If you have car insurance, there will almost certainly come a time when you have to cancel your policy. Maybe you’re taking money expert Clark Howard’s advice of re-shopping for a better rate and need to make a switch. Or maybe you’re selling a car and no longer need coverage.
When you’re ready to get rid of an old policy, this article has all the steps you’ll need to switch and/or cancel coverage.
- How To Switch Car Insurance
- How To Cancel Your Car Insurance
- Frequently Asked Questions (FAQs)
How To Switch Car Insurance
Switching car insurance might save you significant money on your annual premiums. According to a recent study by ValuePenguin, “92% of auto insurance policyholders who switched companies during their most recent renewal period saved money.”
But regardless of your reason for switching, the process is the same. You can switch your car insurance in six simple steps:
1. Get your documents together.
To provide car insurance quotes, insurance companies will need info about you, any other drivers you’re insuring, and any vehicles you want to cover. This includes things like driver’s license numbers, a current address, and dates of birth for any drivers. And for your cars, you’ll need to know the make, model, trim, and vehicle identification number (VIN). You should also know how many miles each car currently has (odometer reading) and be ready to give an estimate of how many miles you drive each year.
Having everything ready can prevent any stress and reduce your call time. It’ll also help ensure you’re giving correct info for the most accurate quotes. With that in mind, you’ll also want to get your current insurance policy ready for the next step.
2. Review your current policy.
Take a moment to go over your current policy’s coverage types (ex: liability, comprehensive, collision, medical payments, etc.) and coverage limits.
You’ll also want to check your policy’s term (start/end date). This is important for two main reasons. First, you want to make sure that — depending on when you switch — there won’t be a lapse in coverage. Second, if you plan to switch insurance before your policy’s end date, be on the look out for any penalties.
3. Decide what you need.
You reviewed your current coverages in the last step. Now, figure out how much car insurance you need. Maybe you’re underinsured. If you’ve recently bought property or acquired assets, take stock of everything’s value. You need to know your net worth to determine the liability coverage limits that’ll protect you and your assets in the event of an accident.
On the flip side, maybe there are uneconomical coverages you can drop. Either way, decide what coverages and coverage limits you need. This way, you’ll be sure to get comparable quotes (based on the same coverages and coverage limits) from every insurance company you contact. You don’t want to accidentally get quotes for different coverage amounts when you shop around in the next step. Otherwise, you might end up with cheaper insurance, but with less protection.
4. Shop around.
This is the part where you get quotes from at least three insurance companies. Check out our list of the best insurance companies and ones to avoid to get started. You can call the companies directly or use the company websites to get quotes. Alternatively, you can use an insurance broker or comparison-shopping website to get quotes from multiple companies at once.
Again, though, be sure that every quote you get is based on the exact same coverage types and coverage limits. This is the only way to do an apples-to-apples comparison and ensure you’re getting the best rate. For more details and tips on shopping around, take a look at our guide on how to comparison shop for car insurance.
5. Enroll in a new policy.
Once you’ve looked at quotes from several companies, decide on the company that is the best fit for you. Price is typically an important factor for people switching insurance. But money Clark also stresses the importance of how companies are rated for their service to their customers.
“Sometimes you’re better off paying a little more to be with a quality insurer who will be there when the chips are down.”
Once you know who you want to switch to, contact the company to enroll. You’ll already have your documents together and possibly an existing quote to reference. So, this will move quickly. In order to finish enrolling, the company will need to know when you want coverage to begin. They’ll also require a payment. In exchange, they’ll tell you how to access your new identification/proof of insurance cards and documents.
6. Cancel your old policy.
Once you’re enrolled in a new car insurance policy, the only thing left to do is cancel the old one. More on this below!
How To Cancel Your Car Insurance
So, you need to cancel your car insurance? Before you do, make sure there won’t be a lapse in insurance for any cars requiring coverage. If you’ve sold a car or no longer need coverage at all, this bit doesn’t apply to you and you can skip ahead to ways to cancel your car insurance.
But if you’re canceling because you’ve found a new insurer, here’s what you need to know: A lapse in coverage simply means that at some point in time — even if for just one day — your car was uninsured. Any period of time without car insurance is considered a lapse in coverage.
If you let your car insurance lapse, insurance companies will view you as a riskier driver, and that means they’re going to make you pay more for protection. How much more? ValuePenguin found that “drivers with a coverage lapse of 30 days or less saw an 8% average car insurance rate increase. And those with a coverage lapse greater than 30 days saw an average premium increase of 35%.”
Before you cancel insurance on a car that still needs coverage, make sure you’ve got a new policy in place. There shouldn’t be a gap between the date your new policy starts and your old policy ends.
When you’re ready to cancel your car insurance, it’s as easy a phone call to your insurance company. If you don’t want to call, you’ve got a few other options too. Here are four ways you can cancel your car insurance:
Call your insurance company.
Calling your insurance company is the easiest and quickest way to cancel a policy. Once you’re connected with an agent, simply inform them that you’d like to cancel your policy and let them know what date you’d like the policy to end. The process typically takes ten minutes or less, depending on if there’s an exit survey or incentives they’ll offer to try and keep you as a customer.
Contact your insurance agent.
If you worked with an insurance agent when shopping around, you can contact that agent for assistance with canceling your policy. This process may vary depending on the agent you work with, but the agent should guide you through what’s needed for them to cancel on your behalf.
Ask your new insurer for support.
If you’re switching insurance and already have a new company lined up, a representative or agent might be willing and able to get your old policy canceled on your behalf. But, this will likely require some back-and-forth between you and the new company to authorize the cancellation.
Submit a written cancellation request.
Depending on your insurer, you might be able to submit a cancellation request via mail or fax. The downside with this method of cancellation is that it can take more time to process. You’ll have to wait for your insurer to receive your request. Then you wait around for them to either contact you with questions or to confirm cancellation. But throughout the waiting period, you might not be sure they’ve received your request.
Other methods of cancellation are better to avoid processing delays and any potential back-and-forth with the company.
No matter how you choose to cancel your coverage, be sure you’re clear on any penalties or how you’ll be reimbursed if you’ve paid your premiums ahead.
Frequently Asked Questions (FAQs)
Can You Cancel Car Insurance Any Time?
A car insurance policy can be canceled at any time. If you’re ahead on payments, you’ll most likely get a prorated refund. This is a partial refund that’s calculated based on unused dates of coverage. But on the flip side — depending on your insurer and individual policy agreement — canceling before a policy’s end date might result in cancellation fees. Although most companies don’t charge cancellation fees, you should review your policy to be sure. This way, you can plan the best — or most cost-effective — time to cancel your policy.
How Much Is the Cancellation Fee for Car Insurance?
If your policy agreement includes a cancellation fee, you’ll need to review your policy to determine the specific charges. That said — if there’s a fee — it’ll likely be one of the following:
- Flat rate fee: the total amount for the cancellation fee is fixed, meaning you’ll pay the same fee regardless of when you cancel your policy; flat-rate cancellations fees are typically less than $100
- Short rate fee: the total amount for the cancellation fee is calculated as a percentage of your remaining premium, meaning the earlier you cancel your policy, the higher your cancellation fee (ex: if your insurer charges a 10% short rate fee and you cancel your policy three months before the end date, your insurer will charge you 10% of your total premiums for the remaining three months)
When Should I Cancel My Car Insurance Policy?
Clark recommends reviewing your car insurance at least every three years to make sure you’re getting the best rate for your needs. A great time to consider switching is when your policy renewal period is around the corner. For one, it makes it easier to keep up with start and end dates, which will help you avoid a lapse in coverage. But also, you won’t risk any sort of cancellation fees and you’ll likely dodge unwanted rate increases.
If you just need to get rid of unneeded coverage(s) without canceling your entire policy, you can do this at any time. Simply call your insurer and tell them you want to cancel the coverage (ex: collision, comprehensive, etc.) you no longer need.
As a rule — if you still need insurance — never cancel your insurance before you have new coverage ready. The best time to cancel an old policy is after your new policy is locked in.
How Do I Shop for Car Insurance?
The hardest part of shopping for car insurance just might be getting started! Depending on how much time you have, there are a few ways you can go about shopping around. First, you need a list of insurance companies to consider; we recommend at least three. Then, get quotes from the companies. Once you have quotes, compare their rates and review the ratings for customer satisfaction. Finally, choose the company that’ll best meet your needs.
I recommend checking out our guide on how to shop for car insurance. This article will guide you through each step of the process. We’ve also got recommendations for how to get quotes depending on how much time you want to spend shopping around. Then, you can look at our rankings for the best car insurance companies.
Whether you’re ready to switch to a new insurer or no longer need car insurance, getting rid of unneeded coverage is a breeze. Calling your insurer is the easiest and fastest way to end a policy.
If you’re switching insurance, just remember: you don’t want any gaps between your old coverage ending and new coverage beginning! A lapse in coverage can be quite costly. Be sure your new policy is ready to go before you pull the plug on the old one.