Can You Cancel Car Insurance Anytime?

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If you’re moving to a new state, want to switch insurance companies, or are just tired of your insurance agent, you might be considering canceling your car insurance. Is the process as simple as simply notifying the company that you no longer want to pay for their coverage? 

A lot of people have serious questions about canceling their car insurance policy. You should never go without car insurance (unless you’re moving to a state that doesn’t require coverage), however, canceling a policy is needed from time to time. Knowing when you can cancel your policy will make sure your car is covered for the right amount of time and help you avoid any unnecessary fees. 

Assuming you know how to cancel your car insurance, that only leaves the question of when to cancel. 

Cancel Car Insurance Anytime

Technically, you can cancel your car insurance coverage anytime — but if you want to avoid extra costs, you’ll need to do some advanced planning. The circumstances in which you cancel will determine if you could have to pay a penalty. It is best to request a car insurance cancellation to help avoid penalties. Canceling immediately after purchasing a car insurance policy is the most likely reason for being charged a fee.

Cancellation fees can vary from a set dollar amount up to a percentage of your overall premium cost. The good news is that fees are usually not charged for a standard cancellation, but policies vary.

Every insurance carrier has its own policy on cancellation. It is important to look at the fine print in your insurance package or speak with an authorized representative.

Still, Owe Money?

Many policyholders still owe money on their car insurance after the policy is canceled. If you cancel car insurance within the grace period, it is very likely you will still owe money on the policy. A grace period provides coverage for a specified number of days past your payment due date. But that doesn’t mean you can get a free few weeks of coverage just by switching insurers: The only way to get out of paying for those days of coverage is to provide proof of coverage through another carrier. Owing for the days you were covered under your policy is not considered a fee. It is considered paying for coverage you used.

Cancel after Switching Car Insurance

The best time to cancel your car insurance is after you have another policy set in place. You can switch at any time although renewal time is the best time. Go through the entire process of purchasing another car insurance policy and make your first payment. It is only then you should cancel your existing policy.

Alternatives to Canceling Car Insurance

  • Reduce Coverage: Lower your liability limits to your state’s minimum coverage. If you are concerned with physical damage while the vehicle is sitting, comprehensive coverage will protect it.
  • Purchase a Non-Owner’s Policy: While you are without a vehicle a nonowner policy will protect you against a liability claim which could potentially extend above and beyond the car owner’s policy.

Just because you can cancel your car insurance at any time does not mean you should. Going without car insurance in many states can make you high risk when it comes time to purchase car insurance again. Car insurance proves your financial responsibility in case of an accident. Without car insurance, you could be subject to quite a few different penalties, if you are caught driving without it. Penalties vary by state but can make going without insurance an expensive choice.

Article Sources

  1. Insurance Information Institute. “Background On: Compulsory Auto/Uninsured Motorists.” Accessed Feb. 19, 2020.

  2. Liberty Mutual. “Cancelling Your Insurance Policy.” Accessed Feb. 19, 2020.

  3. “Can I Cancel My Car Insurance Policy Within 14 Days?” Accessed Feb. 19, 2020.

  4. Nasdaq. “A Minute Past Midnight: Poof! You're Uninsured.” Accessed Feb. 19, 2020.

  5. “Lapse in Coverage: Penalties by State.” Accessed Feb. 19, 2020.