When you buy a new car, auto Insurance tags along as a mandatory legal requirement. However, there might come a time when you want to cancel your insurance policy. This could be due to the change of ownership of the car, or you might want to switch to a better insurance provider.
However, the downside of canceling a car insurance policy is that you need to pay a cancellation fee. But if you want to avoid penalties and might even want to get a refund for your policy, then this guide is for you. This article will discuss how and when you should cancel your car insurance policy so that you do not have to pay a penalty.
Also, if you are looking for affordable insurance plans from one of the best insurance providers in Edmonton, you should definitely read more about the providers available to you, and their basic services.
Why Would You Want To Cancel Your Car Insurance?
While the decision to cancel your car insurance is your own, here are three reasons why you might want to cancel your car insurance.
You Found A Better Insurer
As you gain experience in driving, you also learn a lot about how auto insurances work. Hence you might find a better insurance provider who offers affordable plans, comprehensive protection as well as an impeccable service. All these benefits serve enough reasons for you to leave your old insurance provider.
You Are Selling Your Car With No Intention To Drive in the Future
You might want to sell your car with no intent to drive anymore. In that case, there is absolutely no need for your car insurance policy.
You Are Selling The Car To Someone Else
If you are selling your car to someone else to buy a brand new one for yourself, you need to end or transfer the existing insurance policy to the buyer and buy a new one for yourself.
Keep in mind that if you intend to continue to drive, you need to initiate coverage with another insurance provider before you terminate the plan with an existing insurance provider. There are two reasons for that:
- Car insurance is legally required in every country and state, and a coverage gap will not be legally accepted.
- With a lapse in your insurance policy, you run the risk of having to pay high repair costs out of your pocket in case your car gets into an accident without coverage.
How To Cancel Your Insurance Policy
Here is a step-by-step guide on how you can cancel your insurance policy
Inform Your Insurance Provider About Your Decision
The first step is to inform your insurance provider that you are planning to end the policy. This can be done over the phone or by email. You will also be required to mention the reason for the cancellation. Depending on this, your insurance provider will guide you on the next step.
Submit The Necessary Documents
Depending on your reason for cancellation, you might be required to submit certain documents. For example, if you are ending the policy because you are planning to sell your car, they might ask you for the sale agreement. And if you’re moving to a new insurance provider, they might also ask you to submit the new policy.
Wait For The Cancellation Notice
Once they review the request and all the supporting documents you have submitted, they will approve your policy cancellation. However, most of the time, you would be required to pay a cancellation fee.
How To Cancel Your Insurance Policy Without Paying Cancellation Fee
If you are looking for a way to terminate your insurance policy with your existing insurance without paying the penalty, there is only one way to do that. You will have to cancel the policy before the new term starts. You can also wait for the coverage to end and choose not to renew it. In this way, you will not have to pay a single penny as a penalty. You might also qualify for a refund depending upon your insurance provider’s policies and the terms and conditions of your insurance plan.
Getting a Refund Before The Year Starts
If you have canceled your insurance policy before the year starts, you are eligible for a full refund. However, your provider might deduct some charges for document processing.
Getting a Refund After The Year Starts
If you cancel the policy after the year starts, you will be getting a refund on a pro-rata basis. Since the insurer has already provided coverage for you and your car for a few days for that term, you will not be eligible for a full refund.
Things to Keep In Mind Before Cancelling Your Insurance
Here are a few things that you need to keep in mind before you cancel your insurance policy:
- Always confirm if your policy is getting canceled right away or not. Some companies have a 30 day notice period for canceling policies.
- Get a written proof from your existing insurance provider to confirm that your insurance policy has been canceled.
- Ask your insurer beforehand if prepaying your premiums will bring you any additional benefits like zero cancellation fees and a full refund or not.
- Some insurance providers offer an additional grace period to give you enough time to settle your bills. In case you fail to pay within the grace period, you will be charged for non-payment of bills as well as extended coverage.
- If you pay your premiums through automatic bank transfer, make sure you specifically request cancellation. Otherwise, the pre-decided premium would be auto-debited from your bank account on due dates.
As a car owner, you have all the right to cancel your insurance policy at any time you want. All that you need to do is drop a call or email to inform the insurer about the same and then follow a quick process to finalize the termination.
However, if you are keen on getting a refund or avoiding cancellation fees, you must follow the abovementioned process. Policy cancellations are generally hassle-free, but it largely depends on the provider you choose.