So, you want to cancel your auto insurance. Perhaps you've found a better deal with another company, or you've found a broker that you like who can shop around for you. You may have plans to donate your car or to take it off the road for good. But how do you cancel a policy you no longer want?
Insurance documents are teeming with legal jargon, and that can make it difficult to discern what you need to do when you want out. Here are some tips about what to do (and what not to do) when you're canceling your policy.
Do not stop paying your premiums without notifying your insurer.
A surefire way to get your policy canceled is to stop paying your premiums, but that's not the best way to handle things. In fact, cancelation for nonpayment of premiums can haunt you for years to come when you look for a new policy. If you do not notify your insurer, they'll continue to send bills until the account becomes delinquent. Non-payment will then show up on your credit reports and will stay there for years.
Because nonpaying customers are viewed as high-risk consumers, your insurance rates will be higher. You may even be required to pay a larger portion of your premium in advance. This can be a big blow to your budget if you're used to paying your premiums on a month-to-month basis instead of quarterly, every six months, or once a year.
Call your agent or broker.
If you want the matter taken care of immediately, call your agent or insurance broker. He or she may be able to find you a better policy at a lower price or offer a discount to give you a lower rate on your current policy, which may change your mind. If not, at least you'll know that the matter is taken care of immediately. Your agent or broker may mail you a form to sign to indicate a formal request to end coverage.
Do not leave a voicemail if you're unable to reach your agent or broker. They cannot cancel policies by voicemail request because there's no way to verify that the caller is the policy owner. You'll have to speak to your representative live over the phone to get your policy canceled.
Put it in writing.
Putting your cancelation request in writing is the best way to cancel a policy. It creates a paper trail for both you and your broker and leaves no question as to what your intent is. When putting your request in writing, you'll need to include your name and the names of other insured persons, policy number, the name of the insurance company and the date that you want the cancelation to be effective. All policyholders will need to sign the letter to give their consent to cancel the policy.
Ask for a refund.
If you pay your auto insurance on a quarterly, biannual or yearly basis, you may be entitled to a refund for the weeks or months left on a policy. By going through the appropriate channels such as calling or making a written request for cancelation of your policy, you'll be eligible for your refund. However, those who let their policies expire due to nonpayment will likely not be eligible for refunds.
Remember, auto insurance is required in most provinces, so you must have a new policy in place before you cancel your current policy. If you are caught without auto insurance, you may receive a fine, which can vary from $5,000 to $50,000. You may also get your license suspended and your vehicle impounded. This, too, can cause your premiums to increase in the future because you'll be deemed a high-risk driver.
Canceling your auto insurance policy is easy, but you have to do it right. Put your request in writing, go to sites or speak to your broker live over the phone. If you have any questions about the status of your policy, follow up to make sure that your request was received and handled appropriately.