It is advised to read the fine print carefully when you are signing your auto
insurance policy. It clearly defines your rights and limitations as an insurance
holder and understanding your rights as an insurance holder is much more
important.
Cancelling your auto insurance can be a painful experience. It might be sorer if
you are cancelling insurance midway in the policy term. Normally there are no
termination fees if your insurance is cancelled by the insurer on charge of some
serious violations of the policy rules. However, a termination fees is charged
from you if you are the one to cancel the auto insurance.
This termination fees differs depending on your auto insurance company’s
policies and the sum of your insurance premium. It also varies from states and
according to their rules. When the policy is terminated earlier than the expiry
date at the policyholder’s request, then the earned premium charged would be
more than the pro-rata earned premium. Generally, the return premium is
approximately 90 percent of the pro-rata return premium. However, the company
may also establish its own short-rate schedule.
But if any insurance policy is cancelled following a claim or an accident that
subsequently gives rise to a legitimate claim then any premium due will remain
payable. It is notable that when a car insurance policy is cancelled on
insurance holder’s behalf, all related additional covers such as Motor Legal
Protection and Breakdown Cover will be cancelled at the same time.
When you decide to cancel your auto insurance policy prior to expiry date of
policy, then it is good to inform your auto insurance company beforehand. You
should your insurance agent know beforehand. Send them a notice for cancelling
in written and give them an effective date of cancellation. This will give them
a fair warning so they do not charge you for last minute termination fees. One
thing you should make sure before cancelling your older insurance policy is to
get a new one in place because if there is a lapse in coverage then your state
may place penalties on you such as license or registration suspension, fines,
etc.
