Even if you’ve carefully compared car insurance quotes from various insurers and bought the most suitable and affordable policy. There may still come a time you want to cancel your car insurance policy. It could be that you’ve found a more affordable policy, or you’ve had an issue with the insurer’s service.
No matter what the reason, the process to cancel is simple, you just contact your insurer and tell them you want to cancel the car insurance policy. The insurer might try to tempt you to stay by offering you discounts or extra benefits, despite this, they usually can’t refuse to cancel your policy.
The short answer to the question of when you may cancel your car insurance policy is anytime. Your car insurance policy may remain valid for the rest of the month or year in which you cancel, depending on your payment terms. You may be able to get a refund for any premium paid in advance.
On the other hand, you may also be required to pay any premiums you still owe before cancelling. Some insurers may waive any cancellation fees if you cancel car insurance before the cooling-off period ends. Which is typically fourteen days from buying or renewing the policy. Each insurer is different, it would be best to read the Product Disclosure Statement (PDS) to understand your insurance provider’s policy cancellation rules.
It’s illegal to drive a car without compulsory third party car (CTP) insurance which covers your liability for injuries caused to others in an accident. CTP insurance is included in your registration in many states, and you’re not able to cancel CTP coverage without first buying a new policy. You may also need to update your insurance details noted on your vehicle registration if you switch insurers.
Before cancelling your car insurance policy, you might want to discuss any policy-related issues with your insurer, especially if that’s the reason you’re cancelling the policy. For instance, you may not be satisfied with the insurer’s response to a service request, or you may find it too slow. Consider checking if the insurer’s Internal Dispute Resolution (IDR) department can help you resolve the issue before deciding whether to cancel the car insurance policy.
If you’re selling your car and have any car insurance policy besides CTP, it can’t be transferred to a new owner. You can change the vehicle covered by the policy if you purchase a new car, but the policy owner can’t be changed.
CTP policies can have the owner of the policy changed due to the compulsory nature of this insurance. For your CTP policy, you should check if the policy automatically gets transferred when you transfer the registration. You should also find out if you need to inform your insurance provider in advance about selling the car. Especially if you are buying a new vehicle and want to transfer your car insurance policy.
Usually, when you buy a new car insurance policy, the insurer allows you a cooling-off period for around 14 days to decide if you want to keep the policy. They may also apply this cooling-off period when you renew your policy as well. If you cancel car insurance during this time, you may get a full or partial refund of the premium amount paid and avoid any car insurance cancellation charges. You might want to confirm the details of the cooling-off period when you buy the policy.
If you cancel car insurance mid policy, you’ll probably need to pay the cancellation charges along with any administration fees. If your premium has already been paid, your insurer should reimburse any unused portion of the premium you’ve paid. This reimbursement is calculated based on the amount you’d have to pay to cover the period between your last payment and the date your cancellation request is confirmed.
Disclaimer
This article is over two years old, last updated on October 20, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent car insurance articles.
This article was reviewed by Georgia Brown before it was published as part of RateCity's Fact Check process.
