Is there any cost associated with cancelling your car insurance?
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Asked March 10, 2014
You have the right to cancel or change your auto insurance anytime you choose. Even if you have paid the policy in advance, the insurance company will return the unused portion to you. Canceling your auto insurance could have serious consequences.
All you have to do to cancel an auto insurance policy is to contact the insurance company and inform them of your decision. You will need to supply a termination date, and pay any outstanding balances on the policy. If the policy is paid in advance, the insurance company will subtract the amount of service you have used and any processing fees associated with returning the remainder.
If you continue to drive the car that you cancel the insurance on, you face severe penalties of law. Furthermore, if you become involved in an accident, you will have to pay the costs of the incident out of pocket as well as face charges for failure to obey the law. If you are going to continue to drive the vehicle, make arrangements for a replacement policy before you cancel the existing one.
The only time you may have to pay money to cancel a policy is when there is a prepaid amount on the policy. The reason this will cost you is that the money has already been processed into the company accounts, and there is personnel as well as financial considerations which must be met in order to correct the ledgers.
Finally, it is not a good idea to cancel an auto policy if there are active claims against it. The insurance company is still liable for any covered claims, but you run the risk of being denied new coverage or paying higher rates at the minimum. This is also true if you cancel one policy and then apply for another. Unless you already have a policy in place, you will usually pay a bit more to initiate a new one.
Answered March 10, 2014 by Anonymous