Laura Berry is a former State Farm insurance producer and insurance expert.

Full Bio →

Written by

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

Full Bio →

Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 14, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.

Here's what you need to know...

  • As the named insured, you have the right to terminate coverage anytime during the term
  • Most insurers will request that you request your cancellation in writing
  • You may be entitled to a refund for unearned premiums but companies can charge a fee
  • If you want to backdate your cancellation, you’ll need to provide proof of coverage
  • If you still own the car, you’ll need new insurance coverage to avoid penalties for no insurance

When you buy a traditional personal auto insurance policy, you have the option to choose either a 6-month policy or a 12-month policy. While some like policies that come with a shorter 6-month term, binding your auto insurance policy for an entire year can keep you safe from rate hikes or surcharges for double the time. This is why it’s so tempting to choose an annual policy over an alternative. Compare car insurance rates NOW by using our FREE tool above!

Unfortunately, when you’re applying for insurance you have no way of knowing what could happen throughout that year’s time. You may not need your coverage for the entire year for a number of reasons or you might simply be unimpressed by the customer service the auto insurance company offers. Instead of putting off switching carriers or paying for coverage, you won’t use, you’ll need to understand your rights under your insurance contract.

While your declarations page does show a term with a date of expiration, you’re not obligated to keep your insurance through that period just because you’ve applied for a longer-term than you need.

There are plenty of options on the car insurance market, so finding an insurance company with affordable is not that hard. When your look for car insurance quotes and find a good deal, you might think of canceling your current car insurance policy.

Here’s your guide to canceling your insurance mid-term so that you’ll know just what to do and just what to expect. After all, you don’t want to be driving around without car insurance, as lapses in insurance coverage can lead to higher premiums in the future.

What’s your right to cancel your auto insurance?

Auto insurance might be a legal contract, but when you enter into the contract you have rights. The Department of Insurance in each state takes consumer rights very seriously and has put into place specific laws on how and when your policy can be canceled by the insurer and when you’re allowed to request a voluntary cancellation.

The auto insurance carriers are limited as to when they can cancel your coverage after a policy has already been underwritten and issued. Insurers can’t just have a case of regrets and must show they have good reason to rescind or cancel your cover. Some of the reasons that your insurer can cancel or rescind your policy include:

  • Fraud or misrepresentation
  • Suspension of your driver license
  • Non-payment of premiums

The auto insurance provider might have to follow a strict set of rules as ordered by the law, but you as the consumer don’t. When it comes to canceling the policy, the contract is written to favor you as the insured. As long as you’re the named insured, you have the authority to terminate your contract with the insurer effective the date you give. This date can be before the term expiration date but can only be backdated if you’ve sold your car or if you have proof of other insurance.

Enter your ZIP code below to compare car insurance company rates.

 Secured with SHA-256 Encryption

In which circumstances you might need to cancel your insurance early?

Most consumers don’t buy insurance one day with the intention of canceling just weeks later. You can’t predict what’s going to happen over the course of your term so the chances that you’ll need to eventually cancel a policy early are higher than you might think. Here are some common circumstances where policyholders needed to cancel their coverage in the middle of their term:

  • The named insured no longer has a driver’s license
  • The only vehicle on the policy has been sold
  • The vehicle is in storage and the owner doesn’t want physical damage coverage
  • The family is not happy with the service they have received from the carrier
  • The household shopped around and found cheaper premiums with a different provider
  • The vehicle is being registered in a new state
  • The driver has decided to move overseas and will take the vehicle with them

How to Cancel Your Coverage When You No Longer Own the Car

When you sell the only vehicle that you own, you have no other option but to terminate your contract or you’re paying for a service you don’t need on a car you don’t own. Since you can’t legally be forced to keep coverage on a car you don’t have an insurable interest in, the company must process the cancellation as of the date of sale. This is true even if you sold the car a month ago and forget to notify your agent.

If you need to have your cancellation backdate on a vehicle that’s been sold, you should put the request in writing.

You’ll need to put the reason for cancellation, the date of the sale, the address where you want paperwork sent, and your signature. You’ll also need to attach the bill of sale or the release of liability form that you submitted to the DMV to show that you’re no longer liable for damages cause behind the wheel. To prevent the hassle, it’s best to process your cancellation right away.

How to Cancel Your Insurance When you Switch Carriers

If you still own your vehicle, you’ll need to be very careful on the date that you request cancellation. Since you’re still the registered owner, you’re still the party who must answer if you have a lapse of insurance. In most states, you must have valid insurance on file at all times. Requesting the wrong cancellation date can lead to a lapse that results in fines and penalties that you weren’t prepared for. This is why you should cancel your auto insurance only after you purchase a new plan.

It’s very convenient to have your new insurer submit your request for you so that all of the right paperwork is forwarded. Since companies cannot charge you for double coverage on the same car, the request must be processed on the effective date of the new policy.

It’s important to contact an insurance agent to find out what is the cancellation policy insurance company and their cancellation fee before you cancel your insurance coverage. If the company requires a written notice, you may also need to send a cancellation letter.

Enter your ZIP code below to compare car insurance company rates.

 Secured with SHA-256 Encryption

Will you be charged for early cancellation?

In some states, the carrier has the right to charge a flat fee or a percentage of the remaining premium as a fee for early termination. This is referred to as a short-rated cancellation. Be sure that you check the terms of the policy to see if you can expect fees.

If you’ve been nervous to secure new coverage, you shouldn’t be. You have the right to find a carrier that will charge you better rates. When you’re ready to buy a new plan, use an auto insurance comparison tool and you can find the bargain rates in a fraction of the time. Start comparing car insurance rates now by entering your zip code in our FREE tool below!