Canceling car insurance is a simple process when you know how. You have to call the company and then wait for them to send you the cancellation form. This guide will show you how to cancel your car insurance in just a few minutes, saving both time and money!
If you cancel your policy during the time that it's active, you will be refunded for how much of the premium you paid before tax. If you were given a long-term policy with a smaller monthly fee and paid in advance, the insurance company must refund any money left over after the 1 year.
Motor insurance is mandatory in India as per the Motor insurance Act. Any vehicle plying on road needs to have a valid third party motor insurance policy; failing would result in a fine as per the law. There are certain times when the policy needs to be canceled and the customer needs to know the process and conditions under which a motor insurance policy can be canceled.
The same effort should be put before canceling a motor insurance policy which is put while purchasing the car. The consequences and advantages of car insurance cancellation should be thought out well before taking a decision.
Table of Contents:
What are the Reasons for Cancellation of a Car insurance Policy?
Below might be the reasons for policy cancellation:
- Duplicate policy: There might be instances when you have two or more car insurance policies unknowingly. This can be due to the below situations:-
- Auto renewal of Car insurance opted, the amount debited from your account, and the renewal policy sent in your mail.
- Someone else in your family might have renewed car insurance without informing you.
- You might renew again if your payment status is not known and the policy is expiring shortly.
- Car is sold: Normally all car insurances are valid for 1 year from the date of policy start. But if you have taken a long term policy and you are planning to sell your car, then there is little chance for you to wait till the insurance is over to sell the car. In such situations, it is necessary to cancel the insurance policy and get the pro rate premium refund. The new owner of the car would be responsible to take insurance in his name to avoid any legal issues arising out of third party damages.
- Car is to be scraped: If your car is old and obsolete, then you would be selling it for scrap. In such situations, you need to cancel the policy and apply for a refund.
- Dissatisfied with the current insurer: It happens in some cases that most of the customers are dissatisfied with the insurance company after the sale is done. There are a few scenarios where the customer is frustrated to such an extent that he /she would like to cancel the policy.
- Shifting To a New Insurer: Some people are not satisfied with the service of the previous insurance company or may have had an unpleasant interaction that may bring them to look for a different insurance provider or company. This situation will bring the concerned person to cancel their existing policy to securely shift to a new insurance company.
Why is it Important to Cancel Your Car Insurance Policy?
The average car insurance policy lasts for 3 years. After this time, the insurer may offer a new policy or allow the customer to cancel their policy. If you are canceling your car insurance you should be aware of the refund process and what to do with your no-claims bonus.
Car insurance is a bit expensive to some people and it is always worth the cost. Here are some reasons why you should consider canceling your car insurance.
- You don't drive often
- You don't want to pay for the deductible
- Your car is not worth much
- You want to switch to another company
- You cannot longer bear the premium costs
- You are not satisfied with the features and benefits of the plan
- Your driving record isn't perfect.
How to Cancel Car Insurance Policy?
- Purchase a new policy before canceling: As soon as you decide you're ready to make a switch, be sure to let your existing insurer know as they might offer an extension. Not having any coverage can also increase your rates because driving without insurance is illegal in most places.
- Contact your insurance provider: To cancel your existing insurance policy, you may call your provider, talk to an agent through the company’s mobile app, mail in a cancelation request, or speak to an agent in person - it depends on which options are available.
- Ask to speak with an agent about cancelation: Different providers will have different requirements for canceling a policy. For example, some providers may require you to pay a cancellation fee or give a 30-day notice before your cancellation date. It may be beneficial to contact different providers to find out what they require.
- You may be required to sign a cancelation letter: Cancelation letters are not as commonplace as they once were due to the convenience of email and online forms; however, some auto insurers may still ask that you send a letter requesting your coverage to end. Canceling your home insurance can be done by filling out an online form or by hand-writing a letter. The letter typically includes your policy number, name, and date you want your policy canceled. If you paid for your policy upfront and have remaining months of coverage, you may also choose to include a refund request for the unused portion of your policy.
- Once finalized, request a policy cancelation notice from your auto insurer: Carriers will generally send a notice confirming that your policy has officially been canceled. If you do not receive a notice, you may ask that your insurer provide one to ensure you have a written record of the transaction.
Process of Car Insurance Cancellation:
Step 1: You need to inform your insurance company or broker in writing mentioning the reason for the cancellation of your car insurance. You would receive a call from the insurance company to enquire about the reason for cancellation; they will try to retain you if possible.
Step 2: If you are still not satisfied with the insurer, then the policy cancellation process will be initiated which takes up to 15 days. Before cancellation they would ask for some documents depending on the case; in the case of “switching insurance companies,” you need to submit a new insurance policy. In the case of “Selling your car”, they might ask for a Sale Deed.
Step 3: Once all the required documents are submitted from your end, the insurance company will verify them and your cancellation request will be approved.
How Refund Process in Car Insurance work?
After the car insurance policy is canceled next thing to be done is a premium refund to the customer account. The following are a few scenarios where the refund is processed differently.
- Cancellation before the start date: If the policy is canceled before the start date of the new policy, then the full premium will be refunded to the customer’s account.
- Cancellation after the start date: In case the policy is canceled after the risk start date then the premium is refunded on a pro-rata basis to the customer. This is because insurance protection has been given to your car till the time of cancellation.
Refund Time:
The turnaround time (TAT) for the amount to reflect in your account would range from 7-14 days. It is advisable to check with your bank on the refund status.
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Genuineness of Car Insurance Policy:
Picking the right car insurance is one of the most important decisions to make. There are many factors to take into account, including insurance providers, policy types, and coverages that you need. Buying from a certified insurer will help ensure that your claim is processed as efficiently and cost-effectively as possible in case something unexpected happens.
While there are several ways to get cheaper car insurance in the market, if you get a deal that seems too good to be true, the possibilities are it might be not genuine. If you don’t take the right precautions when buying insurance, there's a chance that you could fall victim to scammers.
This applies to vehicle insurance since you usually buy it from your agent rather than directly from an insurer. Unfortunately, people are lured into buying fake insurance by immoral fraudsters who sell policies that are either not genuine or canceled retrospectively. Being a victim of fake insurance can have serious consequences.
How To Check Whether Your Car Insurance Policy is Genuine?
There are many ways to purchase car insurance and the most popular option is to approach an agent. Insurance companies appoint intermediaries to sell their car insurance policies and the list of intermediaries includes Individual Agents, Banks, Car dealers, Corporate Brokers & Online.
Online way of selling insurance is new to the insurance industry and is gaining traction recently. Just a few years the insurance premium payments were done mainly through cash mode and a receipt was given to the customers as a token of payment received. This has paved the way for many fraudsters to take the insurance premium from the customers dubiously and give them fraud insurance policies.
Example: Mr. Sabin purchased a Car insurance policy from one of the agents who live in his vicinity, the mode of premium payment was Cash mode and a car insurance policy was given to Sabin by the agent. At the time of taking the policy, Sabin didn’t verify the authenticity of the Agent and trusted him blindly and proceeded for premium payment.
One bad day when Sabin was driving on his way from work to home, he met with an accident, and his car was damaged. He took his car to a nearby garage and informed the insurance company of the accident.
The insurance company clarified that it didn’t issue any policy to Sabin and the policy he holds is a fraud policy. When Sabin went to meet the agent, he has already left the place without informing anyone. Now Sabin has to pay for the damages to get his car repaired.
Let us understand the ways to check whether the car insurance policy provided to us is genuine or not:-
- Call your insurance company: The most effective way to find out whether your insurance policy is genuine is to call your insurance company and ask them if the policy number printed on the policy copy exists in their database or not. This way you can ensure the genuineness of your car insurance policy.
- Pay by Cheque/Card/Online: Avoid paying the car insurance premium by Cash. Instead use different methods such as CHEQUE, CARD PAYMENT, or ONLINE PAYMENT. The new age payments such as digital payments are secure and fast compared to the conventional methods. You also get an SMS whenever your cheque is used. In the case of cheque payment, you can ensure that the payment is done to the insurance company directly as you write the name of the insurance company on the cheque. In case of account transfer, you can be aware of the recipient details, and make sure that the insurance company name is displayed in the recipient details.
- Collect your receipts of payment: After the payment is done don’t forget to collect your receipts. These receipts are proof of your premium payment. In the case of new age digital payments, you’ll receive a soft copy of the receipt in your mail and most cases, the policy copy will be ready to download immediately after the payment.
- Verification Links: In some cases after the insurance premium payment is done a verification link is sent to you on your registered mobile number and email. By clicking this link you can verify the genuineness of your car insurance policy. If you find out that the policy number is invalid, then you need to contact the insurance company immediately and notify them via email asking them about the authenticity of your car insurance policy.
- QR Code: Nowadays insurance policy copies come with a QR code when scanned lets us know the details of the policy. The IRDA has made it mandatory for every insurance policy to have a separate QR code for the insurance policies sold after 2015. This code when scanned takes you to a different page where the details and status of your insurance policy are displayed. Be cautious with agents and other portals which do not provide a QR code in your insurance policy.
- Insurance company direct payment link: If you are taking an insurance policy from an agent or online make sure that the link sent to you redirects to the insurance company payment page. This ensures that your premium is directly received by the insurance company with fewer chances of committing fraud by the agent. The payment confirmation is given directly by the insurance company if the payment is made using the direct payment link. The first party car insurance price depends on many factors such as the Make, Model, Cubic capacity, Age of the car, and the zone of operation of the car.
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Disclaimer: We at PolicyBachat send the payment link to the customer directly from the insurance company to ensure that the payment is received by the insurance company.
Frequently Asked Questions:-
Is There a Penalty for Cancelling My Car Insurance Earlier Than Expected?
The early cancellation fee for car insurance is usually the percentage of the annual premium that would have been paid for the remaining months of the policy. This fee varies from company to company and it can be as low as 10% or as high as 100%.
The penalty for canceling your car insurance before your renewal date can be high. It is calculated on a pro-rata basis and it is calculated by dividing your total annual premiums by 12 and multiplying that number by how many months you are canceling in advance.
Will You Be Eligible For A Refund?
If you cancel your car insurer's policy before the end of your current term, you'll get a refund for the remaining period. If you cancel after this time, when you'll have paid in full already, there will not be a refund for what remains of the cover. If you apply for the insurance before it starts, you are likely to get back most of the money (minus a processing fee). If you do it after it starts, a refund may vary depending on how much time has passed since.
Do I need to cancel my policy if I move to another state?
This is a question that many people ask themselves when they are moving. In most cases, you don't need to cancel your policy. This is because many of the top car insurance companies in India offer coverage across state lines. You may be able to stay insured under your current carrier even if you need new coverage.
Can I cancel some coverages without canceling the entire auto policy?
Some drivers choose to save money by dropping expensive coverages such as collision and comprehensive after they pay off their vehicle. They may also drop other types of insurance if they find them to be unimportant. Drivers may want to keep required liability policies in case anything unfortunate occurs.
Do I need to do something specific to cancel if my car insurance company drops my coverage?
If your insurance company stopped providing coverage for you, this means your current policy has been canceled. All you will have to do is find a new insurer and make sure they cover the types of vehicles you own.
Conclusion:
Here are the reasons you should consider canceling your car insurance and how to do it right. It's best to follow these steps carefully as canceling your insurance is not something most people want to make a hasty decision about.
We recommend a car accident policy, in case something happens and you haven't sold the car yet. If you need help, our team can handle it for you! Compare quotes with different insurers to get the best deal if you plan to leave your current insurer. Think carefully about your situation and future driving plans to determine the best approach.