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 insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 21, 2020

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Here's what you need to know...

  • Every state has its own laws regarding car insurance terms
  • Most policies allow you to cancel policies within two weeks without penalty
  • If you choose to cancel your insurance, you should notify your car insurance company in writing

Occasionally, after purchasing car insurance, you discover that you made a terrible error and can purchase car insurance for a substantially lower premium.

You are probably aware that car insurance terms vary from state to state, so you need to check your policy to determine at what point you can cancel car insurance without paying a penalty.

Read your insurance policy to determine the terms required under your policy. Consult with your state’s insurance department for exact laws.

An easy link to your state’s insurance department can be accessed by going to the National Association of Insurance Commissioners website.

Start comparing car insurance rates now by using our FREE tool now! Enter your zip code above to get started!

What if you want to cancel insurance after more than 14 days?


You are allowed to cancel your insurance at any time, but you may pay a penalty for canceling the policy more than 14 days into the policy.

Most policies allow you to cancel policies within two weeks without paying a penalty under the following circumstances:

  • Proof of insurance provided under a replacement policy with the same dates of coverage
  • No accidents or claims have occurred or been filed
  • Written notice to the insurance company or their representative indicating your intentions

There are several types of cancellation formulas that may be applied according to the circumstances:

 – Short-rate cancellation

This is when the owner of the policy cancels a policy before the expiration date. A penalty is attached for the cancellation of up to 10 percent more of the premium than has actually been earned.

Be sure to read your policy carefully before canceling your insurance.

– Pro-rate cancellation

When the full proportion of the premium not used is returned to the purchaser, it’s considered prorate cancellation.

This is at no fault of the purchaser and includes life situations such as moving to a state in which the insurance company does not have a license.

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Process for Cancellation of Insurance

Contrary to popular assumption, insurance policies do not cancel at the end of the policy period.

If circumstances are such that you do not wish to purchase insurance from that company any longer, you must formally tell the insurance company the circumstances.

Why do you have to formally cancel insurance at the end of the policy period?

  • The insurance company assumes you still need the insurance and proceeds to issue a new policy, along with a new bill
  • Not paying that bill can lead to the insurance company canceling the policy for non-payment, affecting your credit rating
  • Cancellation for non-payment can flag you as a risky applicant the next time you apply for insurance, possibly increasing your rates

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Avoiding Possible Misunderstandings about Cancellations

It is necessary to be specific about dates in this process because you may be without insurance during the process if you are not. This leads to penalties for not having insurance and massive legal liabilities.

In order to avoid this, there are a few steps to take:

  • Notify the insurance company or its representative by phone, expressing the date at which you wish to have your insurance terminate
  • The insurance company or agent will send you a cancellation request form. Be sure to fill it out correctly
  • Provide proof of coverage at your new company by enclosing a proof-of-insurance card or copy of the face page of the policy
  • You will likely receive a copy of the cancellation form back to confirm that your policy has indeed been canceled

It is necessary to remember that insurance policies are a legal contract between the person purchasing the insurance and the insurance company.

Most of the terms are stated in the insurance policy, but if you are in doubt contact the company or agency to ask questions.

Upon first glance, cancellation of insurance is easy by not paying the premium, but since it is a legal contract other laws apply.

Your state’s insurance department can help you if you do not get adequate information from the company or agent.

Most insurance personnel are well qualified to answer questions once you have stated them.

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  1. https://www.naic.org
  2. https://www.naic.org/state_web_map.htm
  3. https://www.statefarm.com/insurance/auto
  4. https://www.panterlaw.com/Auto-Accidents/Helpful-Hints/
  5. https://www.thebalance.com/proof-of-insurance-101-527410
  6. https://www.geico.com/information/faq/cancel-previous-insurance/