How to Cancel A Car Insurance Policy and Get A Refund?

Selling the Car: All car insurance policies are at least valid for a year. Those who have purchased a long-term policy will have an extended coverage term of up to five years. If you decide to sell your car, chances are that you will not wait for your insurance period to get over. You will sell the car when you get a good deal or when you feel the time is right. In such cases, the car insurance policy needs to be cancelled.  

Shifting to a New Insurer: An undesirable interaction with your previous insurance company might prompt you to look for a different insurer. You will have to cancel your existing policy while shifting to a new insurance company.

Vehicle Not in Use: You may have to cancel the car insurance policy if the vehicle is no longer in use and you don’t need the car insurance coverage. In this case, it’s better to cancel the polict than paying high premiums. 

Driving Without a License: If you are driving without a valid license, it can be one of the most serious reasons for a car insurance policy cancellation. In case you are found driving a car without a valid license, your insurer will not entertain any of your claim requests.

High Premium Cost: If the existing car insurance policy has high premium costs, then you might want to cancel your existing policy and switch to a new insurer. To switch to a new insurer and save premiums, you need to first cancel your car insurance policy. 

Inform Your Insurer: Get in touch with your insurance company and inform them about your decision to cancel the car insurance policy. You can do this via a call or by sending an email. They will guide you regarding the specifics of the cancellation process.

Fill the Cancellation Form: You need to mention the reason for car insurance cancellation. While cancelling the policy, you need to keep documents handy like car insurance policy number, car registration number, etc.

Document Update – Based on your reason for cancellation, the insurance company will ask for some documents. For example, if you mention the reason for policy cancellation as ‘selling your car’, the insurance company will ask for a Sale Deed. If you mention the reason as ‘switching insurer’, they will ask for the new policy.

Cancellation Approval: Once you send the required documents, the insurance company will verify them, and if your cancellation request is approved, you will receive the policy with ‘cancelled’ written on it. Also, if applicable, you will receive the No Claim Bonus certificate as well.

Plan a New Policy: To avoid discontinuation of car insurance policy coverage, it’s better that you get a new policy as soon as the existing one is discontinued. This will prevent you from paying fines and getting continued coverage.

No Claim Bonus: You need to be aware that once you cancel your car insurance policy, you may lose the No Claim Bonus. This depends and may vary from insurer to insurer.

Cancellation Refunds: The pending premium amount may or may not be returned by the insurer. There are many insurers, however, who return the premium based on small administrative costs.

Time Period of Cancellation: Insurers may deduct the cost based on the time when you cancel the car insurance policy. For instance, if you cancel the policy in the first few months, then the cancellation amount can be higher.

Check Policy Terms: Before you cancel your car insurance policy, you should check the policy terms and conditions. This will you ensure if you are not breaching any policy terms and conditions and also make you aware of the fees applicable.

Third-party Insurance: This is one type of car insurance policy that cannot be cancelled unless the car is totaled.

Cancellation Time: If you cancel the policy within the first 15 days, you may receive the full amount. However, the cancellation fee may be deducted.

Cancelling Before the Start: When you cancel the policy before the coverage actually starts, then the refund will be full.

Cancellation After the Policy Starts: In this case, the cancellation amount will be lower, and certain cancellation fees will also apply.