Summary of how to cancel car insurance

Canceling car insurance is easy. You simply call the insurance company to notify them that you are canceling, and they’ll generally send you a cancellation form to fill out and return. You can cancel at the end of your policy term or in the middle of it. But there are important things to know about canceling auto insurance before you do it.

Can I just stop paying the insurance?

Not paying your premiums will definitely get your car insurance canceled, but not in a good way. A cancellation for non-payment will go on your record and generally means higher rates the next time you buy auto insurance.

Instead, proactively cancel your car insurance by notifying your insurer and make sure you’ve paid for the days you had coverage.

Is there a cancellation fee?

Some insurers will charge a fee for canceling insurance before the policy term is over. Some companies, such as Progressive, use a “short rate,” meaning they charge you a percentage of what you would still owe if you kept the policy. The short rate percentage might vary based on how many months you would still have on the policy.

Other insurers charge a flat rate for cancellation. For example, Esurance typically charges $50 if a customer cancels in the middle of a term-- whether you cancel or they cancel you for non-payment.

A cancellation fee might be waived if you’re canceling because the car was stolen, destroyed, junked or sold.

In some cases, state law will dictate how much a cancellation fee can be. For example, Alaska law says that a cancellation fee can’t be more than 7.5% of what you would still owe on the policy.

Will I get a refund?

You’ll get a pro-rated refund if you cancel in the middle of the policy, meaning a refund for the days left on the policy. Any cancellation fee will be deducted from your refund.

How soon do I need new auto insurance?

If you still have a vehicle, it’s important to get car insurance quotes and arrange for new insurance to be in effect when your old policy is cancelled. Driving without auto insurance is illegal everywhere except New Hampshire. In addition, a gap or “lapse” of insurance makes you look like a risky driver and will lead to higher rates when you buy new insurance.

Have your new policy take effect immediately when the old one expires, or whenever your cancellation date is.

Does canceling car insurance hurt credit?

Canceling a car insurance policy does not impact your credit. In fact, failing to pay your car insurance does not affect your credit either because insurance companies generally don’t report payments to credit bureaus. If you stop paying they simply cancel you.

Can I cancel my car insurance renewal?

Auto insurance policies typically automatically renew at the end of the policy period, unless your insurer has already notified you that the policy is being canceled or nonrenewed. So if you don’t want your policy renewed, you should proactively notify the insurer to cancel it at the end of the policy period.

If the policy renews and you don’t pay it, it will get canceled for non-payment and go on your record.

Can I cancel car insurance if I sell my car?

You can and should cancel car insurance when you sell a car. Notify your insurer in advance if possible and tell them when the sale takes place. You want to be sure your policy gets canceled when ownership changes so that there’s no confusion about coverage when a new owner is driving the car.