How To Cancel Car Insurance Policy?
As a car owner, there could be certain scenarios where you might want to cancel your car insurance. In the event you decide to cancel your car insurance, you will have to follow certain procedures which are quite straightforward. Also, since Car Insurance is mandated by law, it is important that you obtain an alternative car insurance unless you don’t need one.
Scenarios, where you might decide to cancel your car insurance policy, could include:
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Unfortunate Demise: In the unfortunate event the car owner has passed away and the car is no longer being used.
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Car Stolen: In the untoward situation where one’s car is stolen, the insured might look to get a refund of his/her car insurance premium – especially if the premium has been paid out recently.
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Unsatisfactory service: There can be instances where you are unhappy with the levels of service received from your current insurer. In such cases, you are at liberty to discontinue or cancel your car insurance with them. Have explained this in further detail below.
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Traveling Abroad: If you are on a long-term deputation to another country (and your family does not require/use your car), you might end up canceling your insurance policy.
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Car Sale: If you intend on selling your car, you have the option of transferring the existing insurance policy to the new owner or canceling the policy. If you decide to choose the latter option, you are eligible for a refund provided the policy has not elapsed a certain time period – have explained this in further detail below.
Please note that as a consumer, you are at liberty to cancel your car insurance policy for any reason whatsoever, albeit, subscribe to an alternative car insurance policy as car insurance is mandatory per the law.
Car insurance companies provide a free-look-in period – the minimum period during which a customer is free to return/cancel a policy if they are unhappy with the policy construct, customer service, or any other aspect. This minimum period is usually 14 days but may vary depending on the insurer. Once the cooling period (the minimum look-in time) is complete, the insurer will charge you a certain percentage of the premium depending on the number of months passed from the policy period. This percentage could be in the range of 10% for cancellations within the first month, 20% for cancellations within the second month and so on. The older the policy, the higher the cancellation charges. However, please note that the policy cancellation is usually not permissible if eight months have elapsed since the time of purchase.
Insurers usually have a cancellations policy note up on their website. You should go over the same to understand your eligibility to receive a refund and the specific procedures to be followed in case of the insurer you are dealing with.
As a first step, intimate your car insurance company, preferably via email, of your intention to cancel the insurance policy. The insurer will convey the documents to be furnished in order to process your request. Since car insurance is mandatory per the law, your current insurer might request you to submit a copy of the replacement policy before processing your refund, if any. You may also need to send a self-attested letter authorizing the insurer to cancel your car insurance policy. Upon successful processing of your request, you will get a letter from your insurance company confirming cancellation of your car insurance. The company will adjust the premium paid against applicable cancellation charges and refund the remaining amount – the same will be duly indicated in the letter sent to you.
As mentioned earlier, since it is mandatory to have an auto insurance policy, it is important that you get a replacement policy immediately while canceling your current policy – unless you no longer require one. In the event you fail to do so, you stand exposed to a penalty for uninsured driving. Further, your risk factor increases during the interim period as damages resulting out of any damages caused during this period shall be borne by the individual. Therefore, go ahead and cancel your car insurance policy if you must, but get a replacement cover in parallel to avoid exposure to any risks.