• Check your rates. If you’re switching insurance because you need to save money, ask a representative if they can offer lower rates. They might be able to lower your coverage or find additional discounts you’re eligible for.
• Confirm cancellation. Some insurance companies require a notice of up to 30 days before you can cancel your policy without incurring a penalty. Check with a representative to see if you need to provide notice or if your policy will cancel immediately.
• Get confirmation. Whichever way you choose to cancel your insurance, you should receive a cancellation confirmation when you’re policy is officially canceled. You might receive it as an email or letter after your request has been processed.
• Ask about a refund. If you pay for your car insurance policy in full rather than monthly payments, you’ll probably receive a refund for the coverage you didn’t use.

Canceling your car insurance might seem confusing, but you don’t have to tackle it alone. No matter which company you bought insurance from, a representative can help you cancel your policy.

Can you cancel your insurance by stopping your payments?

Canceling your car insurance can sometimes feel awkward, especially if you decide to speak with a real person. Some drivers choose to simply stop paying for their insurance rather than officially canceling it to avoid the hassle. While this is technically a way to cancel your insurance, it’s not the best option.

Ending your policy payments without notifying your company might incur fees or a failure to cancel your policy. Other reasons to tell your company include the following:

• Many companies automatically renew your policy unless they receive a notification that says otherwise. Some companies will then charge a non-payment penalty if you don’t make a payment.
• For customers who make automatic payments, your insurance will continue to automatically withdraw from your bank account until you officially cancel.
• It’s always a good idea to end your business with a company on good terms in case you want to restart your policy later. Rates are constantly changing, and your current company might be your best option at a later date.

Although it’s tempting to cancel your policy by stopping payments, it’s best to send in the notification. Insurance representatives understand that customers have ever-changing needs — there’s no need to feel guilty about canceling.

When should you cancel your insurance?

Unless your company has a cancellation fee, you can cancel auto insurance at any time without needing to worry about penalties. However, there are times when canceling your insurance might not be the best option. You should consider canceling your car insurance policy for the following reasons:

• Find cheaper rates. One of the most common reasons people look for a new policy is to find more affordable rates. Comparing quotes with multiple companies is the best way to find lower rates, and drivers should periodically check to ensure they’re not overpaying.
• Reduce coverage. You can reduce your coverage to lower rates when you no longer need it. For example, you can cancel your collision and comprehensive insurance when you pay off a car loan.
• Selling your car. If you plan to sell your vehicle without replacing it, you can altogether cancel your policy. However, you should maintain a policy if you plan to buy a new vehicle since a gap in your coverage will increase your future rates.

Although there are several occasions when canceling your car insurance is a good idea, there are times when it’s not the right move. No matter the reason you need to cancel your insurance, you should always have a new policy lined up if you plan to continue driving.

When should you wait to cancel your car insurance?

You should always have an active car insurance policy when you own a vehicle. Most states require a minimum amount of insurance to legally register your car or drive, so you’ll need at least that much coverage. If you don’t know how much coverage you need, an insurance representative can help.

If you plan on keeping your car, you should always make sure to have a new policy in place before you cancel. Your insurance history is one of the things companies look at when crafting your rates. If you have gaps in your coverage history when you have a registered car, you’ll pay more for future car insurance.

Find New Car Insurance Today

No matter why you need to cancel your insurance, the process is fairly simple. Whether you speak with a representative or contact customer service, canceling your car insurance usually takes just a few minutes. However, you should ensure you have new coverage set up before your current policy ends if you plan on keeping your car.

Canceling your insurance offers an excellent opportunity to find lower rates. To ensure you find the lowest rates possible, make sure to look at quotes from as many companies as possible.

Read More: What is the process for transferring car insurance to a new car?

Understanding the Process: Case Studies on How to Cancel Car Insurance

Case Study 1: The Cost of Non-Renewal

John had been with his car insurance company for several years and was considering canceling his policy to switch to a new provider offering lower rates. However, he decided to wait until his policy’s renewal date to avoid any potential cancellation fees.

Unfortunately, in the meantime, he got into a minor accident that resulted in some damage to his vehicle. Since John had not renewed his policy, his insurance company refused to cover the damages, leaving him with a significant financial burden.

Case Study 2: Timing Is Everything

Sarah found a great deal on car insurance from a different company and decided to cancel her current policy before it expired. She called her insurance company to initiate the cancellation process, assuming that her new policy would take effect immediately. However, she didn’t realize that her new policy would only start in two weeks.

During this period, Sarah was involved in a car accident, and since she had canceled her previous policy prematurely, she had no coverage. As a result, she had to pay for the damages out of pocket.

Case Study 3: The Importance of Communication

Mark was frustrated with the rising premiums from his car insurance company and decided to stop paying for his policy without officially canceling it. He assumed that by not making any payments, the insurance company would cancel his policy automatically. However, he failed to inform the company about his intentions.

As a result, he received multiple non-payment notifications, and his credit score was negatively affected. Additionally, when he eventually decided to get new insurance, he faced higher rates due to the gaps in his coverage history.