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 auto insurance policy is still active -you would have to cancel your current car insurance policy.
Regardless of the case, you should contact your car insurance company immediately after selling your car.
We’ll go through the essential actions you need to take with your car insurance company in this guide through the cancellation process of your current policy with your current provider.
If you want to sell your car, you should cancel your auto insurance with your current insurer 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 auto insurance company so that your auto insurance coverage can be updated. If you don’t replace your car insurance policy right away, your car insurance coverage may be canceled. Ask your auto insurance company about what options are available to keep your auto insurance policy current.
Why do People Cancel Their Auto Insurance Policies?
It’s not outlandish to cancel your car insurance policy. 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 car insurance policy.
Basically, any major changes to your driving habits or the number of drivers in your household will determine when it’s time to cancel your former auto insurance policy and get a new car insurance policy.
It won’t harm your credit score to cancel your auto insurance, so don’t panic.
How to Cancel Your Auto Insurance Policy?
These cancellation process steps are specifically for those who have sold their car while the car insurance policy was active. However, these tips can also be used if you are in the process of buying a new car and you want to insure it.
Contact Your Car Insurance Agent or Broker
Inform your auto insurance company that you have a new car or are in the process of buying one and you want to insure it with the same insurance carrier. Ask your car insurance company if there are any penalties for canceling your auto insurance policy before it expires. Canceling your car insurance policy before the end of your coverage period just to get one with another auto insurance company can indeed result in your current insurance provider charging you cancellation 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 car insurance agent or broker because your auto insurance company will not be aware of this change in the vehicle registration until you notify them.
Add a Vehicle Replacement to Your Existing Auto Insurance Policy, If You Can
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 your 12-month policy with your auto insurer.
All you need to do is give your car insurance company your new car’s make, model, VIN, and any other information your current insurance company requests of you. Not only is this less of a headache, but vehicle replacement will also save you money.
Begin the Car Insurance Cancellation Submission Process
If unable to, you’ll formally submit a statement to your car insurance company that you wish to cancel your auto insurance policy. There are specialized forms available on the website of your auto insurance company that you can fill out, and mail to your car insurance company. That’s pretty much all there is to it, it’s quite a straightforward process that starts with your cancellation notice or cancellation letter being received by your current or previous insurer.
Once they receive your cancellation form, the insurance carrier can cancel your current car insurance policy. Again, be sure that you include your new car’s information and how you came to be the owner in the cancellation letter. The previous insurer will then refund you for your twelve or six-month policy unused premium. This usually depends on the car insurance company, but you can check beforehand if you receive any money for pre-paid premiums after a car insurance policy cancellation.
Signing Vehicle Paperwork
Without a legal transfer of vehicle ownership, there is no car 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 car insurance cancellation or transfer much smoother according to insurance experts.
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. Auto insurance cancellation would be impossible without this completed form.
In order to free yourself from the liability of the car once it leaves your ownership, you should take the license plates off since they belong to you. Never forget your license plate or 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 Policy Goes Uncanceled After a Car Exchange or Sale?
There is a lot of responsibility you have to make sure your auto insurance policy is canceled by your insurance carrier when it’s appropriate. While the DMV will know your car is sold, car insurance companies will not, so you as the policyholder must notify your auto insurer.
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 car insurance company, you are still liable for the damages. You may even be stuck with their car insurance policy premiums after the car leaves your care.
What to do When You Didn’t Inform Your Auto Insurance Company of a New Car
You can begin the car insurance cancelation process at that point and ask for a refund of the auto insurance premium rates you were paying for a car you no longer owned. This is another thing that depends on your car 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 car insurance policy at any time, but it helps to not wait a long time to do so.
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