Purchasing car insurance is mandatory in India if you want to drive your car legally on public roads. But have you wondered, what if you want to cancel the policy for some reason? Is there a scope for a refund in such a case? The good news is – yes, it is possible to cancel your car insurance policy and get a refund. However, you need to fulfil certain requirements to do so.
Just as purchasing a car insurance policy should be an informed decision, cancelling a car insurance policy also needs a well-thought-out action. You need to think of the consequences of cancelling your policy and chalk out your next steps. Read ahead to know more about how to go about cancelling your car insurance policy the right way and get a refund.
Reasons for Cancelling Car Insurance Policy:
People might have varied reasons for cancelling their car insurance policy. Here’s a list of the most common reasons why policyholders might want to do so.
- 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 bright 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.
There’s no standard car insurance policy cancellation process, as different insurance companies might follow a different process. Although the basics remain the same, some insurers might have one or two different steps than others. Here’s a basic procedure that will help you to understand the steps required to cancel your car insurance policy.
- Step 1 – Get in touch with your insurance company and inform them about your decision to cancel the car insurance policy. You can do this via call or by sending an email. They will guide you regarding the specifics of the cancellation process.
- Step 2 – 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.
- Step 3 – 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.
Online Process – Apart from the above-mentioned three-step offline process, some insurers might also offer an online cancellation process or a self-cancellation process. Here, you will have to log in to their website and follow the process to cancel your policy.
You will be eligible for a refund on policy cancellation based on when you cancel the policy and its terms and conditions. Check out the following two scenarios.
- Cancellation Before The Start of The Policy:
In such a scenario, it is likely that you will get an almost full refund of the payment, some processing fees might get deducted.
- Cancellation After The Start of The Policy:
Here, the refund will be offered on a pro-rata basis. This is because you have been covered by the car insurance policy for a few days.
- Refund Timeline:
The exact turnaround time of the refund will depend upon your payment process. However, it should not take more than 14 working days for the refund to reach you.
Also, read: Electric Car Insurance
New Car Insurance Policy:
If you are planning to sell your car and buy a new one, make sure to purchase a car insurance policy for that vehicle. You can choose to buy a policy from the same insurer or choose a different one. If you have had a bad experience with an insurance provider, make sure to learn your lessons and avoid making the same mistakes while purchasing a policy for your new vehicle. For example, it is not necessary to buy insurance coverage from the car dealer, you can buy it on your own as per your requirements from an online car insurance provider.
Also, read: Vehicle Scrappage Policy in India
Contact Your Insurer:
If you have any doubts about the cancellation and refund process regarding your car insurance policy, feel free to contact your insurer and get all your doubts clarified. Do not make an ill-informed decision.
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