Eventually, you will reach a point when you no longer need insurance. Perhaps it’s because you move. Furthermore, it could be because your rates have become pricier due to a recent offense. But what happens if and when the insurance on a vehicle is canceled? What are the steps?
In the event that your policy comes up for renewal, loyalty towards an insurance company does not make any sense. Especially if you are looking to save some money and find a great rate. First of all, you’ll need to advise your insurer that you plan to cancel the insurance. Some places will request a written confirmation of the cancellation and your coverage will not be affected until the effective date of that cancellation.
Early Cancellation of a Policy – Can an Insurer Charge a Cancellation Fee?
Generally, auto insurers give you the right to cancel a policy albeit with proper notice. Typically, when a policy is canceled, a refund will be issued. Furthermore, if a policy is purchased on an annual term, there will be a refund for the portion of the term remaining. In other words, if six months have passed on an annual term, a refund of fifty percent of your annual rate will be refunded back to the insured in the form the insurance was purchased. It’s important to realize that insurance companies can attach a cancellation fee to canceling a policy before it’s end date. As a result, the refund would be the remaining of the policy minus any of the fees for the cancellation. Another key point is that if the policy is paid on a monthly basis, a cancellation fee could still be owed if any.
Additionally, it is not a good idea to stop any sort of payments through your bank. In the event this happens, the insurance company will cancel the coverage because of non-payment. In fact, such a result can and will be reflected on the history, consequently affecting future premiums.
How and When to Change Insurance Companies
To save as much as possible and to avoid the costs of any sort of cancellation fees, basically, the best time to change your insurance or insurance companies is when the renewal date approaches. Essentially you would be looking for a smooth transition from old to a new policy.
Moreover, if you really do not like the current rates then take some time to look and shop around. There are plenty of companies online that allow you to create quotes. With this in mind, you can collect as many or as little quotes as you see fit and compare them all to see which offers you what you are looking for.
Finally, take some time to see if the cost to cancel early outweighs the savings. If it does, then perhaps look into waiting until renewal. On the flip side, if the savings outweigh the cancellation, it would make sense to do so. Essentially, look at the costs and savings before making the decision.