When To Cancel Your Car Insurance Policy

For many Americans, car insurance payments are a fact of life. If you are legally able to drive and know the freedom of getting behind the wheel whenever you like, then you must be insured. But sometimes, you also need to know when to cancel your car insurance policy.

Depending on the type of vehicle you own and the state you live in, your liability requirements will vary. Yet most states require a driver to have at least minimum coverage enabled. 

There are circumstances when car insurance coverage becomes unnecessary. In these cases, drivers can appreciate the reprieve of a monthly payment and feel relief knowing that one less item is off their financial checklist. 

Due to the pandemic, thousands of drivers are now working from home, finding themselves without the use of a car. Many have even considered canceling their policy until life regains a sense of normalcy again. 

So, I've driven my car a total of 31 miles since March. My 6-month car insurance policy renewal payment is coming up in 2 days. Is there any reason why I *shouldn't* just cancel my policy until life returns to normal?

— Dr. Leigh M. Johnson (@DrLeighMJohnson) January 12, 2021

But is this the right decision?

Find out when cancelling your existing policy is a good idea — including the easy steps to cancelling your car insurance coverage.

Suitable times to cancel your car insurance

If you’re considering canceling your car insurance policy, it is important to make a prudent decision. Insurance companies will always factor in your car insurance history when offering rates. Therefore, if you plan to cancel now, this could affect your rate in the future. 

It is necessary to remain strategic throughout the cancellation process. Does the timing work best? Will it cost you more in the long-run? Ask yourself these questions before acting prematurely. 

Here are the times when cancelling is okay: 

If you move

Moving to a new city or state could require different levels of coverage. If your existing policy does not offer coverage in that state, then you’ll need to find a new provider. To avoid any gap in coverage, it is crucial to purchase a new policy in advance. 

Selling your car

Whether you’re ready to rely on public transportation or don’t require the use of a vehicle any longer, this is the best scenario to cancel your car insurance plan. Selling your car is a big decision, but it can lead to a better way of life. Maybe biking is the transportation for you. 

Kids go off to college

When your loved one leaves the nest, they might decide to leave their first car behind too. Living on campus offers many students the flexibility of walking everywhere, without the use of a vehicle. When this stage of life approaches, some parents find themselves needing to drop insurance coverage to save financially, making it a good time to drop full coverage.  

Keep in mind, some states require every vehicle to be partially covered so might have to continue payments, but at a lower cost. 

You drive an older vehicle

If your car is older and owned outright, you may want to consider dropping collision and comprehensive coverage. While this does not qualify as cancelling your car insurance policy, it will decrease your monthly premium and save you from overpaying for car insurance. 

Easy steps to cancel your car insurance policy

In order to avoid a complicated process, it is best advised to follow these steps when you’ve determined a car insurance policy is no longer required. Whether you cancel online or through the phone, the process is usually quick and painless unless you get stuck with an automated message. Then the process will require some patience. 

@GEICO knows I’m trying to cancel my car insurance with them. Every time I try to call, the wait times are horrendous!

— Gwen 🇫🇷🍾 (@Frenchie_1x1) January 13, 2021

Check out the steps below:

1. If applicable, buy a new policy before cancelling your previous one.

2. Call your insurance provider.

3. Ask to speak to an agent about cancelling your coverage. 

4. Follow instructions to cancel (usually this step requires a cancellation letter).

5. Request a policy cancellation notice for confirmation.  

End result after you cancel your car insurance

As you can see, the steps to cancelling your existing car insurance policy are simple, but deciphering what circumstances warrant an actual cancellation remain paramount. The ultimate goal for most drivers is to avoid costly, monthly premiums by seeking out  money-saving benefits like student discounts and umbrella policies. 

While most times car insurance coverage is required and these discounts help tremendously, there are circumstances when cancelling your policy or reducing your coverage is the best option. 

Before getting ahead of yourself, analyze the long-term effect of canceling your policy. Remember to always lock down another policy in advance if you plan on changing insurance providers too. Maybe it’s just time for you to enter the world of micro-mobility. But pretty soon, that will require insurance too.