Is it time to cancel your auto insurance policy?

Is it time to cancel your auto insurance policy?

April 30, 2021

Canceling your auto insurance policy is easy. What’s not so easy is deciding when and how to do it. While each auto insurance company is different, there are a few key points you’ll want to consider before deciding.

First, check with your auto insurance company to find out if they require a “notice period”. If a notice period is included in your policy, you’ll have to notify the company ahead of time—sometimes as long as 30 days in advance.

Second, find out if you need to send a signed cancellation letter to your insurer. Make sure to ask if there are format requirements for the letter and find out if it needs to be sent via US mail or if it can be faxed electronically.

Third, ask your agent if there is a cancellation fee. Some companies don’t have a cancellation fee, but some can charge a flat dollar amount ($50, for example) while others charge a prorated percentage known as a “short rate” fee, which can be up to 10% of the premium remaining on your policy.

You’ll also want to evaluate your reasons for canceling your policy. Even if you rarely drive your car, you should still keep it insured because it’s the only way to protect yourself in case of an accident. Talk to your agent if you seldom drive, and there may be lower rates available.

Canceling car insurance because the vehicle is in storage is also not a good idea. Wisconsin law requires that vehicles meet minimum insurance requirements, no matter how much the vehicle is driven. Cars can also be damaged while in storage, so comprehensive coverage is a good idea just in case something happens to the vehicle while it’s in storage. Also, a lapse in coverage won’t help you in the long run. Higher rates sometimes accompany gaps in coverage, even if you have a good reason why you were without auto insurance for a period of time.

Make sure your new policy has you covered before canceling your old policy—a one-day overlap should suffice. Once your old policy is cancelled, you can expect to receive a refund of any unearned premiums you had paid in advance. 

Make sure you’re confident in your decision to cancel, as some companies charge a reinstatement fee. Most reinstatements are not considered a lapse in coverage, and your agent can help you determine if reinstatement fees are going to be an issue.

When you’re ready to switch your homeowner’s insurance, give us a call! We’ve been helping clients save money and protect their homes for decades. Our team can make the insuring process smooth and painless so that you can live worry-free. To reach us by phone, call (715) 754-5254 or (920) 822-3695. You can also email us at or visit to learn more.