You must have auto insurance to drive your automobile on public highways legally. But you may question what would happen if you wanted to terminate the coverage. Can you get a car insurance refund in this situation? The good news is that you can get a refund if you discontinue your auto insurance. To do so, though, you must meet specific prerequisites. So come along as we give you all the information in this article.
Can You Get a Refund on Car Insurance?
The insurance provider may refund the remaining amount if you cancel your coverage before the end of the term and pay your payment in advance. Most vehicle insurers will prorate your return based on how many days your previous insurance was in force.
Each state has insurance legislation that dictates how businesses must handle refunds, and the insurance industry is heavily regulated. For instance, in Nebraska, your vehicle insurance company must notify you of any qualified refunds within 15 business days of your cancellation. If you finance your premium through a premium finance firm in several jurisdictions, including Texas, the insurance company may return the unused premium to the finance company rather than you.
Car insurance companies often aren’t legally required to refund you for your money within a specific time. Most insurance policies usually promise a return “within a reasonable timeframe” from the company. When it’s almost time to renew, it’s best to inform your vehicle insurance company that you intend to cancel to avoid any hassles with refunds.
Who is Eligible for a Car Insurance Refund?
Though each policy has extensive terms and conditions, car insurance policies should offer a return facility to anyone who purchases coverage. For example, some insurers might decide not to reimburse the last two months of coverage.
#1. You Decide Not to
For example, because you sold the car, you ought to be able to terminate your insurance.
The time left on your policy and the terms established by the insurer determine how much of a refund you’ll qualify for.
#2. You Altered the Policy
You may be eligible for a refund if you modify your auto insurance coverage to reduce costs—for instance, by moving to a less expensive vehicle to insure.
Once more, this is contingent upon the remaining duration of your policy and the conditions stipulated by the insurer. Make the call to inquire.
#3. Policy Canceled By Insurer
If it is determined that you have violated the terms of the policy, your insurer may terminate it. In this situation, you might be eligible for a refund; however, the amount will rely on the remaining time and the conditions specified by the insurance provider. Additionally, in the future, if you take out a new policy, you will have to disclose that your previous insurance has been terminated.
How to Get Your Auto Insurance Canceled
Cancelling your vehicle insurance is a somewhat straightforward process. The insurance editorial staff at Bankrate, including licensed agents, has compiled a list of best practices to help you streamline the process.
#1. Get a New Policy Before Terminating
You can avoid having a coverage lapse by getting a new auto insurance policy before cancelling your current one. Since driving without insurance is prohibited in most jurisdictions, a delay in coverage may increase your insurance premiums.
#2. Speak with Your Insurance Company
Depending on your carrier’s options, you can call your insurer, contact an agent via the company’s website or mobile app, send in a cancellation request, or visit an agent in person to cancel your current insurance policy.
#3. Request to Talk About Cancellation With an Agent
The conditions for terminating insurance will vary depending on the provider. Certain providers may demand you pay a cancellation charge or offer a 30-day notice before your cancellation date. Speaking with an agent directly helps ensure that you understand the necessary processes.
#4. Reject Your Previous Auto Insurance Policy
After finalising the new policy, contact your previous insurance provider to confirm the cancelling procedure. For their records, you might be required to submit a written request for cancellation. To ensure that you properly cancel the insurance, you need to be aware of the exact process that your insurer follows.
To confirm that you have terminated your policy, ask for a notification of policy cancellation. It makes sense to keep documentation on hand in case you require it.
#5. Choose the Date of Your Cancellation
You can choose a precise cancellation date to provide to your insurance carrier after determining the start date of your new policy. The old policy’s cancellation date should fall on the same day as your new policy’s effective date or earlier. In this manner, your insurance is not void.
You must obtain coverage before the expiration date of your present policy. You run a greater risk of financial and legal trouble if you cancel your auto insurance without obtaining a new one. If you are in an accident, you will be liable for any damages and injuries you cause.
Drove without insurance carries additional penalties, including fines and jail time. Most states mandate that drivers carry liability insurance to drive legally, or they demand that you have the financial means to cover other people’s medical expenses and property damage if you cause an accident.
#5. Evaluate Your Policy for Auto Insurance
Select the precise limits and types of auto insurance you desire from a policy. You could make adjustments or stick with the same levels of coverage as your present insurer.
To assist in safeguarding what can be taken from you in a lawsuit, you should raise the limits on your liability insurance if you recently purchased a home and have more to lose. In addition, liability auto insurance covers any harm or injury you unintentionally cause to others.
Alternatively, you can get comprehensive collision insurance if you just purchased a newer automobile to cover any damage to it. Generally, you must purchase these optional coverages if you financed your purchase. Insurance for collisions covers damage to your vehicle for any reason and damage incurred when you strike an object, such as a fence—comprehensive covers non-crash incidents, including hail, flooding, animal collisions, and theft.
#6. Ask Your Motor Insurance for a Notification of Policy Cancellation
Upon completion, carriers will often issue a notification verifying the official cancellation of your insurance. To ensure you have a written transaction record, you can request a notice from your insurer if you do not receive one.
When to Terminate Your Car Insurance
You might need to cancel your auto insurance for various reasons, so it’s crucial to consider your backup plan in case you need to go without coverage. It’s a good idea for drivers switching carriers to buy a new policy before their current one expires. To ensure that not having coverage won’t put you in danger financially or legally, consider discussing your options with an insurance agent if you are considering a permanent cancellation.
#1. As You Relocate
You must obtain a policy from an auto insurer that provides coverage in your new state if you relocate to a place where your present insurance provider does not offer coverage. To prevent a coverage lapse, make arrangements for the new policy a few weeks before your existing policy expires.
#2. When You Don’t Own a Vehicle
You can terminate your auto insurance if you sell your car and have no intention of buying a new one. Still, waiting until the new owner takes possession and transfers ownership is always a good idea before ending coverage.
#3. When Seeking a Better Offer
To receive a better deal, you can transfer auto insurance companies. Once more, getting new insurance before canceling your old one is a good idea. The ideal time to move insurers is usually when a policy is about to expire. Experts advise starting your search for a new insurance company at least six to eight weeks before the expiration of your current policy.
#4. When You Wish to Cut Back on Coverage
If you own an older car outright, consider removing the comprehensive and optional collision coverage. But be aware of the risks ahead of time. If you cancel comprehensive and collision insurance, you won’t be able to pay for repairs if your car is stolen or damaged, so you should budget accordingly.
When You Should Not Terminate Your Car Insurance
Although you can cancel your auto insurance anytime, you might not always need to. Consider your reasons for no longer needing insurance and devise a plan of action to avoid any legal or premium-related problems before terminating your policy.
#1. When You Intend to Drive
It might not be a good idea to cancel coverage on a car you still intend to drive because you might run the danger of financial risk and legal trouble. Contact a certified insurance agent to learn about the potential consequences of operating a car without insurance.
#2. As You Relocate
Getting new auto coverage is not always necessary when you move. Find out if you may transfer your coverage to the new state before moving by contacting your current auto insurance provider. Moving may result in a change in your rate because location affects premiums in part. You may also need to select a new agent if they operate the local agencies of your present insurance provider.
#3. When You Tie the Knot or Get Divorced
You should hold onto your auto insurance policy if you get married or divorced. You may even receive a discount for getting married, and you can add a new spouse to your existing auto policy. If the same insurance provider covers you and your new husband, you can also be eligible for a multi-policy discount. Usually, when you get divorced, you can have your ex-spouse’s name removed from your current policy rather than having it cancelled altogether.
#4. When You are Momentarily not Operating a Vehicle
Certain auto insurance providers permit you to suspend your policy if you take a long hiatus from driving. Check the regulations in your state, though. In certain jurisdictions, you can request a suspension by writing; in others, you need to call your agent. Your insurance provider may consider this break a lapse in coverage if you terminate your policy rather than suspend it, and your insurance price may increase.
#5. When You Have a High Premium
You do not necessarily have to revoke your insurance because of a high premium. The majority of vehicle insurers provide a variety of discounts. If you take a virtual driving course, drive carefully, or report any safety features on your vehicle, like airbags or anti-lock brakes, you might be eligible for a discount. Speak with your agent to learn more about how discounts can reduce your rate and which ones you could be qualified for but aren’t currently using.
What does refund insurance mean?
When a policy is cancelled before it expires, overpays for premiums, or the policy terms are altered, the insurance company will reimburse a portion of the premium the policyholder paid. This is known as an insurance refund.
What Happens if I Cancel My Car Insurance?
Your insurer might return a prorated portion of your most recent payment if there is still time left on your coverage. However, some insurers also demand a cancellation fee if you cancel your coverage early.
How Long Does it Take to Get a Refund From Insurance?
You should anticipate waiting between two and four weeks to get your insurance company’s reimbursement of premiums. Let’s be honest. Once you’ve urged someone to get over it, the typical person (or business, for that matter) is not in a horrible rush to return your money.
Is it Bad to Cancel Car Insurance Early?
Remember that your record will have an insurance gap if you cancel your auto insurance without getting new coverage. Even if your cancellation was due to your car being cancelled, having an insurance gap may result in higher premiums when you repurchase coverage later on.
Does Geico Refund if You Cancel?
If you decide to cancel your Geico policy, you will be refunded the portion of your premiums you did not utilize if you paid in advance. Contact Geico to find out how much you’ll be receiving back and when.
How is Insurance Refund Calculated?
Policy Adjustments: You can be qualified for reimbursement for the premium difference if you modify your policy, which results in a lower premium, such as lowering the coverage limit or eliminating a policy rider. Generally, based on the time left on the policy, this reimbursement is computed pro rata.
It is always possible to revoke auto insurance, even if you bought a 12-month policy. Ensure you follow the proper procedures to avoid a coverage lapse if you cancel your insurance.
You can cancel your auto insurance for various reasons, such as discovering more affordable rates with another provider, relocating to a different state, or even having a bad encounter with your present provider.
- HOW TO CANCEL CAR INSURANCE: Explained
- MOTORCYCLE INSURANCE PROGRESSIVE: Coverage, Cost & More.
- SPECIAL EVENT INSURANCE: Coverage, Cost & Best Options
- WEDDING INSURANCE: WHY YOU SHOULD GET ONE & HOW TO
- Three Insurance: 2023 Review, Cost, Coverage & Competitors