Do you want to cancel a car insurance policy? Know easy steps

You can cancel your car insurance policy at any time, and you only have to apply to the car insurance company on the replacement documents. Does the policyholder have to pay a fee to cancel the car insurance, depending on when the policyholder wants to cancel it? If someone does this during the insurance period, then the car insurer will charge the minimum amount, at any time the policy will be canceled on the remaining premium amount.

First of all, we need to understand the basics of car insurance:

• It is mandatory to have car insurance for every vehicle according to current regulations. If you plan to cancel your car insurance, the insurance company needs to be informed about the new car insurance policy. To proceed with the cancellation process, the current car insurer needs to be told.
• The policyholder is provided with a cooling-off period of 14 days by the car insurer. During this period, he can get a policy from another car insurance company. This period starts from the day you buy your policy.
• If the application for cancellation is not raised within 14 days, a fee is levied by the insurance provider. A delay of one month will incur an additional 10 percent fee, and a delay of 2 months may result in a 20 percent charge.
• The car insurance provider cannot be held liable for any refund after eight months. 

A cancellation request can be made by phone, mail, or by submitting a cancellation form, and notification will be sent within a week.

What would be the consequences if you did not buy a new car insurance policy?

As stated earlier, it is mandatory to drive the car only with a valid car insurance policy. Car insurance provides financial security in case of an accident or loss to the policyholder.

Third-party insurance covers you from the damage done to a third person. However, in the event where no one has a new car insurance policy, after which he has canceled the former, the person will have to face the following consequences.

• A person will be fined for driving without car insurance.
• In the event of an accident, no cover will be available to the person, and also third-party damage cover will not be available to the person.
• You will have to pay a higher premium amount.

You can cancel a car insurance policy for these possible reasons

• If you want to sell an old car: In this case, if you're going to sell an old car and buy a new one, you will probably cancel the old policy, and go to buy a new one.
• If your car has been stolen: In this case, you will have to apply for your new car insurance policy. If the existing policy is comprehensive, the policyholder will be paid the insured declared value (IDV). The policyholder can place the cancellation request after the insurance amount or claim amount is received.
• If you are not satisfied with the current car insurance company: However, there is not a common reason which may result from high premium and low insured amount, strict renewal policy, etc. You can opt for a new car insurance company.
• If you are traveling Abroad: If you are on long-term deputation abroad and your family does not need a car, your insurance policies maybe canceled.

After knowing the possible reasons for canceling a car policy, now you should know the procedure to cancel your car insurance policy: 

What is the process to cancel your car insurance policy?

Immediately update your car insurance company: You must promptly inform the insurance provider or if you wish to cancel your insurance policy. It will allow the insurance company to initiate the cancellation process and complete the formalities.

Follow the Insurer's Guidelines: The process can vary from Insurer to Insurer. As part of the process, canceling the policy will require your signature on the cancellation or declaration documents. An insurance company can do this through the policyholder's e-mail or phone. The policyholder will then receive a cancellation letter from the policyholder stating the amount.

You should always ask for the documents of the car insurance policy which you submitted at the time of cancellation of the policy as it is required when you are buying a new car insurance policy and can also avail the No Claim Bonus. 

Check the status of refund before the consolidation of policy:

Before policy lapses, it is recommended that policyholders seek a refund from the insurance company. If the premium has already been paid, the car insurance company is liable to pay you a refund. Make sure that the money is deposited directly into the bank account.

Conclusion: So, if you have chosen to proceed with the cancellation of your car insurance policy and you want to apply for a new one or get a better deal from a competitor, then you need to consider the cancellation process.