Any car owner or lessee needs to get the vehicle insured to protect the car from any unforeseen circumstances. Car insurance could be comprehensive or specific for third-party coverage or collision protection. However, there might be various circumstances where you may want to know how to cancel your existing auto insurance. We’re here to show you how to do it in 5 easy steps.
For instance, if you plan to sell your car, it is crucial that the insurance company be aware of the development. Further, in case you decide to increase the insurance coverage, it is critical that you let the previous insurer know about the cancellation of insurance.
This blog considers the reasons and the process of canceling auto insurance with a few tips for drivers looking forward to such a decision. Let’s begin with the basics:
What is Auto Insurance?
Before you decide to cancel auto insurance, let’s take into account the meaning and implications of the concept. It is common knowledge that driving a car or any other vehicle is full of potential dangers. There can be accidents, collisions, riots, and any other potential causes due to which the car, the driver or any other third party (or property) could get affected and damaged. Auto insurance is a category of insurance policies that provides coverage to the owner, vehicle, and any other third-party involved in case of any such mishaps.
The amount of coverage and the cost of the policy varies depending on factors such as the type of car, driving record, and location. Further, different auto insurance policies provide specific or comprehensive coverage to the driver and the vehicle. It is critical to select a policy that suits the requirements of the vehicle owner.
Why Do You Need Auto Insurance?
Before finding out how to cancel auto insurance, it is critical to evaluate the basics. As explained in the previous section, driving a vehicle can be full of potential risks. Having said this, it is equally important to acknowledge the importance of driving and transportation. Hence, one needs to drive safely and have all the bases covered. Here are the most important reasons why you must have auto insurance:
- Auto Insurance is Mandatory: Most states in the US require drivers to have auto insurance. Any non-compliance can result in repercussions such as fines, license suspension, and legal action.
- Coverage Against Losses: In case of a mishap, auto insurance protects you financially. It can help cover repair or replacement costs, medical expenses, and legal fees.
- Provides peace of mind to the driver: Knowing that you have auto insurance can provide peace of mind while driving. It can alleviate stress and worry about potential accidents or damages.
- Third-party protection: A few insurance policies have a clause of third-party protection that protects other drivers, pedestrians, and property owners in case you cause an accident. It covers their medical bills and property damage, potentially preventing costly lawsuits.
Even though there is no fixed formula related to appropriate coverage of auto insurance in the US, there are a few experts who suggest that the ideal coverage should be 100/300/100, which translates to $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability.
Why Should You Cancel Auto Insurance?
There are different reasons based on which one can cancel auto insurance. Here are the most common reasons listed:
- No longer having the same car: If you have decided to let go of your car, you must cancel your auto insurance policy to avoid paying premiums for a vehicle you would no longer own.
- Changing the state (of residence) in the US: Motor vehicle regulations in the US can vary significantly from one state to another. When you plan to move to another state, you may be required to change the insurance coverage, thereby needing to cancel the current one.
- Facing any financial blues: In case you are facing any financial difficulties and can’t afford to pay your auto insurance premiums, which could easily happen if you had previously taken a comprehensive or high premium policy.
- Troubles with the existing insurer: In case you are not satisfied with your current auto insurance policy or provider, you may choose to cancel. You can switch to a new provider that meets your needs.
- Not needing auto insurance for other reasons: For any reasons such as old age, disability or any other personal preferences, you’re no longer driving, you could cancel your auto insurance policy to avoid paying unnecessary premiums.
- Complete loss or damage or a car: If, due to a mishap, accident or theft, your car is considered totaled, you could cancel your auto insurance policy on that car.
Can You Cancel Auto Insurance at Any Time?
The next question is can you cancel auto insurance anyway? Even though the option to cancel auto insurance is available at all times, there could be company-specific guidelines that you might need to follow. A few insurers allow cancellation over a phone call or through online modes. However, other companies follow a more extended procedure. You might need to write a letter/email with a small waiting (notice) period.
There can be cancellation fees or penalties, depending on the terms and conditions of the original auto insurance policy. Hence, it is highly recommended that you go through with the existing policy document. Have a word with the insurer and accordingly carry out the cancellation process.
How to Cancel Auto Insurance: A step-by-step Guide
It is now time to answer the most asked query: how to cancel auto insurance. We will take up a stepwise guide for this. As described in the previous part, it is important to review the current policy and talk with the insurer to learn about the repercussions, cancellation fees, and other effects of canceling the auto insurance. Here is a stepwise guide that one can follow to cancel auto insurance:
Step 1: Carry Out a Comprehensive Review of Your Insurance Policy
As mentioned before, it is important to check your policy documents to evaluate the cancellation terms, any fees, and how much of a refund you can expect.
Step 2: Provide a Notice to the Insurance Company
Have a word with the insurer’s customer service and provide them with a notice in their preferred mode of communication. This can be either online or offline.
Step 3: Provide Details of New Coverage
In a few cases, your existing insurer can demand proof of your new coverage to avoid any legal issues.
Step 4: Return Policy Documents
The current insurance company may require you to return unused insurance cards, license plates, or other documentation.
Step 5: Demand Confirmation and Adjust Any Outstanding
After the cancellation is completed, ask your insurance company to provide written confirmation, the effective date, and any refunds owed to you.
To conclude, there can be different reasons why one might look for auto insurance cancellation. It is quite possible and straightforward process. This blog considered the most common reasons why auto insurance policies are canceled and the standard way of carrying out the process. For more details on car insurance and how to pick the best cover, read our blogs.