Dropping Your Auto Insurance… The Right Way

When getting rid of your old insurance policy in favor of a new provider, or dropping your automobile insurance altogether (if you just do not want or need to drive any longer), it is important to make sure that you take the right steps to formally cancel the coverage. To protect yourself from paying too much money or even from tarnishing your credit, follow the these guidelines when dropping your car insurance policy.

In general, auto insurance providers allow you to cancel your policy within the policy's duration if you terminate the plan in writing, notifying them of the specific date that the cancellation becomes effective. If you do not do this, at the end of your policy period it is possible that you will end up owing money to your insurance provider.

Even if you wish to terminate the policy at the end of the policy period, you must still let your insurance provider know this in writing. The end of the policy period is not necessarily the same thing as canceling your coverage… so if you are planning on switching coverage after your policy expires, you still need to send the necessary cancellation forms.

The three risks of not properly canceling your insurance policy, even at the end of the term, are:

1: Extra Billing. If you do not drop your insurance correctly, your insurance company may send you the bill for the next premium.

2. Tarnished Credit. Even if you think you have dropped your policy, if you have not informed your insurance provider by the appropriate means and then fail to pay the bills for the next premium, the company will cancel your policy. Cancellation of your policy for failure to meet payments on your premium appears on your credit report.

3. Future Insurance. When your auto insurance company cancels your policy, it appears in your claims history, regardless of your credit. If you are trying to obtain insurance from a different company, you may face expensive rates, or even be denied coverage based on your risk as an applicant.

If you attempt to switch insurers and fail to drop your former policy the correct way, you may need to provide proof of insurance to your old insurance company. This is to make sure that you have coverage consistent with state laws (of course in states that do not require minimum levels of liability insurance, this does not apply). This proof can be in the form of your new insurance card or a copy of the first premium payment statement. Regardless of which document you use, make sure that it has both your name and your new policy number on it, and send it to your old provider with your cancellation notice.

To properly drop your insurance policy, the first step is to call your insurance agent or the company that provides you with your policy. Let them know that you would like to cancel your car insurance, and make sure that you let them know the specific date. This will help you avoid confusion that could lead to you driving without insurance. The agent or company will then send you the proper cancellation-request form. Generally the form is already filled out, and all you will need to do is sign the document, however it is important that you look over all the information carefully to avoid mistakes. Finally, get confirmation. Usually your insurance company will send you written confirmation that your policy has been cancelled in the mail.

To find cheap auto rates make sure you check out www.getagreatrate.com or www.greatcarinsurancerates.com. Quotes are free and you could save a lot of money.

©2004 The Lawrence Marketing Group

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