How & When To Cancel Your Insurance | A Guide

This page is a guide to help you know everything you need to about cancelling your insurance policy. Don't get stuck in a bad situation with no coverage, because you didn't cancel your insurance policy correctly.

Don't Cancel Until Your New Policy is Paid & Active

This means you’ve paid for the new policy, you’ve signed the application, you have your dec page and the policy is in force. Until that happens, don’t cancel your old policy! If you cancel your old policy too soon, you'll have a lapse in coverage. 

Make Sure Your New Coverage Matches Your Old

Many insurance agents will pretend they are saving you money by lowering coverage in places you may not notice. While its great to save money, you don’t want to do so at the expense of good coverage.  Compare your old and new policy side-by-side. 

Let Your Old Insurance Agent Know!

You need to let your old insurance company know. They are not automatically notified if you sell your house, sell your car or even move to another insurance company. If you don’t tell them, they will continue to charge you for insurance.  If you just stop paying, they will send you bills and may even send you to collections. See our guide below on how to tell them. 

Insurance Rates Keep Going Up!

Rates go up, this doesn’t mean your insurance company is bad, or even trying to rip you off. It simply means they have to raise their rates to stay profitable (insurance companies aren’t charities) and also to be able to continue to pay out claims.  

Most rate increases have nothing to do with you personally (unless you've had accidents or tickets). Rate increases on your insurance policy are almost always state-wide and affect everyone.

It’s important to know why your insurance rates are going up. This video explains in more detail.  

 

Things To Consider When Cancelling Your Insurance Policy

Canceling Auto Insurance

Don’t cancel your car insurance simply because you aren't’ driving your car. There are still things that could happen to your car, even if you rarely drive it (fire, theft, vandalism, storm damage, etc).  

If you still own your vehicle and want to keep your title and registration up to date, you need to keep active insurance. Without doing so, the DMV will suspend your registration.  

If you don’t drive your vehicle, but would still like coverage in the case it’s stolen, vandalized or damaged in some way while it’s sitting, there are options for you. Options such as removing all coverage except comprehensive coverage are available. Check out this post here on what comprehensive coverage is. 

If you have moved out of state, and still want to keep the same insurance company, you can. However, you still need to have them write you a new policy in that state. Car insurance policies don’t transfer from state to state, you have to write a new policy in the new state you are living.  

Canceling Home Insurance

Wait until the home is officially sold. This means when the sale actually closes. Don’t assume your home will close on the date they give you 2 weeks out. Wait until it’s officially done and THEN request to cancel your home insurance policy.  

If your policy is set up on automatic payments, you may be charged if you don’t give the insurance company enough notice. A good rule is to give them at least 5 business days notice that you want to cancel. This should be enough time for them to stop any automatic payments. Don’t stress though, even if they don’t have enough time, they will refund you your money.  

☑Insurance companies are not automatically notified when you sell your home. You must let your homeowners insurance company know you've sold your house so that they can properly cancel your insurance. Otherwise you will not get a refund.

Steps To Take To Cancel Your Insurance Policy.

  1. Speak with your local insurance agent/broker.
    • They'll need to have something signed by you requesting to cancel.
    • They'll need to know the date the new policy starts. 
  2. Email or call your insurance company. 
    • They'll need to know the same information as above. If you email, be sure to follow up to make sure it gets taken care of. 
  3. Request assistance from your new insurance broker.
    • Many brokers can assist you and provide you the correct forms to send to your old insurance company.  

With most every insurance company, you can cancel at any time. You don’t have to wait until your policy renews or until the first of the month. Some agents and companies will try to lead you to believe you need to wait until a certain date (so they don’t lose the business), but this is not the case. Your contract states that you can cancel at any time for any reason you like. 

Yes, some insurance companies do charge a cancellation fee. Some insurance companies will charge you a fee if you cancel within the first year. If you cancel anytime after that, you will not be charged a fee. 

Others will charge you a fee no matter when you cancel. 

And then other insurance companies will never charge you a fee to cancel your insurance policy, regardless of when you cancel. 

A quick glance of your insurance policy contract will let you know. 

Yes! You absolutely need to let your old insurance company know that you have new insurance. There is no way for them to know. If you don't tell them, they can't and wont cancel your insurance policy. 

To make matters worse, if you don't tell them, they will continue to charge you. If you don't tell them and then don't pay them, they may even send you to collections. 

You need to tell your old insurance company that you have new insurance and wish to cancel your old insurance policy. 

If you just stop paying your insurance premiums then your coverage will eventually be cancelled. The insurance company will send you to collections and they will also send notification to the Motor Vehicle Department telling them you don't have insurance. This could negatively affect your registration with them and could cause it to be suspended. 

For the most part, no, you shouldn't. There are many things you can do to still protect your vehicle and save money.

For instance - if your car will just be sitting in storage for 6 months while you travel, you can suspend liability on your vehicle and just keep comprehensive coverage. This will protect your vehicle from things like fire, theft & vandalism. 

It's always best to keep coverage on your vehicle when possible to avoid in lapses in coverage. Lapses in coverage cause issues with the Motor Vehicle Department and also will lead to higher insurance rates in the future.