How to Cancel Your Car Insurance Policy in 4 Easy Steps

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Whether you’re selling your car, moving to a state outside your insurer’s coverage area, or switching to a new insurance company, you may need to cancel your car insurance before your policy renewal date.

Before initiating an auto policy cancellation, review your current policy to understand your insurer’s rules and requirements for canceling a policy. The good news is that canceling your car insurance policy should generally be a simple process — though the specific steps you need to take depend on your insurance company.

We walk you through the steps to cancel your car insurance policy below and give tips for canceling and securing a refund.

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4 Steps to Cancel Your Car Insurance Policy

young woman canceling auto insurance online

The specific process for canceling a car insurance policy will vary from one insurer to the next, but the following steps will help you navigate the process.

1. Purchase a new policy before canceling

Be sure to purchase your new policy before canceling your current one. If you cancel your current policy before your new policy starts, you risk a lapse in coverage, which could lead to higher rates in the long run.

Even a single day of lapsed coverage could force insurance companies to report your status to your state’s DMV, resulting in a suspended driver’s license and registration, fines, and reinstatement fees.

For your new policy, start by comparing quotes for your new insurance coverage. That can help you find the best price for the coverage you need. Once you find a new car insurance company that fits your needs, purchase the new policy before canceling the old one — this helps ensure a smooth transition.

2. Contact your current insurance company

Each car insurance company has different rules for how to cancel a policy. Often, it’s a good idea to start with a phone call to find out what process you need to follow. You may also be able to get the information you need by speaking with your insurance agent in person, through the company’s mobile app, or by using its online chat feature.

3. Ask your insurer about its cancellation process

When you reach your current insurer, ask about the cancellation process and other factors, such as:

  • Refunds: If you paid your auto premium up front, you’re likely entitled to a prorated refund for the unused portion of your policy.
  • Cancellation fees: Most insurance companies don’t charge a fee if you cancel before the end of your policy term, but it’s important to ask beforehand. The fee may be either a flat fee (typically $50) or a percentage of your premium.
  • Cancellation letter: Some insurers require you to send a signed letter or cancellation notice by mail or fax as part of the process. Make sure you know what’s required to formally cancel your policy.
  • Cancellation notice: Depending on your insurer, your cancellation request may be effective immediately, or you may be required to give up to 30 days’ notice.
  • Cancellation date: This is the specific date when coverage with your old insurer ends. Make sure your cancellation date is the same day your coverage begins with your new insurer.

4. Get your cancellation confirmation

Request a cancellation confirmation notice from your insurer by email or letter. This confirmation shows the cancellation effective date and what refunds (if any) you’re eligible to receive. Not only is the confirmation proof of cancellation, but it also proves when your old policy ended.

If you pay your auto insurance premiums through automated monthly payments, you also need to confirm that the company has suspended those payments.

When to Cancel Your Car Insurance Policy

man smiling looking at car insurance quotes on cell phone

You might need to cancel your auto insurance policies for a variety of reasons. Here are some common scenarios:

  • When you want to save money: If you’re paying higher rates with your current auto insurer, purchasing a new policy and canceling the current one could save you money.
  • When you’re moving out of state: Each state has its own minimum insurance requirements. Depending on the state laws, moving to a new state may require a new insurance company or even new insurance coverages.
  • When you’re moving in the same state: While an in-state move doesn’t change your minimum insurance requirements, insurance companies partially set your rates based on your address and ZIP code. A local move could affect your rates, which makes it a good time to compare quotes and find the best rates in your new home.
  • When you buy a new car: If you get into a car accident and need a new vehicle in the middle of your policy term, or you simply decide to get a new set of wheels — a different car could mean different coverage needs.
  • When you need to change coverage: The coverage level you have with your current insurer may no longer fit your needs. You can adjust coverage with your current insurer or find a new insurance company and cancel your current coverage.

Other things to consider before you cancel

No matter why you want to cancel your coverage, make sure you consider the following potential issues with cancellation beforehand:

  • Discounts: Consider whether you’ll lose a bundling discount with your home, renters, or other insurance products if you cancel car insurance.
  • Coverage lapses: Determine if there’s a possibility you may have a lapse in coverage if you cancel. Even a single day between your old insurance’s expiration date and your new insurance’s start date can lead to rate increases and a suspended license.
  • Cancellation fees: Though most auto insurance companies don’t charge a cancellation fee, it’s important to find out ahead of time if your current insurer does. The cost of this penalty may cancel out any savings you’d see by switching to a cheaper insurer.

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Will You Get a Refund After Canceling Your Auto Policy?

woman canceling car insurance on a laptop

If you prepaid your insurance premiums, you can generally expect to receive a refund for the remaining balance. If you pay your premiums on a monthly basis, you usually won’t receive a refund.

How much of a refund should you expect?

If you’re entitled to a car insurance refund, there are two kinds: pro rata and short-rate cancellation refunds. Here’s how they each work:

  • Pro-rata cancellation: This determines your refund based on the time remaining in the policy. For example, let’s say you pay $100 per month for auto insurance. You prepay for a six-month policy ($600) but cancel the policy after two months. Your pro-rata refund will be $400, representing the four months of unused coverage you’ve canceled.
  • Short-rate cancellation: Many insurers offer a short-rate cancellation refund rather than charging a cancellation fee. Under this system, you’ll receive a pro-rata refund minus a penalty. The penalty may be calculated as a flat percentage of the unearned premium or based on a short-rate table, which can be found in your policy documents.

Can You Cancel Auto Insurance Without Notifying Your Insurer?

Canceling your car insurance policy may seem like a lot of work compared to simply not paying the premiums anymore. But failure to pay your premiums or failure to notify your insurer can lead to some serious consequences, including:

  • Lapse in insurance coverage: Driving without insurance is illegal and can lead to fines, fees, and a suspended license.
  • Higher rates: Not notifying your old insurance company can affect the rates you pay in the future.
  • Repossession of your vehicle: If you financed or leased your car, non-payment of premiums could result in your lender repossessing your car.

Many insurers have a grace period for payments before they send a cancellation notice for non-payment. If you’re struggling to pay, call your insurer to find out what your options are before the grace period ends.

FAQs About Canceling Car Insurance

Thinking about canceling your car insurance policy? Check out the following answers to some of the most common questions about the cancellation process.

Can you cancel your car insurance at any time?

Generally, you can cancel your car insurance policy anytime with a simple phone call. But depending on your auto insurance company’s cancellation policy, you may be required to keep it in place for a certain period before the cancellation takes effect, or you may have to pay an early cancellation fee.

Is there a penalty to cancel car insurance?

Most car insurance companies don’t charge a cancellation fee or penalize drivers who cancel their insurance before the period ends. Typically, insurance companies that charge a penalty for early cancellation set the fee at no more than $50.

Can your car insurance company cancel your policy?

Yes. Car insurance companies are legally allowed to cancel a new auto insurance policy within 60 days after the initial purchase of the policy. Insurers aren’t required to give policyholders any explanation for cancellation within that time frame.

Your car insurance company can also cancel your policy if you don’t make payments, if you make fraudulent claims, or if your insurance circumstances change significantly — such as after you receive a DUI or cause a major accident.

Can you cancel some coverage without canceling the entire auto policy?

Yes. Most insurance companies allow you to drop or change your coverages in the middle of a policy term rather than forcing you to wait until policy renewal. This means you can cancel a coverage you no longer need without canceling the entire auto policy.

Do you need to cancel your car insurance policy if you move to another state?

If your auto insurance company offers insurance in your new home state, you don’t have to cancel your car insurance policy when you move. But you may need to change or update your coverage to meet your new state’s minimum insurance requirements.


  1. Insurance Training Center, “Pro-Rata vs. Short-Rate Cancellation,” Accessed February 13, 2024
  2. Wisconsin Office of the Commissioner of Insurance, “Frequently Asked Questions – Automobile Insurance,” Accessed February 13, 2024
  3. New York State Department of Financial Services, “Shopping for Auto Insurance: Cancellation and Non-Renewal,” Accessed February 13, 2024
  4. Illinois Department of Insurance, “If Your Auto Insurance Policy Is Canceled,” Accessed February 13, 2024
  5. AAA, “Do you need new car insurance when moving to a new state?,” Accessed February 13, 2024

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