Cancellation of Insurance Policy

Cancel your insurance with a letter not just a phone call.
Cancel your insurance with a letter not just a phone call.

When you find a new insurance policy, it's important to follow the correct cancellation of insurance policy procedures.

Handling the Cancellation of Insurance Policy

Sometimes, when you've been with a certain insurance company for a long time, the rates can gradually climb to a level where you may be better off shopping around for better prices and canceling your current policy.

The procedure to cancel an insurance policy can vary somewhat, depending on the type of insurance that you're dealing with. This article covers both health insurance and automobile insurance, but the procedures outlined in this article can serve as a general guide when canceling any kind of insurance policy.

Canceling a Health Insurance Policy

Terminating a health insurance policy can be more complicated than most other types of insurance. A health insurance policy usually has a much longer list of rules and policies, so following the right procedure when canceling a health policy can ensure that you don't face any problems along the way.

  1. The policy holder needs to call the insurance company to cancel the policy. Don't simply submit a cancellation request by e-mail or through regular mail.
  2. Have your policy number handy, as well as your social security number, just in case you're asked for it.
  3. Make sure to get the name of the customer service representative that you speak with, and write down the confirmation number at the end of the call.
  4. Read through your policy carefully to determine what the refund requirements of your policy are. Most new policies have a grace period when you first purchase it, where you can cancel and obtain a full refund, usually within the first 10 to 30 days, depending on the insurance company.
  5. Some states do not allow a refund of an annual policy that you've purchased. Check with the public health department of your own state to understand the basic rules governing insurance cancellation.
  6. Always call the insurance company directly. Don't call your insurance agent or your employer, or any other second party to cancel it for you.
  7. Only call to cancel your old policy after you've already received your new policy. Or make sure the date of cancellation of your old policy coincides with the date your new policy takes effect.
  8. Follow up the phone call with a written notice reaffirming your request to cancel the policy. Mention the phone call and the name of the representative that you spoke with. Write that you are sending the letter to submit a written record of your cancellation as a follow up to the phone call.

Canceling an Auto Insurance Policy

Never assume that you can get a new car insurance policy and then just let your old car insurance policy run out. If you do not send in a written notice of your request to cancel your car insurance policy, your old insurance company will automatically renew the policy and send you a bill for the new premium. When you fail to pay the premium, the old insurance company will then automatically cancel the policy and submit your failure to pay to the credit reporting bureaus, which may damage your credit rating. In addition, the fact that you had a cancellation of insurance policy by the company will remain in your claims history record, and it could be harder to obtain car insurance in the future because of it.

Play it safe by canceling your old policy when you obtain a new one. First call your insurance company directly and request for your policy to be canceled. The insurance company will send you a cancellation request form. If the information is already filled in when you receive it, read through it carefully to make sure all of the information is correct before you sign it. In particular, make sure that the cancellation date is on or after your new auto coverage starts, or you could end up driving without any coverage for a few days. That's never a good idea.

When you send in your insurance cancellation request form, attach a copy of the ID card from your new insurance company as evidence that you are covered by another policy. This will streamline the process because they will not need to ask you for evidence of your new coverage. In a few weeks, you'll receive confirmation by mail. Make sure to file this away for future reference.

Car insurance companies typically provide a partial refund, prorated for the remainder of the year that you do not require coverage from them. While it can sometimes be a hassle to make the phone calls and fill out forms, the good news is that in the end you'll likely end up with some sort of refund check for your efforts.

More Information

For additional information about health and car insurance, read the following LoveToKnow articles:

Cancellation of Insurance Policy