We frequently highlight questions sent to our resident insurance expert, Anne Marie Thomas.
This week’s question comes from Brian, who wonders if you are required to notify an auto insurance company if you decide not to renew an existing policy. Brian asks:
“My auto insurance policy was up for renewal. I didn't renew it and went elsewhere, but I didn't notify my former insurer. I received a letter from them stating I owe them for two-and-a-half months’ worth of coverage. Is this legal? They also stated they sent an insurance cancellation notice to my auto loan lender, but I have been insured during this time. Is that legal also?”
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When you receive a renewal notice from a car insurance company or broker, and you do not reply, your policy is automatically renewed. While there’s nothing wrong with switching providers, if you do decide to purchase a policy from a different company, it’s in your best interest to let your former insurer know you do not wish to renew.
Anne Marie explains:
“You should send a copy of your new policy to your prior insurance company showing that you had insurance with the new company starting at the expiry date of your old policy.
“Your former insurer should waive the cost of the two-and-a-half months as you were insured elsewhere. Also, send a copy of your new policy to your auto loan lender. It is legal for your former insurer to send a notice to your lender as they are listed on your policy as having a financial interest in your car until the loan is fully paid.
“In the future, when you change insurance companies, always notify the car insurance company in writing that you are not planning on renewing your policy.”