Content of the material
- How to cancel your car insurance policy
- Four Pitfalls of Canceling Without Notification
- 1. You’ll Have to Pay for the Grace Period
- 2. You’ll Leave a Bad Impression
- 3. Your Policy Might Never Get Canceled
- 4. Other Consequences
- Will I get a check for my insurance refund?
- What Happens If I Get Caught Driving Without Car Insurance?
- Causing an Accident Without Car Insurance
- Getting Caught Driving Uninsured
- Auto insurance cancellation
- What You Need To Know When Canceling a Policy
- How Do I Find Out If My Car Insurance is Canceled?
- If I cancel my auto insurance, will I get a refund?
- Canceling your insurance isn’t always a good idea
- Do insurers charge cancellation fees?
- Will I Get a Refund When I Cancel My Policy?
- What happens if you stop paying your premiums without canceling your car insurance policy
- What Happens When You Cancel Your Policy?
- Always read the fine print when canceling insurance
- How do you switch auto insurance carriers?
How to cancel your car insurance policy
If you want to cancel your policy, GEICO makes it easy with no cancellation fee. Just follow the steps below:
- Call (800) 841-1587 to speak with a friendly, licensed agent.
- If prompted to speak to the Interactive Voice Response (IVR), say “cancel insurance policy” and then “auto.”
- You may be asked to say your GEICO policy number, so please have that ready.
Before you cancel your policy, there are a few things you should consider to be sure it’s the best next step.
Four Pitfalls of Canceling Without Notification
It isn't a good idea to cancel your coverage without letting your current carrier know. Here are just a few of the pitfalls of taking that approach.
1. You’ll Have to Pay for the Grace Period
If you do not request a cancellation, and you just allow your policy to cancel on its own, you are technically "canceling for nonpayment." Some policies do cancel automatically at renewal without payment; however, many companies give an automatic grace period.
Grace periods often extend your coverage for 20 days. If your policy is canceled for nonpayment, you will be billed for the grace period. If you do not pay or provide proof of another active policy, the insurer could send your unpaid bill to collections.
2. You’ll Leave a Bad Impression
Leaving an insurance company without giving notice can leave a bad impression. It is a good idea to leave on good terms, especially if there's a chance you may want to return at some point. Rates are always changing; you may want to go back to your old insurance company again one day. To prevent it from feeling awkward in the future, notify your agency of cancellation.
3. Your Policy Might Never Get Canceled
If you are signed up for automatic online payments, your policy will likely continue unless you request cancellation. The money will continue to be withdrawn from your account, and you will have duplicate coverage. It may be possible to get your money back if you provide a declaration page proving that you had duplicate coverage.
4. Other Consequences
Insurers are required to inform the state DMV of a lapse in coverage. Certain states impose penalties for a lapse. It may not be wise to leave it to chance, even though you've obtained new insurance.
At the very least, your state DMV may send you a notice asking you to prove that you have coverage. In a worst-case scenario, your driving privileges could get revoked. Then, you'd have to pay a fine and fees for getting them reinstated.
There are special rules if your car is a leased vehicle. In that case, you must make sure that your new insurance lists the leasing company as a loss payee. If you don't, the leasing company will be notified that there was a lapse in coverage. It could then begin the process to repossess the vehicle.
No matter how you cancel your car insurance, make sure to keep an eye on your mail for a confirmation letter. If you cancel mid-term, you could receive a refund. It depends on whether you have any unused premium.
Be sure to cancel your insurance after you have your new policy set with a new carrier. Canceling your car insurance should be a simple process. Just don't put it off or forget about it entirely.
Will I get a check for my insurance refund?
Insurance refunds are typically issued through the same payment method you use to pay for your insurance. So, if you pay your premium with a check, you’ll usually get your refund in the form of a check too. Likewise, if you pay with a credit card, your refund will appear as a credit on your card balance. However, the exact method of distributing refunds may vary by insurer.
What Happens If I Get Caught Driving Without Car Insurance?
Driving without car insurance can have both legal and financial consequences. That’s because every state has some form of “financial responsibility” law, which basically means that you must show you can pay for others’ medical bills and property damage if you cause a car accident. Most folks satisfy this requirement by purchasing auto liability insurance.
Here are two ways that driving uninsured could cause serious financial and legal pain.
Causing an Accident Without Car Insurance
If you cause a car accident while driving without insurance, you could be hit hard by out-of-pocket expenses to pay for others’ medical bills and car repairs. For context, the average nationwide cost of a bodily injury claim is more than $20,000 and the average property damage liability claim is about $4,200, according to the most recent data from the National Association of Insurance Commissioners.
People who drive without insurance end up costing everyone else. Because an uninsured driver may not have funds to pay a legal judgment, other drivers protect themselves by purchasing uninsured motorist coverage in case they’re hit by an uninsured driver.
Getting Caught Driving Uninsured
Many states have sought to crack down on uninsured drivers with legal ramifications. If you get pulled over and cannot show proof of insurance, you could be hit with fines, penalties and even jail time.
Here’s a look at examples of consequences for driving without car insurance.
|State||Fine (first offense)||Other potential consequences|
Impoundment of your vehicle
$150 reinstatement fee
License and car registration suspension
Loss of your driver’s license for one year community service
Jail for up to 15 days
$250 surcharge on your license for three years
Auto insurance cancellation
Insurance companies cannot cancel a policy that has been in force for more than 60 days except when:
- You fail to pay the premium
- You have committed fraud or made serious misrepresentations on your application
- Your drivers license has been revoked or suspended.
What You Need To Know When Canceling a Policy
According to Policygenius, you may need to consider the following circumstances when canceling your plan:
- Cancellation fees: Some car insurance companies charge cancellation fees, usually $50. In other cases, they could charge you a small percentage of your final premium that you were going to pay in the future. The majority of the time, you will not have to pay a cancellation fee.
- Cancellation letter: You may be required to send a formal cancellation letter. If this is the case, you will need to call your insurance company to get the details of where to fax it.
- Notice period: Some companies do require a 30-day notice in advance before you can cancel your policy.
You will want to check your policy for all these clauses before canceling to make sure that the process goes smoothly.
How Do I Find Out If My Car Insurance is Canceled?
A car insurance company is required to give you advance notification of cancellation, typically sent by mail or electronic delivery.
The time frame for advance notice varies by state and the reason the policy is being canceled:
- Cancellation for nonpayment typically requires 10 days notice of cancellation.
- A notice of cancellation for other reasons, like a driver’s license suspension, can generally range from 20 to 45 days, depending on the state.
If you receive a cancellation notice, you’ll want to deal with it immediately. If you think the insurer has misinformation, or the reason is a late payment, ask if you can resolve the issue before cancellation.
If you think the cancellation of your car insurance policy is unfair or unlawful, and you can’t resolve it with the insurance company, you can contact your state department of insurance. State departments of insurance are the official takers of complaints against insurers, not the Better Business Bureau (BBB) or other organizations. And if a department of insurance sees a pattern of unfair cancellations, it could take enforcement actions against the insurer, such as fines.
If I cancel my auto insurance, will I get a refund?
If you paid your premium in advance and cancel your policy before the end of the term, the insurance company must refund the remaining balance in most cases. Most auto insurers will prorate your refund based on the number of days your current policy was in effect.
The insurance industry is highly regulated and each state has insurance statutes that govern how companies must handle refunds. In Nebraska, for example, an auto insurer must contact you within 15 business days of cancelation to inform you about any eligible refunds. In many states, like Texas, if you finance your premium through a premium finance company, the insurance company may return the unused premium to the finance company, not you.
Unless otherwise stated in a statute, auto insurance companies usually do not have the obligation to refund your money within a given time period. Most insurance contracts typically state that the company will issue a refund “within a reasonable timeframe.” To avoid refund headaches, it is best to notify your auto insurer of your plans to cancel when it is time to renew your policy. Check with your carrier before canceling to learn what the policy cancelation terms are.
Canceling your insurance isn’t always a good idea
Dropping your car insurance can be a mistake. Here are times you may want to rethink that decision:
Moving to a state where car insurance isn’t required: Currently, there are only two states that don’t require drivers to carry car insurance, Virginia and New Hampshire. If you happen to live in one of these states it doesn’t mean you can drop your coverage and hit the road.
Even though insurance isn’t a requirement, you’re still financially responsible for any accidents or damage caused by your vehicle. In states that don’t require insurance, you usually have to meet certain financial thresholds that prove you can cover the costs of any at-fault accidents. Unless you are fairly wealthy, you shouldn’t be out on the road without coverage.
You don’t drive much anymore: Even if you barely drive anymore, you still need car insurance. Not only is it the law in almost every state, but insurance can also be a financial lifesaver if you are in an accident. Car accidents can lead to expensive medical bills, legal fees and the cost to replace another person’s car, making car insurance a necessity.
Talk to your car insurance agent to see if they can lower your premium. Insurers often give discounts to people who don’t drive much.
Your car is in storage: You still need insurance even if your vehicle is in a storage unit. In most states, if the car is registered and has a license plate, it needs to be insured. In addition, if the storage unit burns down, is flooded or something in your unit falls on it, you will want insurance to cover the damage.
If you want to lower your premium, drop all coverages except comprehensive, which covers damage not caused by a collision. However, if you do this, don’t take it out on the road. You won’t be covered if you get in an accident.
Do insurers charge cancellation fees?
Most insurance companies will not charge a cancellation fee for cancelling a car insurance policy or a specific coverage. However, some may charge a flat fee, usually less than $100, or a short rate fee for cancelling auto insurance early.
Insurers use a proprietary “short rate” to calculate their earned premium when policyholders cancel their car insurance prior to the policy’s expiration date. The short rate is multiplied by the premium remaining on your policy.
A 15% short rate applied to a cancellation of a 12-month policy nine months after initiation would be 15% of the remaining 3-month premium. A 10% short rate applied to a cancellation of a 6-month policy four months after initiation would be 10% of the remaining 2-month premium.
Some insurers let you avoid the cancellation fee if you wait to cancel until the date your policy is set to expire.
Will I Get a Refund When I Cancel My Policy?
The answer is that every insurance policy is unique. Some will give you money back, but others might not. It all depends on the details in your agreement. To be specific, you could pay six months of your car insurance policy at once. If you cancel your plan before the six months pass, you may be able to get a refund.
You may get a refund if you cancel your plan in the middle of the month. For example, if you canceled your plan on January 20 and you had already paid premiums for all of January, you could receive money back for the days January 20-January 31.
In some cases, you may not get a refund if you cancel your payment during a time called the ‘grace period.’ This term refers to the time after a payment is due when you are still covered, even if you fail to make the payment on time. On average, these can last seven to 10 days before your insurer cancels your policy. If you cancel during a grace period, you may not get any money back says the Balance. Again, it all depends on the details of the policy. It is important to be aware of your cancelation terms.
What happens if you stop paying your premiums without canceling your car insurance policy
If you want to discontinue your insurance coverage, you will need to contact your insurer or your agent. If you stop paying your premiums, but have not canceled your policy, your carrier can continue requesting payment from you throughout your policy’s term. You will be charged for the time your policy was active without payment.
Failing to properly notify your auto insurer that you want to cancel coverage may even impact your experience of finding auto coverage in the future. Even if you intend on finding a new car insurance company, missing payments entirely could lead to poor payment history and make finding affordable rates more difficult. Similarly, if you have automatic bank account withdrawal enabled to pay your premiums, you may continue to pay for coverage that you do not intend to keep.
What Happens When You Cancel Your Policy?
When you cancel an auto insurance policy, your insurer will likely notify your state that you and your vehicle are no longer insured. Because it’s illegal to drive without insurance in virtually every state, your state’s department of motor vehicles may ask you for proof that you either sold the vehicle or have obtained other insurance. If you don’t respond, then the state can suspend your registration and driver’s license. In some states, you also may be required to return your license plates.
If you still have time left on the policy, your insurer may issue a prorated refund of the premium that you paid most recently. However, some insurers also charge a cancellation fee if you want to get out of your policy early.
If you’re switching insurance companies, make sure to have the new policy lined up before you cancel the old one—and tell the new insurer exactly when your old policy is set to expire. Lapses in car insurance are illegal in many states and can result in fines. If you have an outstanding car loan or lease, you should also notify your lender that you have changed insurers.
If you’re cancelling your policy because you’re moving to a new state, note that you will typically have to show proof of insurance when you register your car there. States have different rules regarding the types and amounts of insurance that you’re required to carry.
Always read the fine print when canceling insurance
The majority of insurance companies make canceling a policy a fairly straightforward process. However, others may require some attention to detail.
“Depending on the insurance company, there may be different cancellation procedures. It is important to cancel a policy correctly so that you are not charged any unnecessary fees or penalties,” says Fred Hoffman, founder and chief executive of Life Insurance Guideline.
Here are a few details to check:
● Cancellation fees: Some car insurance companies charge a cancellation fee. The fee can range from $25 up to a “short-rate fee,” which breaks down to 10% of the remaining policy premium. As an example, if you signed up for a 12-month policy and canceled after nine months, you would be on the hook for 10% of the remaining three months.
● Notification: The notification period can vary from canceling immediately to requiring 30 days’ notice to dump your policy.
● Cancellation letter: As mentioned earlier, some insurers require a cancellation letter while others may be satisfied with a verbal cancellation over the phone. Your policy should spell out what you need to do to properly cancel your policy.
How do you switch auto insurance carriers?
To switch auto insurance carriers, start by getting quotes for coverage. If you're not at the end of your coverage period, confirm whether there are any penalties for switching coverage with your current carrier. Next, apply for your new coverage before your current coverage expires, so you won't experience a coverage gap. Make sure your new policy starts before your current policy ends. Finally, contact your old insurance company and notify it that you're ending your coverage.