How to Write a Cancellation Letter for an Auto Insurance Policy

Your cancellation letter should include (1) your policy info, (2) your vehicle info, (3) your address, and (4) the date you want the policy to end.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 19, 2021

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Things to remember...

  • A policyholder can cancel their auto insurance policy voluntarily at anytime they want to and for any reason
  • You need to be sure to cancel a policy when you already have coverage elsewhere so that you won’t be fined or penalized
  • It’s typical for an auto insurance company to ask for you to submit a cancellation request in writing
  • Your cancellation request should include your policy number, the date, your name, and your signature

Your auto insurance policy is yours to keep or yours to cancel. When you’re insured through a company that’s not providing you the customer service or the claims service that you need and expect, it’s time to start shopping elsewhere.

You should never accept poor service when you’re paying a company for coverage.

It’s common for auto insurance consumers to postpone their mission to find a better insurer until their policy is up for renewal so that the policy can just expire.

If your renewal is quickly approaching, this is a viable option, but it’s not an option when you have months left on the contract. Instead, you’ll have to shop the market and set your policy up for an early cancellation. Let’s discuss what you need to do.

If you are also in need of better auto insurance rates, start comparison shopping by entering your ZIP code above!

Can you cancel your policy before it renews?

All licensed insurance companies have rules that they must comply with that are set by the state department of insurance.

Even though your paperwork says that your contract doesn’t end until the expiration date, it doesn’t mean that you’re locked into it.

Per the state’s Consumer Bill of Rights, you’re allowed to request that your policy is canceled at any time.

The insurance company can never reject your request to cancel your insurance as long as the date is in the future.

The carrier also can’t make it mandatory that you give the reason why you’re terminating the contract.

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Is there a penalty for canceling your auto policy early?

When it’s your primary goal to save money, you better be sure that you check and see if you’ll be charged a cancellation fee before you buy a policy with a new company.

Sometimes, the amount that you save will be eaten up by the fee you’re being charged for an early cancellation.

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What is the typical early cancellation fee?

Any fee that you’re charged a fee to end the policy early it’ll be classified as a short-rate fee.

Instead of getting your pro-rated refund back, you’ll get a lesser amount because the fee will be subtracted from what you’re owed.

Not all companies charge short-rate fees. Those that do will either charge you a fixed fee or a percentage of the premiums that you have yet to pay.

If there’s a balance of $500 due on your contract and the fee is 10 percent of the unearned premiums, this means you’ll be charged a fee of $50 when the cancellation is processed.

Steps to Take Before You Cancel Your Existing Policy

Don’t just make an emotional decision to cancel your policy after your claim is denied or you’re offered less than you feel you deserve.

If you cancel the policy in haste, you could wind up being fined by the state for failing to carry the insurance that you’re required to carry.

Since you have to have mandatory insurance coverage when you have a vehicle registered in your name, you should have another policy in place before you even start to draft a written cancellation request.

Here are the steps that you should take to avoid running into issues after you cancel your policy:

  • Price the cost of coverage elsewhere
  • Contact your insurer to ask how much it will cost to cancel your policy early
  • Submit your application for coverage with the new carrier if you’ll still save money after the fee
  • Wait until the policy is issued to see what your final premium is
  • Write a cancellation request and submit it to your carrier
  • If you cancel your car, you should wait to cancel your policy until you have officially released your liability

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Why can’t you just cancel your policy by phone?

It’d be easy if you could pick up the phone, call the toll-free number on your ID cards, and cancel the coverage by phone. With some carriers, this is a possibility but not with many of them.

It’s pretty standard practice for insurance carriers to require your cancellation request in writing.

It might feel like the requirement is only in place to inconvenience you, but that’s not really the case.

Requiring you to submit a request in writing protects the insurer if you allege that you never canceled the policy and then try to submit a claim.

By keeping your signed request in writing, they can use it during arbitration if it ever gets to that point.

Can you backdate your cancellation to a prior date?

You’ll have to cancel your insurance as of today’s date or a future date if you don’t have any other coverage.

If you have proof that you bought insurance on the car or you sold the car on a prior date, you may need to provide the declarations page or the bill of sale to backdate your cancellation and get a pro-rated refund.

What do you need to include in the written cancellation request?

Now that you know the steps that you must take to cancel your insurance, the next step you need to take is to write your request.

It shouldn’t take you too long to get it all drafted up and ready to give to your agent.

Here’s what it should include:

  • Policyholder’s name (must be written by policyholder)
  • Policy number
  • VIN of the vehicles on the policy
  • Date that you want the cancellation processed
  • Address to send your refund or future documents
  • Your signature and date of the cancellation request

It’s best to do everything right so that your cancellation is processed immediately.

If you haven’t yet taken the steps to find coverage with a different carrier, now is the time to start. Get online quotes and see just how much switching your insurance will save you in the end.

If you’re looking to save some money by comparing auto insurance rates, start comparison shopping today by entering your ZIP code below!



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