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Can You Get a Refund on Your Auto Insurance?

Refund on Auto Insurance

Are you thinking about canceling your auto insurance policy but you’re not sure if you’ll get a refund on auto insurance if you do? Don’t worry, I’ve got you covered. In this post, we’ll explain everything you need to know about getting a refund on your auto insurance policy if you need to cancel your policy.

Canceling Your Auto Insurance Policy

Before we get into the nitty-gritty of refunds, let’s talk about canceling your auto insurance policy. There are a few reasons why you might want to cancel your policy, such as:

  • You’re selling your car and no longer need insurance
  • You’ve found a better insurance deal elsewhere
  • You’re no longer able to drive due to a medical condition

Whatever your reason for canceling your policy, make sure you do it properly. You don’t want to end up with a lapse in coverage or any other issues that could affect your future insurance rates.

To cancel your policy, simply call your insurance provider and let them know you want to cancel. They’ll likely ask you for some information, such as your policy number and the reason for canceling. Make sure you have all the necessary information handy before making the call.

Can you get a refund on your auto insurance when you cancel?

Now, let’s talk about how you get a refund on your auto insurance policy when you cancel. Basically, the amount of the refund will depend on two factors:

  • How much have paid in advance,
  • Are there any cancellation fees or short-rate premium penalties

Let’s tackle how much you paid first. To best understand this, we’ll use a paid-in-full policy. If you’ve paid for your auto insurance policy in full and canceled the policy mid-term, you’re entitled to a refund for the remaining months you won’t be using. For example, if you cancel your policy with six months left and you paid $1,200 for the year, you will receive a refund of $600.

Alternatively, if you pay your auto insurance premiums monthly, the unused portion of the premium could be much smaller, typically less than 30 days’ worth.

Regardless of how much you paid, however, the insurance company may charge a cancellation fee or short-rate penalty. In both cases, the amount of refund you may be entitled to will be reduced by the amount charged in fees or a short-rate penalty. Ask your agent if there are fees or short-rate penalties before you request cancellation.

Will you get a refund if the insurance company cancels your policy?

If your insurance company cancels your auto insurance policy for underwriting reasons, you will normally get an auto insurance refund. However, they have to cancel your policy for non-payment of the premium, you will not get a refund. In fact, you may end up owing the insurance company the earned portion of the premium for coverage provided.

How will you get your auto insurance refund?

If you cancel your auto insurance, the refunds are normally issued back to you using the same payment method you used to pay your premium. For instance, if you pay your premium with an electronic funds transfer (e-check), you’ll usually get an insurance refund check refunded to the same account. Likewise, if you pay your premium with a credit card, your refund will appear as a credit on your card statement. The exact method of issuing refunds will vary by insurer, so if you need to know for sure, ask your insurance agent.

How do I start my auto insurance refund?

To get your refund, you’ll need to contact your insurance provider and request the cancellation of your auto insurance policy. The insurance company may ask you to fill out a form or provide some additional information. Make sure you follow their instructions carefully to ensure a smooth refund process.

The bottom line

Canceling your auto insurance policy isn’t much of a hassle, and getting your refund is just as easy. Just make sure you cancel your policy properly and follow your insurance provider’s instructions carefully. This will assure you get the maximum refund you’re entitled to.

It goes without saying, you shouldn’t cancel your policy unless you already have replacement coverage. If you’re shopping for auto insurance, contact us, or you can start a quote online.

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