Is it a bad idea to cancel auto insurance?

It is a bad idea to cancel auto insurance if you don't have another policy lined up. Even if you find a quote that promises better coverage and rates than your current policy, you shouldn't cancel your insurance unless you know how to cancel insurance without charges or fees. If you want better auto insurance rates shop around online for a new policy so you never experience a lapse in coverage.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Aug 31, 2021

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Can't-Miss Facts

  • Canceling your auto insurance can save you money
  • You should verify if your insurance company charges a fee for early cancellation
  • Drivers can shop online to find excellent rates and great coverage

If you want affordable auto insurance, is it bad to cancel auto insurance policies that you already have?

If you were to switch auto insurance companies, it could actually be a great way to save money, and — even better — you can change your insurance at any time you want.

Of course, there are a few scenarios in which you should wait before canceling your auto insurance, and you should know how to cancel insurance without charges.

It is bad to cancel auto insurance without a plan, but you can enter your ZIP code today to receive free quotes from companies near you.

When can drivers cancel auto insurance coverage?

Is it bad to cancel auto insurance for auto insurance quotes you haven’t finalized yet? Yes, it can be, but here are the top two reasons when drivers should cancel auto insurance:

  1. When you sell your car
  2. When you’re moving to a new state

Selling your car is an excellent reason to cancel your insurance policy but only if you will not be purchasing another vehicle to drive. Of course, if you are going to be replacing your vehicle with a new one, then update your policy without canceling it.

If you move to a new state, you’ll have to cancel your old policy and get a new one to be compliant with the insurance laws in your new home state.

When Drivers Should Not Cancel Their Auto Insurance

If you want better auto insurance rates, is it bad to cancel auto insurance you already have? Yes.

You should never cancel an auto insurance policy until you have another one in place. Changing insurance companies can reduce your rates, but never cancel coverage simply because you’re driving less frequently or letting someone else borrow your car.

While driving less can save you money on gas and your insurance, especially if you switch to pay-per-mile insurance, that doesn’t mean you should cancel your policy.

Even if you just are popping out to the store once or twice a week, you still need to be insured whenever you drive.

If you are going to let someone borrow your car for some time, you still need to keep your vehicle insured even when you won’t be the one driving it. Even if you won’t be driving your vehicle for a long period you shouldn’t cancel your policy.

For example, if you are a soldier and are about to be deployed overseas, you can suspend coverage which drops your rates dramatically without canceling your policy entirely.

It is a bad idea to cancel auto insurance because then you have a lapse in coverage, which could result in much higher rates when you go to reinstate your policy.

So, if you want to buy auto insurance, is it bad to cancel auto insurance policies that are too expensive? No, but you need to know how to do so first.

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How do I cancel my auto insurance policy?

According to auto insurance cancellation laws, you can cancel a standard auto policy at any time. Before you cancel in the middle of a policy period, verify if your auto insurance company charges an early cancellation fee.

If this is the case, then you can plan your cancellation in such a way that you won’t have to pay a fee and won’t have any lapse in coverage.

While canceling your auto policy isn’t difficult, it can be tedious. Knowing how to cancel auto insurance smoothly means knowing which steps to take with your current provider. You will need to most likely send in a written notice that contains specific information to your insurance company so they know when you will be ending your business relationship with them.

How to Send a Cancellation Notice to Your Provider

When you send in your cancellation notice, either via snail mail or email, include the following pertinent pieces of information:

  • Your current policy number
  • The policy number with your new insurance company
  • The date your current policy should end

Now, if you will be selling your vehicle and don’t plan on driving again, your cancellation notice should also include:

  • Your current policy number
  • The date your current policy should end
  • The bill of sale for your vehicle
  • Proof of that you have relinquished the plates

When you let your insurance company know that you will be canceling your services, don’t be surprised if you are asked to sign a form with the requested cancellation date listed. This serves as a way to protect both you and the insurance company.

Is it bad to cancel auto insurance?

Don’t risk a lapse in coverage. Before you cancel auto insurance, shop around for insurance quotes and compare auto insurance companies you’re interested in before making any purchases. Compare at least three quotes so you know if you are getting the best value and coverage.

Even if you’ve found yourself a quote that promises better coverage and better rates than your current policy, you shouldn’t cancel your insurance until you know that you can do so without fees and your new policy is active so you can avoid any lapse in insurance coverage.

If you know how to end your insurance policy without any repercussions, you can cancel auto insurance whenever you like if a better offer turns up.

It is bad to cancel auto insurance without having another policy in place, so enter your ZIP code below to find affordable auto insurance coverage from companies in your area.

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