How to cancel your auto insurance policy

This article has been updated from a previous version 

There are many reasons why you may no longer need coverage from your insurance company. Whether you’ve sold your car and switched to public transit, moved, or found a better deal elsewhere, you may be thinking about cancelling your auto insurance policy. 

If so, the paperwork and potential cancellation fees might seem intimidating. But it’s gotta be done, and it’s probably more simple than you fear. Here are the steps you should take to cancel your auto insurance policy: 

1. Check your policy  

Every insurance provider has its own rules around cancellation. So, the first step you should take is to check your policy and read the fine print for the exact terms and conditions.  

2. Contact your insurance provider  

Speak to an authorized representative about the cancellation process and ask any questions you have. Some insurance providers require you to submit a request in writing to confirm your cancellation. If you’re just switching providers, make sure that before you cancel, you have a new policy in place and have confirmed the quote with your new provider. 

3. Get a written confirmation  

Once you’ve spoken to your provider and decided to go ahead with the cancellation, the best practice is to get written confirmation that your policy was indeed canceled. 

Keep in mind, however, that cancelling your insurance may come with a fee — especially if you’re cancelling before your policy comes up for renewal. 

When to cancel your car insurance 

Your insurance company won’t typically charge you a fee for a standard cancellation, but if you’re mid-contract and decide to cancel your policy, you’ll probably end up paying a penalty fee.  

How much that fee is depends on the time remaining on your policy term, any outstanding payments, non-refundable fees, and the insurance provider’s own cancellation policy.  

For example, when a driver in British Columbia wants to cancel their auto insurance coverage without penalties, they must return their licence plate to their broker, since it’s directly linked to the Insurance Corporation of British Columbia’s Autoplan policy. 

However, cancelling your car insurance mid-contract isn’t always a bad idea. You just need to be aware of the costs associated with the decision. To avoid any penalties, renewal time is the best time to cancel car insurance coverage. Generally, if the cost of cancelling and switching to a new policy ends up costing you more than staying on your current policy, it might not be worth the switch and you may be better off waiting until your policy ends to renew. 

Think carefully about cancelling your car insurance 

Unless you no longer require coverage, make sure your new policy kicks in before the cancellation date of your old policy. If not, you risk not having coverage while waiting for the new policy to take effect, which results in having a gap in coverage history. Insurance companies will look for any gaps in coverage when determining your rates, and the longer you go without insurance, the higher your premiums can be. 

If that’s not enough to deter you from trying it, then consider the consequences of driving without car insurance. If you’re caught, you could receive a fine, licence suspension of up to a year, or risk having your vehicle impounded. 

If you get into an accident and don’t have insurance, the consequences are even worse. If you’re the at-fault driver,  you will be responsible for damages and won’t have access to any type of accident benefit. That's money that can help cover any loss of income and medical expenses from the accident.  

Just because you can cancel your car insurance at any time doesn’t mean you should ever drive without it. Remember: if you’re not driving your car as much and just need the basic level of insurance, there’s always the option to drop certain coverages instead, which could save you up to 96% on your premiums. 

Overall, getting caught driving without car insurance will adversely affect your ability to get insurance — and cheap rates.