How to cancel car insurance

Life evolves from one minute to the next — and changing circumstances might prompt you to cancel your car insurance.

You may need to cancel your coverage due to the sale of your vehicle. Or maybe you need to drop your current coverage because you’re moving to a new state or switching insurers. Understanding the process can help you navigate the situation, regardless of why you’re canceling.

• Can you cancel car insurance at any time?
• What is the best way to cancel car insurance?
• What happens when you cancel your policy?
• Canceling auto insurance without notifying your insurer
• Do insurers charge cancellation fees?

Can you cancel car insurance at any time?

Typically, you can cancel car insurance at any time. If you cancel before your policy ends, you may receive a refund for coverage you’ve paid for but haven’t used.

Keep in mind that if you plan to continue driving, it’s vital to have replacement coverage in place before ending things with your current insurer. Most states require liability insurance.

You could face stiff fines if caught driving without state minimum coverage. Also, some states may suspend your driver’s license, even for a first offense. If you’re canceling your coverage and plan to keep driving, make sure your new policy meets the minimum requirements in your state.

What is the best way to cancel car insurance?

The best way to cancel your car insurance likely depends on your individual situation. Here are a few different options.

• Via phone call. One of the simplest ways to cancel your coverage is over the phone. You can place a call to your insurance company or agent and state your intentions. Remember that you may need to share your policy number when canceling by phone, so have it close at hand.
• By mail. Some carriers allow you to cancel your car insurance by mail. You’ll need to send your insurance company a letter ending the relationship if you take this route. If canceling by mail, you need to allow time for delivery and processing, so it’s a good idea to mail your letter at least two weeks before your desired cancelation date.
• In person. Some companies, like State Farm, allow you to cancel insurance coverage in person by visiting a local branch.

If you’re replacing one insurer with another, your new insurance company may be able to assist with the cancelation process. For example, Geico offers a form letter online that you can mail to your previous insurer when ending the relationship.

What happens when you cancel your policy

Canceling your policy initiates a chain of events. Some of these events may have significant consequences, so it’s essential to understand what happens after a cancelation occurs.

First, insurance companies must typically let your local Department of Motor Vehicles know if you’ve canceled your car insurance.

If the DMV knows you have no car insurance, this may impact your ability to register your vehicle. In many states the DMV won’t permit registration without proof of insurance coverage. Driving without insurance may cause the DMV to suspend your driver’s license.

Once cancelation occurs, you may be eligible for a refund from your carrier if you’ve paid in advance for insurance coverage. This refund is a prorated amount reflecting coverage you’ve paid for and haven’t used.

If you’re canceling to switch insurers, remember that it’s crucial to maintain coverage with no gaps. Even the most minor lapse in coverage could put you at risk for fines if caught driving during this window. Also, insurance companies take note of your coverage history, and even a tiny lapse could cause higher rates for future premiums.

Canceling auto insurance without notifying your insurer

If you’re switching insurance companies, you might think it’s easiest to make the change without notifying your current insurance company. In this situation, you’d stop making payments to your current insurer and begin paying premiums to your new insurance company.

But this approach can backfire. If you paid in advance and have unused coverage, canceling without informing your insurer may cause you to lose a refund that might have otherwise come your way.

Do insurers charge cancellation fees?

Cancelation fees can vary from one insurer to the next and may depend on the insurance regulations in your state. With some insurance companies, there is no fee for termination. For example, Geico doesn’t charge a fee for cancelation. 

What’s next?

If you’re thinking about canceling your auto insurance policy, make sure to have coverage lined up with another insurer. Get multiple car insurance quotes to ensure you’re getting the best coverage for your needs at the best price and make sure your new policy starts before the old one expires.