How To Cancel Car Insurance + When To Consider It

Car insurance is a necessary cost for drivers in most states. It offers protection for accidents and incidents you can't plan for to decrease your financial risk. But although car insurance is often required, you may decide to cancel your policy for different reasons, including switching insurance companies.

In this guide, we'll go over how to cancel your car insurance, plus how to know if cancelling your auto insurance policy makes sense.

How to cancel car insurance

Here are three simple steps to cancelling the insurance policy for your vehicle.

1. Review your current policy

Before you cancel anything, review your current policy. If you're switching insurance providers, make sure you understand your current coverage, including the types of protection you have and your insurance limits. For example, do you just have minimum liability coverage, or do you pay more for full coverage? When you know what you're getting rid of, you can make sure you get the same amount of coverage on your new policy.

In addition, your current policy might have cancellation fees. If you review your policy contract or talk with your provider, you'll be able to see what the cancellation terms are and whether you would have to pay any fees.

2. Call your auto insurance provider

If you're set on canceling your current policy, call your auto insurance provider and ask what you need to do to cancel. They might try to convince you to stay, but you should be polite and firm in your responses that you want to cancel.

If you're unsure whether you want to cancel, calling your insurer could still make sense. You might have issues with how much you're paying or with a bad experience you've had. In these cases, you have the opportunity to talk with your provider and hopefully address your concerns.

One result of this type of call could be getting a lower rate. But you might want to compare rates from other providers before you call an insurance agent. That way, you'll have leverage to negotiate.

3. Follow the policy cancellation process

Your insurer should have provided the next steps for cancellation when you contacted them. Often, it won't be anything more than talking to a customer service agent and having them cancel your policy.

Remember that you might have to provide some information, such as your policy number, to go through the cancellation process. You should also be able to select your cancellation date, which is important if you're switching providers and don't want a lapse in coverage.

But not every insurance provider has the same cancellation process. In some cases, you might have to send in a cancellation letter with your policy number, your intended cancellation date, and your signature. This type of cancellation request is a little bit more of a hassle.

What happens when you cancel your car insurance?

When you cancel your car insurance, you might receive a policy cancellation notice automatically within a few business days. If you don't, you can ask for one to keep with your records.

Once your policy is cancelled, you will no longer have coverage for your vehicle with that particular insurance company. This is why it's so important to make sure you have other coverage set up and ready to go before you cancel. However, you do not need to wait until your renewal date to cancel.

When you should cancel your car insurance policy

Canceling your car insurance can make sense in loads of scenarios. Here are a few situations in which you might consider canceling an insurance policy:

When switching insurance companies

You might want to change auto insurance providers for various reasons, including saving money on a policy or because you haven't had the best experience with your current insurer. Whatever the reason, it makes sense to cancel your current coverage to take advantage of better offers with other insurance companies.

However, it's best to make sure you don't have a lapse in coverage while making the switch because your rates could increase. It's also important to compare different car insurance companies to see which options would be the best fit. Check out our list of the best companies for car insurance.

When you have no plans to drive

If you have no plans to drive in the future, there's little to no need to have car insurance. You might still want coverage if there's a chance you could keep a vehicle and drive it again some day, but if that's not the case, it's likely time to cancel your policy.

This type of scenario might occur if you physically can't drive anymore or you're moving to an area where it may not make sense to have a vehicle. For example, public transportation is good enough in places like London or New York City that you shouldn't need a car to get around. 

To get rid of optional coverages

Most states require a minimum amount of liability insurance for drivers, but you still have the option to buy additional coverage. If you end up buying more coverage, such as collision insurance, and find that it's too expensive or you don't think you need it, you might want to cancel that specific part of your policy. As long as you still have the required amount of coverage for your state, canceling optional insurance coverage shouldn't be an issue.

When you shouldn't cancel your car insurance policy

In some cases, it likely wouldn't make sense to cancel your auto  insurance. Here are a few common scenarios when we would recommend against cancelling.

If you're driving less often

If you don't drive often or you know you'll be driving less in the future, it might be tempting to cancel your car insurance. After all, auto insurance can be expensive, and it might not seem like it makes sense to pay money for something you don't appear to get much value from. An example scenario would be if you're working from home and no longer have to commute to an office. 

But if you ever plan on driving a car at all, it's best to have car insurance. It's likely illegal in your state to drive without car insurance, no matter how little you use your vehicle. In this type of situation, consider usage-based insurance or adjusting your coverage to lower your car insurance premium.

When you're traveling

If you're often away on trips or know you're going to be traveling for an extended period, you might consider canceling your car insurance. But even if you're not around to drive your vehicle, we suggest keeping insurance on it.

In some cases, it might make sense to cancel your insurance if you're going on an extended trip, especially if you're going to be gone for several months or years. But being gone for a few weeks or even a month isn't likely a long enough time to warrant canceling your insurance policy. You don't want a lapse in your coverage, and your car could still benefit from certain coverages even when you aren't driving it.

When your car is in storage

Similar to the above point, canceling car insurance on a vehicle you plan to put into storage could make sense, and you might even qualify for lower rates — but it depends on the situation.

It likely wouldn't make sense to cancel if the car won't be in storage for long or if you want to help ensure the vehicle has some financial protection attached to it. If this is the case, we'd recommend a higher deductible before recommending cancelling. 

For example, comprehensive insurance could help cover damages from fire, falling objects, or a natural disaster. 

FAQs

Bottom line

If you want to cancel your car insurance, it's typically not difficult. But consider your situation before deciding to cancel a policy. In some scenarios, it might make sense to cancel, whereas in others, it likely wouldn't.

Be sure to review your current situation and consider what alternatives you might have, especially if you're looking for ways to save money on car insurance. Unless you're loyal to a specific provider, researching new coverage and comparing car insurance quotes is often an effective way to see what's available, and at what prices.