All states require that vehicles have car insurance in place in case of an accident; it is a requirement to drive. However, sometimes it is necessary to cancel a car insurance policy when a new policy is activated, if the insurance rates are too high, or if the car is no longer owned by the policyholder. It may also be necessary to cancel coverage when moving to a new location where the insurance company doesn’t offer coverage. Before the cancellation, make sure to determine what fees are involved, that the coverage is adequate, and that there is no insurance gap.
Informing the Car Insurance Company
The first step when canceling car insurance is to give notice to the insurance carrier. When a policyholder calls and gives their policy number, the provider will provide a cancellation request form that should be reviewed, filled out, signed, and returned. The insured individual needs to include the date when the insurance policy should be canceled on the cancellation-request form. Because each company has different requirements for canceling a policy, it may be helpful to contact an insurance agent and ask exactly what the cancellation procedure involves.
Getting a Refund
If the policy premium was paid in full for the policy period and it is not the end of the contract, there may be a refund available. However, the car insurance company may not be required to return any portion of it, depending on the circumstances. If the policyholder is canceling the policy, they should receive a full refund for the remaining premium. If the insurance company is canceling the insurance policy due to a non-payment, then they do not have to provide a refund. Policyholders should ask the insurance agent if they are entitled to a refund; if so, the check should be sent in the mail within a few weeks.
Informing the DMV
Some states require policyholders to contact the DMV or proper derivation whenever there is a change in insurance carriers. An insurance agent should be able to tell any policyholder if this is a requirement in their home state, and whether or not they need to return the vehicle’s plates and tags. If there is a lapse in insurance coverage, the insurance company will inform the state; they are required to do so. If the plates are not returned or transferred to another vehicle within the state’s allotted grace period, then the policyholder may have his or her driver’s license may be suspended.
Following the Process
When canceling a car insurance policy, there is a defined process to follow and it is crucial to know what it is. By calling the car insurance company and filling out the cancellation form, it will invalidate all current insurance certificates. As long as the policy was voluntarily surrendered, there should be a pro-rated premium refund sent to the policyholder. Finally, the insurance carrier will issue proof that the car insurance policy is no longer in effect. If the policy is involuntarily canceled, there will be written notification and an acceptable period of time to find a new insurance coverage. Remember that just because it is cheap car insurance doesn’t mean that it is the best car insurance for you.