Can you cancel car insurance if you pay monthly?
Yes, you can cancel car insurance even if you pay monthly. Policyholders have the right to cancel their car insurance at any time, but it's your responsibility to find new coverage before your old policy runs out. Find new coverage quickly with our free comparison tool. Enter your ZIP code to get free car insurance quotes from local companies.
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Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
UPDATED: Mar 20, 2024
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Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Mar 20, 2024
It’s all about you. We want to help you make the right car insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Most insurance companies allow their customers select a payment installment plan that works best for them
- Perhaps the most popular payment option that you can choose to break up your payments is the monthly installment
- No matter what payment plan you choose, you the policyholder have the option to cancel your policy whenever you want
- If you do exercise your right to cancel your policy, you could be penalized if you don’t secure coverage elsewhere
- When you submit a cancellation request, some carriers will charge a fee which is subtracted from your refund
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. (For more information, read our “If I cancel car insurance, do I get my money back?“)
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.
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Are There Different Monthly Installment Options for Auto Insurance?
There’s more than one type of monthly installment option. If you’re working with an insurance agent, they can discuss your options with you. Your current insurer may also have the option on their site with different insurance rates.
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 Have The Authority to Cancel Your Auto Insurance?
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. If you’re the only one on your insurance policy, the answer is obvious.
If you’re not the primary listed person, it would depend on what the primary listed driver chose. Generally, there are only two slots for named insureds on the auto ID cards.
If you’re paying monthly, 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. Some people pay quarterly or once per period.
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. There are steps to take, and there are rules about how much they’re required to refund you if you paid up front.
Companies that don’t let you exercise your freedom to cancel can be fined.
Read more: Can I cancel my car insurance at any time?
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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. You can call your insurer back again to double check, but you don’t want non payment to go on your insurance history. 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.
Read more: What should I do if I can’t afford car insurance?
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. (For more information, read our “Can I pay off my car insurance early?“)
The fee may be minimal, but some companies charge a percentage of your balance due.
Read more: Can I cancel car insurance early?
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.
Compare quotes from the top car insurance companies and save
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Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.