Auto Insurance Cancellation: Can I Get My Money Back?

If auto insurance cancellation happens to you, there are sure to be many questions running through your mind. Why did this happen, how can I get insurance again, and does the company have to give me my money back may be just a few of the things you wonder about.

Canceling Voluntarily

If you choose to cancel your insurance policy for any reason, then you should be entitled to a full refund of the remaining premium. There will be a deduction from the amount you paid, depending on how long you have been insured. If you have only been insured a short amount of time, then you will get a refund of most of your premium. For example, most premiums cover 6 months of insurance. If you paid $300 for six months and you cancel after 1month, then you will get approximately $250 as a refund. However, you should read your policy closely. There may be fees associated with early cancellations.

Contact Insurer in Writing

In order to cancel a policy, many insurers will require that you send them written notice. This is to cover them and to cover you in the case of any questions in the future. Most states require a driver to have auto insurance, and if you cancel the insurance and have no coverage, then you will be liable in the case of an accident. In order to cover themselves, the insurance company will want a written statement with your signature showing that you cancelled coverage.

If you do cancel coverage, you need to have new insurance in place before you cancel your previous policy. In many states, you will be liable for a penalty and fee for any amount of time that you are not covered. It may take several days or even weeks to receive your policy refund.

Insurance Company Cancellation

There is s difference between you canceling your insurance and the insurance company canceling your coverage. Insurance companies only take the step of canceling coverage during a term if you violate the terms of the insurance agreement in a some serious way.

One of these ways is non-payment of premium. If this is the violation in your case, then you won’t get any money back from the company, clearly. You can avoid cancellation for non-payment by setting up an automatic payment program or by simply paying your premium on time. Many insurance companies offer a grace period for established customers, but are less accommodating to new customers without a track record.

If your policy is canceled for other violations, the circumstances are different. These violations may include a DUI, too many tickets or too many accidents. If a company cancels your insurance due to these kinds of violations, they must send you written notice, and will give you a period of time to search for new coverage, although it may be a short time.

Even under these circumstances, the insurance company will send you a pro-rated refund based on the amount of time left on your policy. Again, this refund will take several weeks to arrive, so don’t count on it as the means to pay your new premium.

Even if the insurance company cancels your car insurance, you are generally entitled to a refund of unused premium. The only exception is if your insurance agreement specifically states that there will be no refunds. You can expect this kind of provision if you have high points on your license, a high number of accidents or a poor payment record.