If I cancel my car insurance, do I get any money back?

If you cancel your car insurance, you will get your money back if you paid your annual premium in full and canceled your insurance before the policy term ended. If you have monthly premiums and cancel your auto insurance, you may get your money back if you cancel early enough in the month. Whether you get money back after canceling your car insurance policy is at the discretion of your insurance provider and based on the terms of your policy.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Oct 29, 2020

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Things to know...

  • Auto insurance premiums are usually prepaid, so you may receive a partial refund if you cancel your coverage
  • Drivers are required to maintain a minimum amount of car insurance at all times
  • You may be able to save money on your auto insurance premium by shopping around

There are many reasons why you may be thinking about canceling your current auto insurance policy. Auto insurance can be expensive, and you may not think that you can afford to pay your premium any longer.

Perhaps you want to change providers because of an issue that has developed between you and your current auto insurance company. Regardless of why you want to cancel your current coverage, you may be wondering if you will receive a refund on your premium through this process.

Learn more about auto insurance below and make sure to use our free insurance comparison tool above to compare the best rates for FREE!

Understand the Need for Car Insurance


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Before you cancel your policy, you should be aware that car insurance is legally required in most states. You should not drive your car even once without being properly insured. State requirements for car insurance vary, but most states require drivers to have a minimum level of liability coverage. Because liability auto insurance only pays for the expenses of others if you cause an accident, you may prefer to opt for more substantial coverage, such as through a comprehensive or collision policy.

If you are caught driving without the required coverage, you may face legal penalties. These vary by state and by the number of previous incidents. However, you could be fined, or you may even lose your license in some cases.

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What Happens When You Cancel Your Coverage

When you pay your premium for auto insurance, you typically prepay for your coverage. Depending on how you have established payment, you may have pre-paid for a month of coverage, several months, or the entire year. Because of this, you generally will receive a refund on your coverage. This may be a partial refund that only includes payment for the days that you are not insured by the coverage.

Each provider has a different process for refunding a prepaid premium. For example, some may send you a check in the mail several weeks after the policy is canceled. Others may direct deposit the funds into your account within a few days.

When You Cancel Your Current Policy

Before you make the decision to cancel your current auto insurance coverage, you should be aware that you will not have the financial protection that insurance provides. If you cause a car accident, you may be required to pay for all repair costs, property damage, and medical bills for the other party.

You may also have to pay for your own related expenses. A single accident may cost you several thousand dollars or more in out-of-pocket expenses.

You also face the legal ramifications for not being properly insured. Some states actively compare licensed drivers by lists provided by insurance companies to find drivers who are not properly insured. This means that you do not necessarily need to get pulled over by law enforcement to get in trouble for failing to have the proper auto insurance in place.

The Need to Shop for New Coverage

As you can see, it is not wise to be uninsured for even a single day. If you plan to cancel your current auto insurance coverage, it is best to find a new policy and to bind coverage before you execute your cancellation request. There are many ways to purchase insurance, and this includes directly from a company or through an auto insurance broker.

When you shop for new auto insurance coverage, you or your insurance broker must provide each provider with similar basic details about you, your driving history, your car, and more. It is wise to compare at least three or four different quotes from reputable auto insurance providers before you decide which policy to purchase. Because this can take a considerable amount of time to do over the phone, some people prefer to request online quotes.

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How to Choose a New Provider

After you receive a few online quotes for auto insurance rates, you may be inclined to move forward with the lowest rate quote you can find. The need to save money on coverage is common, but remember that insurance also needs to be functional for your needs. When your insurer is not financially strong or when your insurer has a reputation for not processing claims fairly, this can be detrimental.

Therefore, it is wise to focus your attention on the financial strength of the provider. You can search through the A.M. Best website for more information about this. You also should read through consumer reviews online to learn about others’ experiences with a provider before you decide which quote to move forward with.

If You Need to Save Money on Auto Insurance


There are many factors that can affect the cost of your insurance. If you are not happy with your current quotes, you may be wondering how you can save money on the coverage you need. By learning more about these factors and available discounts, you may be able to find a more affordable policy.

Everything from the type of coverage you select to the limits you assign to each coverage type can affect policy rates. In addition, factors such as your age, gender, driving history, address or zip code, vehicle details, and more will also affect your premium rate. While you cannot change some of these factors, others are well within your control.

For example, you can improve your driving history or record to save money on auto insurance. You can also move to a zip code that has more affordable rates, or you can trade in your vehicle to a model that is more affordable to insure. Another idea is to use auto insurance discounts strategically.

Each provider has different types of discounts available as well as various requirements to qualify for those discounts. For example, you can find auto insurance discounts for low mileage, safe drivers, students, safety equipment on your car, and more. Because these discounts vary substantially, it can be helpful to look for providers that have discounts that you may qualify for if you want to save money.

Adjusting your deductible and setting up automated payments are other great ways to save money on your coverage.

Remember that opting for a higher deductible generally yields lower premium payments. However, the deductible should be reasonable and affordable for you to pay as needed.

If you are concerned about your current cost of insurance, you may be inclined to cancel your policy immediately. However, it is best to shop around and compare rates before you cancel your policy and get a refund on your prepaid premium.

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