Whether you’re switching car insurance providers or selling your car, you can cancel your current insurance policy at any time. It’s a simple process that typically doesn’t take much time. That said, you’ll need to consider the timing and potential fees before you terminate your insurance.
Below, CNBC Select explains how to cancel your car insurance, when to do it and what to keep in mind before you take this step.
What you need to know about canceling car insurance
Steps to canceling car insurance
The exact cancelation process depends on your car insurer’s rules and whether you’ll still need coverage (which you almost certainly will unless you’re giving up car ownership).
Generally, here are the steps you’ll need to complete:
Determine when to cancel your car insurance
When you’re switching insurance providers, you want to avoid any lapse in coverage and ensure your new policy is in effect when the old one is canceled. For that reason, it’s best to purchase a new policy before pulling the plug on the old one. Ideally, your new policy should begin on the same date the old policy ends.
If you’re selling your car, you should maintain coverage until you fully complete the sale. Usually, this means you’ve completed the bill of sale and signed over the title to the new owner. In some states, you also need to submit a Notice of Release of Liability to your state’s Department of Motor Vehicles.
Remember that most states require you to have at least the minimum coverage for your vehicle even if you’re not driving it. When you cancel your car insurance too soon, you can be subject to fines and even have your license suspended. You’ll also potentially be on the hook for any damage and injuries if you cause an accident.
Note that your auto insurance company might have a 30-day notice requirement for cancellation. If that’s the case, it’s wise to consider it when you figure out the timing.
Shop for a new policy (if you need one)
The next step is to purchase new coverage.
You want to think about how much insurance you need and which types of coverage you’ll include in your policy. While you may be tempted to only purchase the state’s minimum coverage and call it a day, that puts you at financial risk — plus, your car lender is likely to require that you have comprehensive insurance (if you’re financing your car).
Once you have an idea of what you want, gather quotes from several providers. Your insurance needs will likely affect your choice of insurer. For instance, Geico can be an excellent choice if you’re after affordability. The provider takes the top spot on our list of the cheapest car insurance companies and boasts great customer service.
Geico Auto Insurance
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Cost
The best way to estimate your costs is to request a quote
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Policy highlights
Geico coverage and services are available in all 50 states and the District of Columbia and there are 16 different types of discounts available. In addition to the standard coverage options, Geico offers various optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.
On the other hand, if your driving record leaves a lot to be desired, State Farm is a good option. It offers some of the lowest rates for drivers with at-fault accidents, speeding tickets, DUIs or DWIs and ranks high for customer satisfaction.
State Farm Auto Insurance
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Cost
The best way to estimate your costs is to request a quote
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App available
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Policy highlights
State farm is one of the largest auto insurers based on market share and has an excellent reputation for customer satisfaction. It offers 13 discounts, including ones for safe driving and young drivers.
When you finish shopping around, connect with the provider of your choice again and purchase a policy.
When you’re buying a new car
If you need coverage for a new vehicle, you can stick with your current provider and add the new car to the existing policy. Still, it’s a good idea to shop around for coverage to ensure you’re getting the best deal.
If you’ve sold your car but haven’t bought a new one yet, look into non-owner car insurance. Even though you don’t own a vehicle, having a non-owner policy prevents you from having a gap in your insurance coverage, which can lead to higher premiums when you apply for a new car insurance policy.
Contact your current insurer
Once you secure new coverage, you can cancel your existing policy. Insurance companies have different rules for how to cancel, but typically you start things off with a phone call. Your insurance agent might also ask you to submit a request for cancellation in writing for the company’s records. In turn, you can request a policy cancellation notice so you can have the documentation showing you’ve terminated the policy.
What to expect after canceling your car insurance
When you cancel your car insurance, you might be eligible for a refund, especially if you had paid for your coverage in advance and are switching to a different provider. If you’re staying with your current insurer, they might offer a policy credit instead. But none of this is guaranteed and will depend on your individual provider and policy.
At the same time, you might also be subject to a cancellation fee. Many companies don’t charge such penalties, but with those that do, you can expect to pay a flat fee of under $100 or around 10% to 15% of the remaining policy premium.
Can an insurance company cancel your policy?
You might be tempted to simply stop paying your insurance premiums and let your insurance company cancel your policy for you. Indeed, after a grace period (up to 30 days), your car insurance provider could terminate your coverage for non-payment.
However, it’s best to avoid this course of action. Cancellation due to non-payment will probably result in higher rates when you purchase new coverage. Plus, if you keep an uninsured vehicle, you’ll be financially and legally responsible if you cause an accident. Additionally, you can have your license suspended if you drive without insurance and your car lender may repossess your vehicle.
Needless to say, you don’t want to go this route. Do your best to stay on top of our insurance payments and, if you need to cancel your policy, communicate with your insurer. Canceling and switching car insurance is a simple process that doesn’t take much time to complete properly.
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Bottom line
Before you cancel your car insurance, make sure you have a new policy set up. Compare multiple insurance providers and collect quotes for price comparison. This way, you’ll avoid a lapse in coverage with all its unpleasant consequences — and find the best coverage deal for you.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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