Yes, an insurance policy can be cancelled at any time, and you will receive a partial refund if you paid your premium in advance and then cancel before the end of your policy term. Some car insurance companies also charge a fee for cancelling your policy before the end of the policy term.
There are generally two types of fees car insurance companies charge for cancellation, flat fees and short-rate fees. Flat fees are fixed charges that do not change based on how much of the policy term is left. On the other hand, short-rate fees are a penalty for early cancellation that allow insurance companies to keep more of your premium, above what would be withheld on a pro-rated basis. Short-rate fees get less expensive the further into the policy term you are, and companies use them to recoup cancellation costs.
Information You Need Before Cancelling Car Insurance
- Name, address and phone number
- Social Security number
- Date of birth
- Driver’s license number
- Car insurance policy number
- Chosen date for cancellation
Before cancelling your existing insurance, be sure that you have a new insurance policy set up to overlap with it so you can avoid a lapse in coverage. Some insurers require 30-days’ notice before cancellation, in which case you should wait until this period is up before purchasing a new policy.
If you aren’t transitioning to a new insurer and are selling your vehicle, you should wait to cancel until your vehicle has been sold. Your insurance company may require a bill of sale before allowing you to cancel to prove that you won’t be driving without insurance.
To learn more, check out WalletHub’s guide to cancelling car insurance.
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