If you’ve decided to switch car insurance companies or drop your car insurance all together, make sure you do it the right way. Simply stopping payments to your previous auto insurance provider will result in cancellation of your auto insurance, and this can mean major hassles for you down the road.
When You Might Cancel Your Car Insurance
There are a few reasons you might be wanting to cancel your car insurance, including:
- You no longer need to own a car
- You’ve donated your car to charity
- Your car is not for street driving
- Your car is off the road for an extended period of time
It may seem like a good idea to cancel your car insurance if you aren’t going to be using your car. But, before you do, read on. If you foresee that you will need to buy car insurance again in the future, you may not want to cancel your coverage completely.
How to Cancel Your Car Insurance
If you do want to proceed with cancellation there are several ways to do it. Sometimes your new insurance company will take care of cancelling your old insurance for you.
If not, you can provide a written notice of cancellation or call the company directly. You generally can’t cancel your insurance online. This is mostly to protect you from fraud and ensure that it is really you wanting to cancel a policy.
You could also visit a local agent, if you use an insurance company that has local offices.
Why You Shouldn’t Completely Drop Your Car Insurance
As we said before, you may want to consider not completely dropping your car insurance, especially if you think you will need it again in the future. This is because insurance companies don’t like to see a gap in auto insurance and may increase your rates when you apply for insurance again
In addition, if you do drive your car and get caught, you will be facing steep fines and penalties for driving without insurance. And if you cause an accident, even in someone else’s car, you may find yourself liable for property damage and personal injuries to others.
Instead of cancelling your car insurance, you might consider dropping your coverage to the absolute minimums. A small amount each month in premiums may save you lots of money down the road.
Don’t Forget Your Refund
If you do cancel your auto insurance and it is before your policy period is up, you will probably have a refund coming your way. Make sure you ask about the final amount due to you and how you will receive it.
Don’t Forget to Tell Your Lienholder that You’ve Switched Companies
If you lease your car or are making payments, your financial servicer probably requires a minimum amount of coverage. Usually this includes carrying comprehensive and collision coverage. While you can’t cancel your insurance altogether in this situation, you can switch insurance companies. Just be sure to let your loan or lease company know that you have switched and not simply cancelled your coverage.
It always a good idea to shop around for car insurance to make sure you are getting the best deal. If you want to find out how much minimum insurance will cost, the InsuranceWins form can match with the best company for your insurance needs.