Find out if your extra car loan payments will go straight to your principal and how these payments will affect your car loan.
During difficult economic times, consumers dealing with reduced income or emergency expenses often look for ways to cut back on daily or monthly expenses. While there are many basic measures you can take to cut costs. From generating a detailed budget to deferring payment arrangements with lenders, more drastic options may need to be considered. For example, cancelling your automobile insurance. If you take this step responsibly, it can save a significant amount on a monthly basis as well as over the long term. In order to take this leap prudently, it’s important to understand how to properly cancel your auto insurance.
When It Is A Good Time To Cancel Your Auto Insurance?
The first thing to get a thorough understanding of is the best possible time to complete the cancellation. Perhaps you are cancelling because you found a different arrangement with a better rate, or have decided to stop using your car for the foreseeable future. In any case, optimal timing can prevent you from the risk of incurring penalties.
Cancelling Your Auto Insurance At Renewal
Though you can technically call off your insurance policy at any time, it is best to cut ties when your agreement is getting renewed. Typically, this is viewed as the most responsible time to stop your insurance. Without actively (or passively) renewing the contract, you can simply end your policy. While most companies offer a chance to cancel your insurance online, you may have to call in and speak with a customer service representative. The process is fairly straightforward, including you confirming your identity and policy number before cancelling.
What If You Need To Cancel Mid-Policy?
It’s important to know that you can call off your policy at any given time. However, it helps to perform some due diligence to ensure that either changing your policy for cancelling all together makes sense financially. Consider if you have loyalty-oriented pricing arrangements that may offer you a better deal to stay with the same company. Be certain that, if you are going with a different company, you will actually get a better rate. There are multiple approaches to this, including getting a more skeleton form of coverage. While a new cheaper policy might only cover the basics, it may be able to save you enough money to get you through a tight time.
On the other hand, if you are parking or selling your vehicle, this is less of a concern. Simply be sure that you won’t need the insurance, and that it covers you during any travelling to the site of the car sale. It is a legal necessity to have auto insurance if you are driving your car, even for one short drive. Due to this, it is absolutely essential to be exact about the timing of your coverage. Most companies offer a daily price method so that you can get your monthly fees prorated. So long as you are responsible for keeping the coverage you need, it will be fine to cancel in the middle of your policy.
Find out if your insurance covers your friend driving your car.
Steps To Take To Cancel Your Auto Insurance
Once you’ve decided that you want to cancel with absolute certainty (and you selected the right time to make the leap), there are some simple steps to follow. While the procedure is fairly standardized across the insurance industry, it’s prudent to check with your individual provider. Essentially, the steps are as follows:
- Get in contact with your policy provider: Whether digitally, at their offices, or over the phone, the first step is to touch base directly. The agents working for the company will be the most familiar with all options open to you. Additionally, they have access to your policy and its payment history. Once you get in touch, you can get all the information you require.
- Discuss your cancellation options: By speaking to someone with the full picture, you can express any concerns and go over your needs. Perhaps cancelling is the way to go. Alternatively, you might learn about a preferable arrangement. You might be able to cut costs by reducing services associated with your existing policy. There may be a way to bundle with your home insurance to save, as well.
- Research a new provider: Assuming you are keeping your vehicle and plan to drive it, even if it isn’t as often as before, you need to find a new provider. Ensure that you consider more than just price. It is a matter of service, coverage, and benefits. Consider bundling multiple types of insurance, try to reduce your expenses by simplifying your coverage, or select an option that just costs less.
- Cancel old insurance: Now that you know what plan you’ll be moving to, proceed with cancelling your old plan. The next step is to proceed with the cancellation. Ensure that you follow the instructions given to you by the person with whom you spoke. Generally, it is a quick process. Depending on when you cancel and the underwriting of your specific policy, you will either receive a refund or pay a small fee. Knowing what to expect can help you budget properly.
- Time it properly: Last but not least, be absolutely certain that there are no lapses between your coverage periods. This eliminates risk and is well worth the extra few dollars it could cost.
Pros And Cons Of Cancelling Your Auto Insurance
There are various different benefits and pitfalls associated with cancelling your insurance. While they are unique to each situation, there are some common truths.
- Reduces your monthly expenses
- Enables you to accrue savings
- Frees up funds to reduce debt
- Easy to plan and execute
- Pause in coverage could impact future rates
- Leaves you without protection for your car
- Reduces your transportation options
- Limits your ability to bundle insurance services
Consider Asking About Reduced Coverage Before Cancelling
If the drawbacks of cancelling your insurance policy give you pause, there are other options. When you speak directly with a representative of your insurance company, bring up the idea of reducing your coverage. Sometimes, by trimming down your services to the bare necessities, you can save enough to be able to keep the insurance. After discussing a reduction in your current policy, it’s prudent to research competitor pricing. If you can find an arrangement with a different company that has the same features but is better priced, opt for that instead.
Make sure you avoid these insurance mistakes.
Can I cancel my insurance policy halfway through the year?
Will I get any money back if I cancel my auto insurance?
Why did my insurance provider cancel my policy without me asking?
So long as you put the proper thought and consideration into cancelling your insurance, it can be a good way to go. Be certain that you have written proof of the cancellation of your policy. Keeping all of your paperwork for your records can prevent any pitfalls in the arrangement. Bear in mind that it is fairly simple to get car insurance in the future if you choose. By taking prudent financial steps today, you can make way for a brighter future. Cancelling automobile insurance can be a useful step in this direction.
Rating of 5/5 based on 7 votes.
Largest Lender Network In Canada
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
50 Free Trades Offer
Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.
Earn 5% Cash Back With Neo
Earn an average 5%¹ cash back at thousands of partners and at least 1%² cashback guaranteed.
Build Credit With Refresh
Build credit while spending money with the Refresh Financial VISA card.
Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.