Can You Cancel Car Insurance Anytime?

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If you want to switch insurance companies, are moving to a new state, or are just tired of your insurance agent, you might be considering canceling your car insurance. Yes, you can, but It's not as simple as notifying the company you no longer want to pay for their coverage.

It's unadvisable to go without auto insurance for any period—unless you’re moving to a state that doesn’t require coverage. Knowing when you can cancel your policy will ensure your car is covered for the right amount of time and help you avoid any unnecessary fees.

The Best Time to Cancel Car Insurance

If you choose to switch insurance companies, the best time to cancel your car insurance is after you have another policy set in place.

You can switch insurance companies at any time, but renewal time is the best time.

Go through the entire process of purchasing another car insurance policy and make your first payment. Only then should you cancel your existing policy. This ensures you go without any coverage gap.

Avoid Penalty When You Cancel Car Insurance

Technically, you can cancel your car insurance coverage anytime—but if you want to avoid extra costs, you’ll need to do some advance 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.

When You 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.

Dangers of Canceling Car Insurance

Just because you can cancel your car insurance at any time does not mean you should. Going without car insurance can put you into a high risk pool in many states 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're caught driving without it. Penalties vary by state but can make going without insurance an expensive choice.

Alternatives to Canceling Car Insurance

Here are some options that can save you money, yet preserve your insurance status:

  • Reduce Coverage: Lower your liability limits to your state’s minimum coverage requirement. If you are not actively driving a vehicle but are concerned with physical damage while the vehicle is sitting idle, comprehensive coverage will protect it.
  • Purchase a Non-Owner’s Policy: While you are without a vehicle, a non-owner policy will protect you against a liability claim that could potentially extend above and beyond the car owner’s policy.

Insurance coverage needs will change over time depending on the age of your car and factors such as the type of neighborhood you live in. Comparison-shopping the available rates every year or so can give you the peace of mind that you are paying a fair price for the type of coverage you need.

Article Sources

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

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

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

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

  5. CarInsurance.com. “Lapse in Coverage: Penalties by State.” Accessed April 19, 2020.