Suppose you have shopped around online and found a lower car insurance rate. Your first thought is likely: “What do I do about my existing policy?” Do you wait for your renewal date to switch or do you cancel your current policy right away to take advantage of the lower rate?
The first thing to do is speak with your insurance agent or broker. It could very well be worth it to cancel your policy mid-term, especially if your savings are greater than any “cancellation penalties” you may have to pay. Also, you should rest assured that simply changing insurance companies does not affect your record. However, if you do change insurance companies, it’s very important that you cancel your existing policy properly. Doing so will make sure your insurance company does not fault you on your insurance record, because if an insurer deems you as having been “cancelled for non-payment”, this will impact your record, which could lead to higher premiums.
In order to cancel your policy properly, first you must notify your current insurance company. Review your policy for any cancellation requirements. Most require a signature, in writing, to indicate that you wish to cancel. Remember to include the effective date of cancellation clearly. Once completed, give this written cancellation to your insurance professional, who will ensure that your insurance company is made aware that you are in fact cancelling the policy. If you do not have a copy of your policy, your insurance professional will provide you with document called a “Lost Policy Voucher” that you can sign.
It is very important to note that stopping your monthly payment to your current insurer alone is not the same as requesting a policy cancellation. Doing so could result in a “cancellation for non-payment” on your record. If you have already stopped payments on your insurance premium, and have not formally cancelled your policy, your insurance company will send you a registered letter letting you know that your policy will be cancelled in 15 days for non-payment of premium. If you receive a registered letter with notice of non-payment from your insurance company, do not to ignore it, even if you have already purchased a new policy. Discuss the cancellation with your insurance professional as soon as possible. If you do not rectify this immediately, a “cancellation for non-payment” will go on your record and could cause you to pay higher insurance premiums later.
The cancellation process applies regardless of the reason you are cancelling your policy. Whether you have a new policy, no longer have your car, or are leaving the province, make sure you send a signed cancellation request to your current insurance company. Your payment history is part of your driving profile which has a direct impact on the rate you pay, regardless of the insurance company you are dealing with.