How do I cancel my car insurance policy?

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Here's what you need to know...
  • You should call your current insurance policy to ask about fees or penalties for early cancellation
  • You must buy new auto insurance before cancelling to avoid having a gap in coverage, which carries harsh legal penalties
  • Shopping around online will help guarantee you get the most coverage at the best price from a new company
  • Waiting until your policy expires is a better option if you don’t want to pay cancellation fees
  • If you can’t afford your current auto insurance, research discounts and see which ones your company offers

It is always best to be cautious when you cancel your current car insurance policy, especially if you still own a vehicle that you are driving. If you cancel your current car insurance without having a new valid policy, you could create a gap in your insurance coverage.

While not having car insurance for a few days may not seem like a big deal, it could lead to some undesirable consequences, like higher future premiums and being declared a high-risk driver. Therefore, before you cancel your current car insurance policy, you should find and purchase a new policy with help from a comparison tool.

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Determine When Your Current Car Insurance Policy Ends

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Car insurance companies cannot stop you from canceling your car insurance policy at any time. However, it may be to your benefit to call your current insurance company and ask them when your current policy expires. This will give you the opportunity to ask if there are any fines or penalties for canceling your current policy early.

If your insurance agent tells you that there is a fee or penalty for canceling your car insurance early, you may want to wait until closer to your policy’s end date before buying a new car insurance policy.

If there is no fee or penalty, you can cancel your old policy as soon as you purchase a new policy.

Purchase a New Policy Before You Cancel Your Old Car Insurance

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If you still plan on owning a car or driving, you will need to purchase a new car insurance policy before you cancel your old policy. This is because gaps in your insurance coverage can result in significant fees and penalties, and if you leave a significant gap in your car insurance coverage, you could be labeled as a high-risk driver, which could double or even triple your rates.

You could even be subjected to have your license, car registration, and plates suspended. This is because your insurance carrier is required to notify the DMV in your state when your car insurance coverage ends. This means that before you cancel or let your current coverage expire, you should find a new policy and purchase it.

If You Do Not Plan on Getting a New Car Insurance Policy

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If you do not plan to get a new car insurance policy or you have sold your vehicle and do not plan on buying another vehicle for several months or at all, you need to return your plates to your local DMV. The exact procedure varies from state to state.

For example, if you sold your car, put it in storage or it will be in a repair shop for an extended period of time, usually more than two months, and live in the state of Pennsylvania, the state requires that you turn in your license plate, sticker, and registration card to the PA Bureau of Motor Vehicles. Failure to turn in your license plate, registration and sticker could result in the DMV marking you as having a lapse in your insurance coverage.

Making Sure Your New Insurance Policy Is Valid

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Before you cancel your old insurance policy, you will need to purchase a new policy and ensure that it is valid. This can be accomplished by using a comparison tool to vet all the available car insurance policies in your area that meet your needs.

Once you’ve reviewed all of the available car insurance policies and chosen one, you will need to purchase it online and print all the information for the policy as well as your temporary insurance cards. Next, you will need to double-check the start date for the policy. This can be accomplished by calling your new agent or reviewing your new policy via your insurance carrier’s online portal.

After verifying that your new insurance policy is valid and active, you can safely call your old insurance company and cancel the policy. However, make sure that you that you follow all the cancellation requirements of your old carrier. Some require a phone call and signed paperwork stating that you are canceling your policy.

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