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UPDATED: Dec 13, 2017
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Insurance is one of the expenses you have that you can’t forget about. If you don’t pay for all of the coverage options that you’ve selected on time, you’ll lose your policy and affect your reputation.
Having a bad reputation as an insurance consumer might not make it impossible to find insurance, but it could affect your rates in the future.
It’s better to cancel your insurance than to let it cancel for non-payment. If you’re about to switch to another carrier or you’re going to sell your car right near your next payment date, don’t just fail to send in your payment.
Take the extra steps to protect your consumer reputation by asking that your policy is canceled.
Compare quotes and save on car insurance today! Here’s what you need to know about canceling a policy with a payment plan:
Why are some policy premiums due every month?
If you buy a term that lasts for six months, your declarations page will show your coverage and also the total policy premium.
Some consumers will pay the total policy premium all at once. Others will pay their premiums monthly instead of having to pay everything in full at the policy inception.
If you can’t afford to pay your policy in full, your agent might offer you a monthly payment installment.
When you agree to pay your premiums monthly, the total policy premiums is divided into a certain number of installments. Each installment may include a billing fee that will be a percentage of your balance due or a fixed charge.
Are there different types of monthly installment options?
There’s more than one type of monthly installment option.
Some carriers will bill their monthly clients six or 12 equal monthly installments. Other carriers will divide the installments into only five payments (11 payments for an annual policy) so there’s one month with no payment.
Not only is there is a difference in the frequency on your payments, there could also be a difference in how your payment is made. Some carriers will send you a bill in the mail or by email so that you can manually make your payment.
Other carriers will ask that you set up an automatic EFT payment that drafts out of your bank account on the due date.
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Do you know if you have the authority to cancel your policy?
Anyone can make a payment, but not just anyone can cancel an insurance policy. There’s a huge difference between people who are listed on your policy as drivers and people who have the authority to make changes.
The only people who are authorized to write and sign a cancellation request are the named insureds on the auto ID cards.
Your payments will be due once every 30 to 31 days. It’s most common to owe your new premium installment on the same day of each month. If you’re in between payments, your coverage will remain in force up until the next installment’s due date.
The only time that will change is if you decide to request a cancellation and you’re authorized to do so.
Do all insurance companies let you cancel your policy mid-term?
Choosing a quality insurer with fair conditions and quality coverage options is crucial. You may see a commercial airing to promote a specific carrier that’s telling you that they waive deductibles and feel a twinge of jealousy when your carrier doesn’t do the same.
Fortunately for you, you don’t have to have a reputable insurer with customer-focused policies to cancel your insurance mid-term.
Mid-term cancellations are always allowed. An insurance company must answer to regulating agencies and these agencies say that since consumers get to voluntarily choose their insurer, they should be able to voluntarily cancel their insurance at any time.
Companies that don’t let you exercise your freedom to cancel can be fined.
What can you do if your insurer won’t process your cancellation?
It’d be nice if everything ran smoothly all the time, but sometimes companies make mistakes. If you run into a problem canceling your coverage, be sure to contact the Department of Insurance to report the issue.
The department will take complaints, investigate them, and help you get the outcome you deserve.
Not only is it good to give the department a heads up so that you can cancel your policy and get your refund, it’s also good because complaints are public record.
When you take the time to let the agency know about wrongdoing, it can help other consumers avoid the company.
Do you need to cancel your automatic payments if you’re paying electronically?
Consumers who automatically have their payments sent to their insurer each month should cancel their payments at least 3 to 5 days before the payments is going to be processed to avoid making extra payments.
If your request isn’t submitted right away, you could get stuck paying for two policies in one month. You’ll get a refund, but if you didn’t budget for the extra payment it could make the month difficult.
Should you ask your insurance company about fees?
It feels like you’re stuck paying fees at every corner. There’s a fee to make payments, a fee to print bills, and with some companies even a fee to make changes to your policy. It might come to no surprise that there are carriers that also charge early cancellation fees.
The fee may be minimal, but some companies charge a percentage of your balance due.
You should follow up with your old company until you get the refund you’re owed. As long as you never had a lapse in coverage, you can keep a clean insurance record and good reputation. Before you ask for a cancellation, ask other companies for insurance quotes.
Use an online quoting tool and you may be surprised to see how much you could save by switching. Try our free comparison tool today.