The thing about car insurance policies is that they are attached to the vehicle rather than the driver. So, if you’re selling your car or getting a new one while your policy is still active -you would have to cancel it. Regardless of the case, you should contact your insurance provider immediately after selling it. We’ll go through the essential actions you need to take with your insurance company in this guide. If you want to sell your car, you should cancel your insurance immediately. You don’t want to be in charge of a car that no longer belongs to you. If you acquire a new vehicle immediately, notify your insurance provider so that your coverage can be updated. If you don’t replace your car right away, your insurance coverage may be canceled. Ask your auto insurance provider about what options are available to keep your policy current.
Why do People Cancel Their Auto Insurance Policies?
It’s not outlandish to cancel your car insurance. In fact, there are a couple of instances where it would be the natural and best thing to do. Auto policies can be canceled due to a lifestyle change such as marriage, major moves, and new drivers being added to the policy. Basically, any major changes to your driving habits or the number of drivers in your households will determine when it’s time to get a new policy.
How to Cancel Your Auto Insurance Policy
These specific steps are specifically for those who have sold their car while the insurance policy was active. However, these tips can also be used if you are in the process of buying a new car.
Contact Your Insurance Agent
Inform your insurance provider that you have a new car or are in the process of buying one. Ask your insurer if there are any penalties for canceling your policy before it expires. Canceling your insurance policy just to get one with another provider can result in some extra fees. From the vehicle registration side of things, your state’s Department of Motor Vehicles will know when you get a different car because you will have signed the ownership forms. It’s important to contact your insurance agent because your provider will not be aware of this change until you notify them.
If You Can, Add a Vehicle Replacement to Your Existing Policy
You can save money and time by adding a vehicle replacement to your already active auto insurance policy, so there’s no need to cancel them. All you need to do is give your insurer your new car’s make, model, VIN, and any other information they request of you. Not only is this less of a headache, but vehicle replacement will also save you money.
Begin the Cancellation Submission Process
If unable to, you’ll formally submit a statement to your provider that you wish to cancel your auto insurance policy. There are specialized forms available on their website that you can fill out, and mail to your insurer. That’s pretty much all there is to it. Once they receive it, they can cancel it. Again, be sure that you include your new car’s information and how you came to be the owner. They will then refund you for your policy. This usually depends on the insurance company, but you can check beforehand if you receive anything after a cancellation.
Signing Vehicle Paperwork
Without a legal transfer of vehicle ownership, there is no insurance cancellation policy. These forms can also be obtained at your state’s DMV website. In addition to the car’s and previous owner’s information, you should also include information such as the mileage recorded on the odometer. Whether or not both parties sign the bill of sale depends on the state. In some events, you may have to have the bill notarized.
Transfer And Liability Notice And Paperwork
This is more so a step of selling your car. However, it’s important to know because having the following paperwork can make your insurance cancellation or transfer much smoother. When selling your car, you should have the buyer sign a liability release form, so you are no longer liable for future activities of the vehicle. This also protects you from problems that may arise with the car once it leaves your care. This form also plays a pivotal role in notifying the DMV of the vehicle sale. This whole process is expected to take under two weeks for both the seller and the buyer. Insurance cancellation would be impossible without this completed form.
In order to free yourself from liability of the car once it leaves your ownership, you should take the license plates off since they belong to you. Never forget your plates as replacing them can cost you. Make a copy of the receipt and sign the car title, then collect personal contact information from the new owner.
What Can Happen if Car Insurance Goes Uncanceled After a Car Exchange or Sale?
There is a lot of responsibility you have to make sure your insurance is canceled when it’s appropriate. While the DMV will know your car is sold, insurance companies will not, so you as the policyholder must notify them. One of the worst-case scenarios for an uncanceled auto insurance policy is being liable for a car accident you had no part in, but the car you once owned did. To the insurance company, you are still liable for the damages. You may even be stuck with their premiums after the car leaves your care.
What to do When You Didn’t Inform Your Insurer of a New Car
You can begin the cancelation process at that point and ask for a refund of the rates you were paying for a car you no longer owned. This is another thing that depends on your insurance company as they may be happy to provide a refund or they may not. It helps to have several copies of the vehicle paperwork from the time of the exchange to help the process be more efficient. The good news is that you are allowed to cancel your insurance policy at any time, but it helps to not wait a long time to do so.
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