Yes, an insurance policy can be canceled at any time and you'll receive a partial refund if you paid the premium in advance and then cancel it before the end of the policy term. If you paid your premium in advance and cancel your policy before the term ends, the insurance company must reimburse the remaining balance in most cases. Most auto insurers will pro rate your reimbursement based on the number of days your current policy was in effect. If you decide to cancel your policy or your insurance company cancels it, you usually won't receive a refund from car insurance unless you've paid the premium in advance.
For example, let's say your policy term is 12 months and you pay the full year's premium in advance. If you cancel your policy after just three months, your insurer will issue an insurance refund for the remaining nine months. Policies are paid proportionately when the insurance company cancels the policy. This can happen for several reasons, but it's usually due to major changes in the insured party's circumstances (for example, if you started using your truck for business purposes and your insurance company didn't take out commercial insurance, it may cancel the policy).
In this case, all “unearned” premiums will be reimbursed. The amount paid for the time the policy was in effect is proportional to the remaining time the policy was in effect. Therefore, if the insured has been on a 12-month policy for 6 months, half of the premium will be reimbursed if they paid the premium in full when they established the policy. Policies are canceled at a reduced rate when the insured party, or the customer, decides to cancel the policy early and violate the terms of the insurance contract.
Any questions you have about canceling your insurance policy should be directed to the insurance broker or company that administers your policy. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provision, limitation or exclusion that is expressly stated in any insurance policy. If you cancel your insurance policy before the one-year contract ends, your insurance company will normally cancel your policy (short rate) and charge you a short-rate cancellation penalty. The insurance industry is highly regulated, and every state has insurance statutes that govern how companies must handle reimbursements.
You may have to cancel your car insurance for a variety of reasons, but it's important to consider your plan beforehand so you don't have coverage. If the insurance company cancels your policy, you'll normally get a refund from car insurance, unless they cancel the policy for non-payment. If you change your car insurance company and find better rates with another insurer, you may want to cancel your current policy before it expires. Talk to a licensed insurance agent to learn more about how driving your vehicle without insurance might affect you.
Because insurance premiums are determined in part by where you live, you can get a lower rate on your new policy if you move to an area where rates are cheaper, and your insurer can reimburse part of your insurance premium. If you need to cancel your car insurance policy, the Bankrate guide can help you take the necessary steps to do so. Your insurance company or brokerage agency may finance your premium so that you can make monthly payments, but you're still signing a one-year contract and are committed to paying for a full year of insurance coverage. Your insurance company is committed to insuring you for a full year and you agree to pay your insurance company for a full year of insurance coverage.
An example of a situation in which an insurance company might agree to cancel your policy proportionately would be if you moved to another province and took out a new policy with the same insurance company there (insurance works differently in each province, so if you're moving, you'll have to cancel your car insurance policy and create a new one in the province you're moving to)...