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What You Should Know Before Canceling Your Car Insurance

Many factors could prompt you to cancel your existing car insurance.

Probably, you got a better offer from a new insurance company. Or you may be moving to a new state. You may have planned to sell your car and don’t see any reason to carry on with the policy.

Whatever the reason for choosing to cancel your insurance, you should keep a few things in mind. 

When You Want A New Insurance Company

So you came across an advertisement for the cheapest car insurance in Nevada. The offer is irresistible and you think you’re all done with your current policy. 

You may now be wondering what to do next.

First things first. Assess the position of your coverage period.

If there’s still a lot of time for the insurance term, the insurance company may charge you for canceling so soon.

Wait until your policy is closer to expiry, only then apply for the new insurance. Also, arrange for the new insurance to be effective before the term for your existing insurance ends. This way, you’ll have peace of mind with continued insurance coverage.

When You’re Selling The Car

If you’re selling your car, you’d find it wasteful to carry on with its insurance. 

You should cancel insurance only after the sale of your car is legally complete. 

This means the title of the car has been transferred to the new owner and you have deposited the number plates to the Department of Motor Vehicles (DMV).

If you’re planning to buy a new car, your insurance company might suggest non-owner car insurance for you. 

With non-owner car insurance, you won’t have to cancel insurance in the first place and your new car will be covered automatically.

Informing Your Insurance Provider

In the rush of things, don’t forget to inform your current provider about your decision to cancel.

Getting another auto insurance doesn’t mean that the previous one revokes automatically. If you don’t let the insurance company know, they may assume you’re continuing with the policy.

In that case, the insurance company will cancel your policy for the reasons of failure to pay or failure to renew. The effect will be the same as canceling, except that you’ll be liable to pay heavy penalties.

You’ll get a notice for non-payment. You’ll have to give a formal reply and pay the penalty. 

All this and a lot more hassle could follow. Worst case scenario, your policy won’t be canceled at all, and your bank account will be billed continually!

Requesting The Cancellation

You should make a cancellation request, either through mail or over a phone call. 

You could also visit the insurance agency and discuss your options with the executives personally. They could guide you on how to go about the process while paying minimum amount as cancelation fee.

Check if your new provider will assist you with the cancelation process. Many companies offer this as an add-on service to their new clients. 

In this situation, you’ll just need to hand over the documents and information to their agent. The agent will complete all the formalities on your behalf.

Key Takeaways

Canceling your auto insurance isn’t a big deal if you’re careful about the following: 

  • You should cancel your insurance only once the new one is sorted. 
  • Don’t cancel your policy early in the insurance term, you’ll have to pay heavy penalties.
  • You may have to pay some charges even if you cancel during the grace period. So it’s a good idea to discuss the costs and your options with the insurance provider.
  • Your insurance provider should be formally informed about your final decision to cancel.
  • Check with your new insurance provider if they can offer any assistance with cancelation.
  • Always make sure your vehicle has continued insurance coverage.
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