How it works
- You cancel: you can usually end a policy at any time, for example when you switch insurers or sell your car. Ask how any refund of unused premium will be worked out.
- The insurer cancels a new policy: during an initial period set by state law, insurers generally have wide freedom to cancel a policy they have just issued.
- The insurer cancels later: after that period, state laws usually limit the reasons to things such as not paying the premium, fraud or material misrepresentation on the application, or a fraudulent claim.
- Notice: the insurer must send written notice before a cancellation takes effect. How much notice you get depends on your state and the reason.
Before a cancellation takes effect, arrange new coverage so you do not have a gap. A lapse can lead to license or registration trouble and higher prices when you buy again. If you think a cancellation breaks your state's rules, contact your state insurance department.
Related terms
Sources
- NAIC, A Consumer's Guide to Auto Insurance cancellation and nonrenewal defined, reasons after the initial period, notice varies by state
- Wisconsin Office of the Commissioner of Insurance, Automobile Insurance FAQ new-policy cancellation, mid-term reasons and written notice
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