There are a multitude of reasons that people opt to cancel their insurance policies, whether they have chosen to no longer drive or if they are selling their current vehicle. They may cancel with one carrier in favor of an auto insurance company with better rates, particularly if you’ve moved into another area. Regardless of the reasons, it is vital that you follow the carrier’s guidelines to correctly end the policy.
There are some plans that you can terminate over the phone with a customer support representative while other companies expect there to be a 30-day notice along with a letter of cancellation. The policy that you have with the insurance carrier is deemed as a contract and written letters of cancellation are oftentimes required. When signing on with a carrier, you should familiarize yourself with their termination guidelines prior to purchase.
Auto Insurance Cancellation Letter
Writing a cancellation letter for your insurance carrier is fairly straightforward, but you want to be sure that you include several pieces of key information in order to cancel your business with the carrier in the proper way. It needs to be brief and direct with the following:
- Policyholder name and address
- Carrier name and address
- Policy ID number
- Policy requested cancel date
- Requested refund for premium remaining balance
If you have a specific person(s) that you are in contact with, these names should be on the top. The main paragraph should directly state the request for cancellation of the policy followed by the date that you would like that to take effect and a request for a refund for any amounts that you have overpaid in premiums for which you can ask to be paid out by check. Close the letter with a simple salutation as ‘respectfully’ or something similar and sign regardless of whether or not the letter has been typed. You want to proofread to verify all information is accurate and there are no spelling errors.
Before Sealing Up The Letter
Prior to sending off your cancellation letter to the auto insurance carrier, you want to go over several specific areas:
- Compare the auto insurance carrier’s address on the envelope with correspondence from the carrier so you can be sure it is accurate. The company won’t be held responsible if they do not receive your letter in the mail. The ideal situation would be to send the letter via a shipping method that will offer tracking information. This will allow you to know precisely when it is received.
- The word ‘Cancellations’ should be included in the sender’s address. Some insurance agencies are large corporations with a multitude of departments. This will ensure that the letter is directed to the right area.
- The primary policyholder should be the only signature on the cancellation letter regardless of who is listed as a driver on the policy. The carrier may deny the request if there are multiple signatures or a signature other than the main driver.
- You want to make sure that you have been professional in your tone yet also firm.
- Have two copies of the letter, one for the auto insurance carrier and one for you to keep for your records.
What To Do After Canceling
There are other things you need to take care of once you have canceled your car insurance. You need to get in contact with the state DMV office to let them know of the cancellation. Some states may mandate this. They could require that you turn in the license plates as well as the registration tags.
If your vehicle is financed, you will need to notify the lienholder right away of the change in auto insurance carriers. Finance companies have strict guidelines on financed vehicles needing to have insurance coverage. If they find that there is no insurance on their vehicle, they will most likely ask that you return the car.
Insurance On Your Vehicle
If you plan on driving your car, it is vital that you have insurance coverage. Prior to canceling your auto insurance, you should already have another policy lined out with a new carrier and set to begin. A lapse in auto insurance will stir a whole mess of problems for you such as:
- Driving uninsured fines
- At-fault accident charge leaving you responsible to pay any damages
- Being deemed a high-risk for any future auto insurance policies due to the lapse being recorded on your insurance history which will cause much higher insurance premiums for you
You have a right to cancel your auto insurance policy at any time for whatever reason you deem necessary. The process is quick, easy, and should cause you no repercussions. Just make sure if you’re still intending to drive there is another policy all set up to take over where this one left off.