When you cancel your car insurance or your car insurance company cancels your insurance for you, you need to get a new policy as soon as possible. Should you decide that you don’t want to get a new policy, you will lose your ability to be able to drive a vehicle. There are some circumstances in which you might want to consider canceling your insurance policy. However, in order to avoid a lapse in insurance coverage, you need to make sure that you have a policy with a different insurance company before you do so. Otherwise, you risk not being able to get car insurance coverage from a different insurance provider.

Does Canceling My Insurance Affect My Car Insurance Rates?

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Yes, canceling your insurance policy can influence your car insurance rates. It can certainly cause an increase in your car insurance premiums. Car insurance companies want their clients to pay them for the full length of the contracts that they sign. Previous proof of a client leaving another insurance company makes it riskier for an insurance company to create a contract with that client. Although they can charge them a cancellation rate for leaving, it is a waste of an insurance company’s time and money to develop a new policy with a client only to have it canceled on them shortly afterward.

Do Insurance Companies Have the Right to Charge Me a Cancellation Fee?

Yes, insurance companies do have the right to charge a cancellation fee. Usually, there is a grace period for canceling your car insurance policy. During this grace period, you can cancel your car insurance policy without having to pay a cancellation fee. Once this grace period is over, you no longer are allowed to cancel your car insurance policy without paying a cancellation fee. The cancellation fee you pay can range depending on the insurance company that you’re dealing with.

Do I Have To Pay My Insurance Company the Money I Owe If They Cancel My Car Insurance Policy?

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Should you owe money to a car insurance company after switching companies, you are obligated to pay the bill. However, it is unlikely that you will owe money to your car insurance company when you switch providers. Usually, the only thing that you will have to pay for is a cancellation fee. Insurance companies collect your insurance at the end of the month for a reason. Paying at the end of each month provides insurance coverage for the following month. Should you cancel your car insurance policy, you normally will not have to pay for coverage that you haven’t paid for yet. Sometimes, a car insurance company might actually owe you some money after you cancel your car insurance policy.

When Can an Insurance Company Cancel My Insurance Policy?

Insurance companies have the right to cancel your car insurance during the grace period. The grace period is not just for consumers to decide if they want their insurance. The grace period is for car insurance companies as well. Should a car insurance company decide that they don’t want to insure you for the length of the policy, they can cancel the insurance policy within the grace period. After the grace period is over, the car insurance company has to have a reason to cancel your car insurance. Usually, reasons such as missing a payment, too many road infractions or making a fraudulent claim will result in a termination of your insurance policy.

How Do I Go about Getting a New Insurance Policy?

It is quite easy to go about getting a new insurance policy. This is especially the case if you are thinking about leaving your insurance company. It becomes a little bit harder when your insurance company leaves you because they probably left you for a good reason. In any case, you simply have to call or get into contact with an insurance company online. Usually, your first step is to get a quote from an insurance company. Once you get a quote, you can decide whether you want to go with that insurance company or not and proceed to set up a policy. Another option is getting insurance through an insurance broker. An insurance broker will contact the insurance companies for you so that you don’t have to make the phone calls and tell them the information that they need to know to get a quote.

What Happens If There Is a Lapse in Car Insurance Due to a Canceled Policy?

You never want to have a lapse in car insurance if you can avoid it. As soon as you hear that your policy has been canceled, you should get a different insurance company immediately. The larger the lapse you have in car insurance, the more insurance companies will think you have been driving illegally. It is also a risk for insurance companies because you aren’t practicing driving when you don’t have insurance. New drivers are a much higher risk to insure and therefore, some insurance companies might even deny you coverage.

Are There Any Options Better Than Cancelling My Car Insurance?

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Sometimes, there are a few better options than canceling your car insurance. Having high car insurance premiums should not force you to cancel your insurance coverage. You can always lower your liability and remove things like collision and comprehensive insurance to lower your insurance rates. On top of that, you could always pay for nonowners insurance so that you have car insurance without technically being legally allowed to drive. Non-owners insurance will provide you coverage for when you rent a vehicle, drive someone else’s vehicle etc. This is likely a last case resort insurance option, but it is a better option than having a lapse in car insurance coverage.

To Conclude

There are definitely some good reasons you might want to cancel your insurance policy. On the other hand, it isn’t always worth canceling your insurance policy. You need to always consider the consequences of your actions and how they are going to impact your future car insurance rates. Sure, switching insurance companies now might help you to get a cheaper car insurance policy. That switch, however, is likely going to ruin your chances of getting car insurance in the future with your previous insurer. It might also make it harder for you to get insurance through other insurance companies as well. You will have to decide what the best option is for your situation.

Resources:

https://www.awinins.ca/blog/does-cancelling-my-insurance-affect-my-car-insurance-rates-in-the-future
https://www.thebalance.com/what-is-non-owners-insurance-527421
https://www.thebalance.com/can-i-cancel-car-insurance-anytime-527400