Getting car insurance can be an involved process. Not only do you have to gather all of your licensing and vehicle information, but you also have to solicit quotes to find the best rates in town.
Once you’ve compared quotes, you’ll have to select the best combination of coverage limits and the best policy.
Then, after you’ve made your final selection, you’ll have to start the application process which can last anywhere from 30 to 60 days.
You’ll have coverage from the moment you apply even though it takes a while to finalize an insurance rate and issue a policy.
Be sure to submit your first payment with your application and ask for a binder so that you’re not going without coverage.
If you decide you want to cancel your policy shortly after you apply, here’s what you should know:
Are you legally allowed to cancel an auto contract you’ve applied to enter into?
Auto insurance is a contract that’s legally binding. If you read through your policy booklet to understand the terms and conditions of the contract, you would find a lot of legalese that’s difficult for the average consumer to understand.
Even so, both parties that enter into the contract must satisfy their duties when an application is submitted.
Some of the rules laid out in a policy are dictated by the consumer rights that are set forth by the state.
One of your consumer rights when you buy auto insurance is that you’ll be able to cancel your policy at your request.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
What are some legitimate reasons to cancel your policy early?
It seems like a lot of work to apply for a policy that you’re only going to have for 14 days.
It’s not ideal to cancel your insurance this early, but sometimes there are factors beyond your control and other times failing to do your research costs you money.
Here are a few valid reasons you should cancel early:
- You sell your vehicle and don’t plan to buy a replacement
- You give your vehicle away and decide to surrender your driver’s license
- Your vehicle is totaled in a loss, and you decide not to purchase a new one
- You move out of state suddenly
- Your final rate is higher than expected and you buy insurance elsewhere
Is there going to be a fee for canceling insurance within 14 days?
There may be a fee for canceling your insurance early on in the policy. Some carriers charge these fees to protect themselves from incurring costs to underwriting an application.
Since insurers spend money on manpower and on reports, they need to be sure that the money spent isn’t in vain.
If you are charged a fee, there will be a provision in the policy saying the company processes short-rate cancellations. The fee that’s charged will either be a percentage of the premiums that are still left unpaid or a fixed amount that’s spelled out in the policy.
If you’re canceling your insurance because you found a better rate elsewhere, take a look at the fee you’ll have to pay first. It’s probably not worth the switch to save $50 each term if you’re being charged 10 percent of your $1,000 balance.
If the fee is only $10 and you’re saving $50, then the effort is well spent. Assessing the cost and savings is important.
How do you submit your cancellation request?
Submitting your cancellation request isn’t difficult if you request the current date or a date in the future. All you’ll have to do is write up a letter saying that you want to terminate the policy effective a certain date.
Be sure to include the following:
- Your name
- The date
- The policy number
- Your contact information
- Your signature
Turn the request in at least five days before any automatic payments are coming out of your account.
Why You Shouldn’t Buy Short-term Insurance
You could apply for a short-term policy that lasts one to 30 days, but it’s not in your best interest. These policies have extremely high premiums because they aren’t underwritten.
They are designed for people trying to get their license back because they don’t qualify for standard coverage.
Look for an insurance policy that you’ll want to keep for the entire term. If something comes up or you’re not happy with the carrier, you can cancel your policy. Start getting quotes through carriers online, and see which carrier has the best rates for you.