You can cancel your insurance policy quite easily. Some companies require nothing more than a phone call, while some require a written cancellation notice. If switching companies, the new company can sometimes notify your old provider with a written cancellation notice. It is important to follow the law in your state regarding insurance requirements to avoid unnecessary fees or license suspension.
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Call your state's Department of Motor Vehicles (DMV) before cancelling you insurance policy to ensure that you are following all laws and DMV requirements. If you are simply cancelling your insurance and taking your car off the road or selling it, you are often required to return the plates immediately. Your agent may share this information with you, or may not--it is your responsibility to follow your state laws.
If you know the date you want to cease your insurance coverage with your current company, call and ask for instructions. Often, the company wants a written cancellation notice stating your date of requested cancellation along with your policy number, name and address. You can drop this cancellation request off with your local agent. If you are purchasing a new policy, your new policy holder may do this for you, so inquire. Some insurance companies, depending on your state, allow for verbal cancellation.
If you are switching insurance companies, you should see no lapse or lack of continuous coverage problems as long as your new policy is in force before the old one is cancelled. You may suffer financial consequences if you have no policy in place. Some states require that a licensed driver remain insured at all time, so check with your DMV. Your new policy holder will notify DMV that you have an insurance policy in place to avoid unnecessary repercussions.
An insurance lapse is taken very seriously in all states. If you are cancelling your current policy, you must notify the company so that your "lapse" is not reported to the DMV. A lapse in insurance on your record results in higher insurance premiums and can lead to a license suspension if plates are not returned or you live in a state that requires all licensed drivers to have a personal insurance policy. In some states, a lapse of insurance results in the return of your plates and the inability to reapply for 30 days, or even a license suspension.
Refunds and Fees
If you returned your plates or started a new policy before cancelling your old policy, you may receive money back. Your prior agent can back date your policy cancellation date if you can provide proof of overlapping coverage or plate surrender. Save your receipt for your plate surrender for this reason. Ask your insurance provider for instructions. Some insurance companies charge a cancellation fee. Review all of your paperwork that was given or mailed to you when you instated your policy. You may not have noted this at the time, but any fees are listed in your paperwork, if applicable.
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