Driven Away: How to Cancel Your Insurance Policy

May 1, 2013

Insurance

Car insurance is supposed to make your life easier. It protects you if you get into an accident, paying for the bulk or repairs or even providing a new vehicle. Unfortunately, for some people car insurance itself is an exorbitant cost, or just a general pain in the backside.

Whether dissatisfaction with price, customer service, or some other factor is your vice, if are having problems with your insurance provider, you may want to consider switching. Rest assured that doing so is easier than it seems.

Reasons for Canceling

There are many reasons why people may decide they can’t stand another minute with their car insurance provider. The top three are:

  • Price: Many times, auto insurers will lure customers in with attractive prices, then increase said prices after a time. Customers can easily comparison shop online to figure out if they are paying too much; if that is indeed the case, and there is a lot of money to be saved, an immediate switch may be in order.
  • Claims: If you get into an accident and your insurance company fails to deliver, the bad experience may be enough to send you packing. This is doubly true if representatives are rude or ignorant during your ordeal. To avoid a repeat experience, choose a new insurer that has a history of customer satisfaction.
  • Coverage: Either experience or a glance at your contract can tell you if you have adequate coverage. You can either switch to a new plan with your current provider or find an entirely new provider if this is the case.

Canceling is No Big Deal

Since typically car insurance is renewed every six months, you can simply call your provider near the turnover date and tell them not to renew your policy. Even if you decide to cancel mid-cycle, most car insurance companies will let you go without a cancellation fee and reimburse you a prorated amount. There are those who, however, will charge some fees. For example, here are the policies for the top five auto insurance companies in the United States.

  1. State Farm: Pro-rated refund, no cancellation fee
  2. Allstate: Pro-rated refund, no cancellation fee
  3. Progressive: Pro-rated refund, no cancellation fee
  4. National: Pro-rated refund, no cancellation fee
  5. Farmers: 10% remaining premium, $30 penalty for accounts owing $300 or more

Of the top five, only Farmers charges a fee for canceling.

If you are a new policy holder, you are even more in luck. Most insurance policies have a two-week grace period. If you cancel within that grace period, you should be able to receive a full refund.

Is it Worth Canceling?

Because car insurance policies renew relatively frequently, you may be better off waiting until the end of your current cycle to cancel. Further, if you want to cancel in order to save money, a quick phone call and a declaration of your intentions may be enough to convince your current provider to drive down your rates.

You should also note that, while discount car insurance companies like Progressive do offer lower rates than the largest companies, they also provide decidedly worse coverage. When it comes to insurance, staying with a reputable company may pay off in time.

Before You Cancel

Even if you are sick and tired of your current BMW car insurance company, don’t pick up the phone and tell your provider to get lost unless you have another policy. Driving without car insurance is illegal and extremely financially dangerous – if something happens, you will be completely liable. Also, to make new insurance even more tempting, some companies will pay any cancellation fees you may incur and help you arrange the switch. Phoning a new provider first may make your transition that much smoother.

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About the author

Brandon Hunt