Things You Need to Know about Car Insurance Cancellation

Many car owners at some point in their lives have to deal with car insurance cancellation. This process is quite straightforward and shouldn’t be overcomplicated. However, some folks worry considerably when faced with this idea because they don’t have sufficient knowledge about the car insurance cancellation process.

In this blog post, let’s find out the important things that you need to know about car insurance cancellation. If you’re considering calling your car insurance policy off, make sure to read this article.

Can You Cancel a Cancel Insurance Policy?

Can a car insurance policy be cancelled? Yes, it’s possible to cancel your car insurance policy. Regardless of the amount you’ve already paid or the policy’s maturity date, you can cancel your car insurance. You just need to contact your car insurance provider to begin the cancellation process.

Two of the ways to contact your car insurance provider are via phone call or in writing. You can also visit the website of the provider if they have a website. Typically, it’s advised that you write a request after you’ve talked with your provider via phone.

What Happens When You Cancel During the Cooling-Off Period?

The cooling-off period of a car insurance policy is the time frame of around 14 or 30 days during which you can request for cancellation of your car insurance for any reason. By law, a policyholder making a car insurance cancellation request during this period will compel the provider to accept the request and give a refund to the holder.

Depending on the agreement, a fee may be charged to the policyholder when he/she cancels the policy while it’s active. Moreover, there may be charges for processing and administration costs related to the car insurance cancellation.

What Happens When You Cancel It After the Cooling-Off Period?

Canceling your car insurance policy after the cooling-off period requires you to state a valid reason for such action. For example, you can declare the automobile as SORN (Statutory Off Road Notification), or you’re going to sell the insured car, or whatever valid reasons applicable to the policy’s terms and conditions.

The car insurance provider is also required to refund the holder of the car insurance policy. The former may provide a refund on a pro-rata basis minus the costs of processing and administration.

Typically, it’s not advisable to cancel your car insurance policy after the cooling-off period because you’ll have to pay a significant amount on processing and administration costs. Moreover, there’s the possibility of not getting a refund for any additional coverage in your policy.

Is it Possible to Cancel a Policy after Making an Insurance Claim?

Yes, you can cancel a car insurance policy after you’ve made an insurance claim. However, you’ll receive little in the refund as the insurance company will deduct the outstanding amount for the insurance claim.

Disputing the Costs of Car Insurance Cancellation

While you can make a legal dispute regarding the costs of a car insurance policy cancellation, it’s crucial to be wary before making such a move. It’s because car insurance providers have qualified attorneys and most of their insurance policies were drafted with the assistance of these lawyers.

If they have these qualified lawyers, chances are the costs related to the insurance policy cancellation are stated in the terms and conditions. So, you should read carefully the policy papers and the terms and conditions, and go through any communication between you and the insurance company before you make any dispute over the costs of the cancellation.

If any issues can be settled through amicable negotiation with the car insurance company, it will be much better than raising a legal dispute. However, if you think you’re on the right side and a negotiation won’t work out, you can go with the latter approach.

Transferring the Policy from an Old Car to a New Car

Many car insurance policyholders often ask whether it’s okay to transfer the policy to a new car from an old car. What are the conditions of such transfer?

Again, the answers to these questions will depend on the agreement between you and the lender. It’s common for insurance companies to allow the transfer of insurance policies from an old car to a new car. However, you need to be aware of the possibility of the increase or decrease of your insurance premium when transferring the policy to a new car.

A replacement car that’s more expensive or riskier may cause your premium to increase. A less expensive or safer car, on the other hand, may cause your premium to go down. It largely depends on the risk profile of the new car.

Takeaway

Do your research if you want to cancel the insurance policy on your car. You also need to go through the terms and conditions of the policy to ensure that you’re at an advantage before making a cancellation request. Read the guide above for that purpose.