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Things to You Should Know About Car Insurance Policy Cancellation

You can easily cancel your car insurance policy at any time; all you need to do is submit your replacement papers to inform your car insurance company. Whether you have to pay any charges, however, depends on when you cancel it. If you do it of the insurance term, your insurer may charge a nominal cost, from you. If you cancel it at any other time, the remaining premium amount will be reimbursed.

Overview

  • It is mandatory to have your car insured. So, when you apply for cancellation, make sure that your insurer is intimated about your new car insurance policy. It is necessary for your insurer to be informed to continue with the cancellation.
  • There is a cooling-off period of 14 days which your car insurer provides you. It allows customers to easily cancel their insurance plan within this period, if they want to purchase another policy from some other insurance company to meet their needs. This period begins when you buy your policy.
  • If you do not place a cancellation demand within those 14 days, then your insurer will charge you some percentage of the amount, for the delay. The more you delay, the higher the charges. Delaying it for a month can lead to a charge of 10% extra, if its 2 months, it can reach 20% and so on
  • After a period of 8 months, your insurance company is not liable for refund
  • Cancelling your car insurance is a seamless process. You simply need to request your insurer about the cancellation request over email or phone or sign the documents, if required. Soon, after that, your cancellation request would be processed further and you will get a notification within a period of one week

Consequences of not Buying a New Car Insurance Policy Upon Cancellation

In every state, it is mandatory to have your car insurance papers in place. It is a proof that you are covered for any accident or damage that may take place on road. Also, it gives third party insurance to cover damage caused to any third person from your vehicle. But if you do not have your new car insurance policy at the time of cancellation, you might have to face the following circumstances -

  • You can be fined or penalized for driving without car insurance
  • You will need to bear all the personal and accidental damage expenses. Also you would not be given third party car insurance cover to save you from any legal or financial expenses incurring from the same
  • If you delay it more, you would need to pay higher premium amount

Therefore, if you want to buy a new car insurance plan without facing any consequences, then you should take all the necessary steps to cancel it on time and buy new policy soon before that.

Reasons why you Might be Looking for Cancellation of Your Car Insurance Policy -

  1. You want to sell your car - In this case you would definitely need to end the old insurance policy, take the refunds and buy a new policy, which will offer you a better deal.

  2. Your car has been stolen - Hopefully, it will never happen to you. And if it does, you should certainly take up a new insurance policy for your new car. If your current policy is a comprehensive one, then you would be reimbursed for the theft, based on the IDV of your vehicle.  Once you get the sum assured or the claim amount, you can apply for the cancellation of your policy.

  3. Your car model is old - If you want to dump your car because it is an old model, then there is no point dragging your current insurance policy. You should definitely cancel it and look for a new policy, if you are going to buy a new car model.

  4. You are not happy with your current insurance company - Though, it doesn’t happen much, but there are times when you may not be satisfied with your current insurance company. The reasons can range from higher premium amount, less sum assured, more waiting period, stringent renewal process and so on.  Thus, you are looking for a new car insurance plan for a hassle free experience.

Process of Cancelling Your Car Insurance Policy -

  1. Update your insurance company immediately - You need to inform your car insurance company on an immediate basis or as soon as you decide to go for cancellation of your car insurance policy. This will allow your insurer to begin the cancellation process and carry out necessary formalities within a week or two.

  2. Follow the guidelines laid down by your insurer - The process will vary, depending on the insurance company you have taken the policy from. As a part of the cancellation process, your insurer can ask for your signature on the cancellation documents or the declaration form, giving you approval on policy cancellation. Some companies prefer to do it via email, or via a letter from the policy holder.  After this, you will receive the cancellation letter from your insurer, mentioning the amount refundable to you.

  3. Ask for your car insurance certificate - It is imperative to ask your insurance company to return your car insurance policy papers, which you submitted to them for cancellation process. It is mandatory to have them when you are buying a new car insurance policy and to avail of your No Claim Bonus.

  4. Check your refund status before the culmination of policy - Before your policy lapses, it is recommended that you ask for a refund from your insurance service provider. It’s your insurer’s liability to pay you the refund, if you have already paid the annual premium. The amount won’t be refunded, if there is sudden demise of the policy holder or the policy is terminated due to some unforeseen calamities. Ensure that you get the refund amount transferred to your bank account only. 

  5. Buy a New Policy Immediately - As soon as you cancel your old policy, remember to purchase a new car insurance plan, especially if you do not want to bear any penalties. If there is any loss or damage to your vehicle, due to any accident or some other unforeseen circumstances, then you might have to bear the cost of higher premium amount for unnecessary delay in buying the new policy. 

Conclusion:  

So, if you want to go for a cancellation of your car insurance policy and wish to go ahead with a cheaper one, or are getting a better deal from the competitor, make sure you take into consideration the cancellation process and requirements as mentioned above.