Having car insurance is mandatory if the insured wishes to legally operate his/her vehicle on public highways. However, policyholders may want to cancel their car insurance policy for various reasons. For instance, they might no longer be the car’s owner, relocate to a different state, or perhaps change insurance providers to save money.
If that’s the case with you, you can also change your car insurance coverage with a different insurer after cancelling your existing policy with the former one. This post will make you aware of everything you need to know about cancelling your car insurance policy.
Process Of Cancelling Car Insurance
There isn’t a common procedure for cancelling a car insurance policy because it can vary between insurance providers. Here is a simple and fundamental process that will make it easier for the policyholders to comprehend what needs to be done to cancel their car insurance.
- The policyholders must first let their insurer know that they want to have their car insurance coverage terminated. They can either call the insurance provider or perhaps send an email to the relevant party. For the cancellation process, they can alternatively go straight to the insurance company’s official website.
- The insurance company will then request some documentation in accordance with the grounds for cancellation. For instance, if the policyholder states that he is cancelling the coverage because he is selling his car, the insurance provider will request a Sale Deed. And in case the insured is switching the insurer, the company will request a new policy.
- The cancellation process will begin after the required paperwork has been submitted. The cancellation process could take a variety of times, depending on the insurer. The insured will also get the No Claim Bonus certificate, if applicable.
What Will Happen Upon Cancellation Of Car Insurance Policy?
When the policyholder terminates his car insurance coverage, the insurer will probably let the state know that he and his car are no longer covered. The state’s department of motor vehicles may request evidence that the policyholder has either sold the vehicle or has alternative insurance because it is illegal to drive without insurance in almost every state. The insured’s registration and driver’s licence may be suspended by the state if he doesn’t react.
- The insurer may give a prorated refund of the most recent premium the insured has paid if there is still time on the policy. However, if the policyholder wants to cancel the coverage early, some insurers also impose a cost.
- If the policyholders are switching insurance providers, they need to be careful to have the new policy in place before cancelling the old one, and be sure to inform the new insurer of the precise date that their current policy will expire. In many states, it’s against the law and subject to fines to have lapses in auto insurance.
- Policyholders also need to remember that they will normally need to provide proof of insurance when they register their vehicle in a new state if they are cancelling their policy because they are relocating to a new state.
Prominent Reasons For Car Insurance Cancellation
There are times when the policyholder needs to terminate his car insurance policy for a number of reasons. Following is a list of some of them:
- Selling Car: It is crucial that the policyholder cancels his current car insurance policy and transfers ownership when he intends to sell his car to another person.
- Dissatisfied With Current Insurer: The insured can decide to terminate his car insurance with the present insurer if he subsequently realizes the benefits are insufficient or if his claims are being processed too slowly.
- Replacing Car Model: It is best for the insured to terminate his current car insurance policy and find a new one if he intends to replace his vehicle with a brand-new one.
- If Car Is Stolen: The insured must terminate his policy if his vehicle is stolen and he doesn’t have comprehensive coverage. He can file a claim if he has comprehensive coverage, and the insurance provider will cover the IDV (Insured Declared Value).
Things To Consider Before Cancelling Car Insurance Policy
It’s important to take caution while deciding to cancel a car insurance policy. There are many things to think about, and some of them could significantly affect your financial situation. Here’s a list of factors that the insured should consider before cancelling his car insurance policy!
- Before terminating the previous car insurance, it is crucial to note that the new policy must first be in effect.
- The insured should also make sure to request his previous insurance provider to cancel the policy rather than letting it do so by failing to make a payment. In addition to being good-mannered, it will help reduce the headache associated with grace periods, refunds, and additional paperwork.
- If the policyholder decides to cancel the coverage, it is important to notify the insurer right away. Insurance companies want at least 15 days’ notice before cancellation is implemented.
- Only if the policyholders cancel the coverage within the insurance company’s 15–30 days free look period are they eligible for a return.
