I always thought this was a fallacy until my car got stolen just after cancelling my car insurance policy. My intention was to move from one provider to another, but I didn’t plan the transition properly.
Sucks right? Yeah!
That was my first car. Luckily, I paid cash for it. But, I’ll never forget the amount of overtime I had to put in to actually buy that car. Well, I learnt my lesson. So, if you want to cancel your car insurance because you’re getting rid of your car or moving to another insurance provider, here are a few things you should do so you don’t up like me.
How to Cancel Your Car Insurance Effectively
1. Let the company know when you want to cancel
Don’t just let the policy end and bounce debit orders without letting the insurance company know. This is not only courtesy but also gives them the opportunity to offer you a discount or a policy that would work better.
What’s annoying are numerous bills, and likely follow those up with phone calls or letters they continue to send you. Yes, they’ll will eventually stop. However, the insurer could mark your account for non-payment, and you’ll end up owing them. This could also affect you in the future as you could face higher car insurance rates.
2. Follow their lead
Insurance companies don’t handle cancellations the same way. Some could ask you to sign some legal documents, formally indicating your desire to stop coverage. Others want you to write a letter stating your intent, or talk to an agent or customer service representative about it. They all have ways of dealing with this matter that they can walk you through.
3. Ask for a refund if you paid in advance
This is especially likely if you are canceling your car insurance for an unexpected reason, such as a death in the family. If there is time left on the policy and you already paid for the entire year, you could be entitled to a refund.
4. Ask your new insurance company to help with the transition
When you ask your new insurer to cancel your old insurance policy, it will make the transition easier. It’s also a great way to avoid any awkwardness with your soon to be ex-insurance company. All your new agent needs are your effective dates, old policy number and a signature on the cancellation form.
What happens when you cancel without notification?
You’ll have to Pay for the grace period
Technically, if you do not request a cancellation and you just allow your policy to cancel on its own, you are canceling for nonpayment. Some policies do cancel automatically at renewal without payment; however, many companies give an automatic grace period. If your policy canceled for nonpayment, you will be billed for the grace period. You will be looking at a possible collections notice if you do not pay or provide proof of another active policy.
You’ll leave on a bad note
When you leave an insurance company without giving notice, this can leave a bad impression. You have to try to leave on good terms because you might want to come back. Remember, not everything that glitters is gold. Rates are always changing and you may want to go back to your prior insurance company again one day. To prevent future awkwardness, notify your agency of cancellation.
They might never cancel your policy
If you are on a debit order, your policy will continue unless you request cancellation. They will continue to debit your account and you will have duplicate coverage. It might not be possible to get your money back because you never asked for cancellation.