Car insurance is a necessary cost for drivers in most states. It offers financial protection for various types of situations, including accidents or covering medical expenses that result from an accident. But although car insurance is often required, you have the option to cancel your insurance for multiple reasons, including if you want to switch providers.
In this guide, you’ll learn how to cancel your car insurance, plus different scenarios in which canceling your coverage may or may not make sense. You’ll also learn important money-saving tips concerning auto insurance. This will help you make informed decisions with your current coverage and any policies you consider in the future.
When it might make sense to cancel car insurance
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:
Switching car insurance providers
You might want to change car 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 so you can find new insurance coverage with another auto insurer.
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 companies with the best car insurance.
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 in the future, 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. And driving in big cities isn’t for everyone anyway.
Canceling 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 car insurance coverage shouldn’t be an issue.
When it probably doesn’t make sense to cancel car insurance
In some cases, it likely wouldn’t make sense to cancel your car insurance. Here are a few common scenarios where you might want to consider all the details before canceling an auto insurance policy:
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.
Traveling away from home
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. Because if you won’t be around to drive your vehicle, what’s the point of having insurance on it?
In some cases, it might make sense to cancel your insurance, especially if you’re going to be gone for a long time. And if you’re selling your vehicle, it’s a no-brainer. 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.
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 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. For example, comprehensive insurance could help cover damages from fire, falling objects, or a natural disaster. But if you aren’t worried about these things and know the car is going into storage for a while, it might make sense to cancel its car insurance policy.
How to cancel car insurance
Canceling your car insurance doesn’t have to be complicated. Here are three simple steps to get started:
1. Review your current policy
Before you cancel your car insurance, it’s essential to review your current policy. If you’re switching insurance providers, you’ll likely want to understand your current coverage, including the types of coverage you have and your insurance limits. This understanding can help ensure 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, it’s time to 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 some information in case you want to negotiate your rate. Another result might be that your provider resolves any concerns you’re having about your existing policy.
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 might be 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, the effective date of your cancellation, and your signature. This type of cancellation request is likely more of a hassle than simply making a phone call, but unfortunately, it’s what you have to do in certain situations.
5 tips for saving money on car insurance
If you decide not to cancel your coverage just yet, you still have options to save. To help save money on car insurance, consider these tips:
- Adjust your coverage needs. How much coverage are you paying for? One way to lower your monthly rates is to adjust your coverage limits or the types of car insurance you have. For example, removing comprehensive coverage from your policy could help decrease your bill.
- Choose higher deductibles. Part of adjusting your coverage could include changing your car insurance deductible. A higher deductible could result in lower car insurance premiums, whereas a lower deductible could result in higher premiums.
- Consider a bundle. Many insurance providers offer different types of insurance products, which could include car insurance, homeowners or renters insurance, and life insurance. If you bundle some of these policies with the same insurer, your provider might provide a discount.
- Search for other discounts. In addition to bundling discounts, you might also qualify for other discounts from your current car insurance provider. This could include discounts for being a good driver, good student, military member, federal employee, and more. Check with your provider to see what discounts are available.
- Research other providers. Even if you don’t want to cancel your old policy, it could make sense to research car insurance rates from new insurers. This could help you negotiate a better rate with your current provider if other auto insurance companies offer lower prices.
Can you cancel your car insurance if you pay monthly?
Most car insurance providers allow you to cancel your policy at any time, whether you pay monthly or in full for the policy term. But it’s best to check if your provider charges a cancellation fee before deciding whether you want to cancel your coverage.
Does it cost money to cancel car insurance?
Whether you have car insurance cancellation fees depends on your car insurance provider. In most cases, major insurance providers don’t have cancellation fees and will give you a refund for any unused time remaining on your policy. But it’s worth it to check and see whether your provider will charge you anything extra for canceling.
Can you get a refund if you cancel car insurance?
Many car insurance providers offer refunds if you’ve prepaid for coverage and then cancel before your coverage expires. In most cases, you would receive a refund that's equal to your unused premiums for the remainder of your policy.
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 make sense.
Be sure to review your current situation and consider what alternatives you might have, especially if you’re looking for ways to save 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.