Switching Auto Coverage Mid Term: Things Drivers Should be Aware of

| December 2, 2009

If you find that you’re either totally disgusted with your current insurance auto insurance company or that you’ve found a great deal with another company, it is possible to switch your coverage midterms. You don’t have to wait for the policy renewal to transfer your auto insurance from one company to another.

Keep in mind however that although you don’t have to wait till the end of the policy or to switch, a midterm cancellation and rewrite means that you have to be a little more on top of things than you normally will if you were to wait until policy renewal. Here are a few things to consider if you are thinking of switching auto insurance policy mid term.Auto Insurance

  • Make sure you have the new coverage in effect. The last thing you want to do is cancel your old policy only to find out that the new one is not truly in effect because of some small misunderstanding. If you have a gap in auto coverage, the old insurance company is required to let the Department of Motor Vehicles know that you are without insurance. That little faux pas will cost you dearly.
  • Notify the old company in writing of the request to cancel. A phone conversation works too but it’s easier to follow up with the old company if you have written documentation as proof of the request. In your cancellation request be sure to let them know the name and the policy number of the new automobile policy. This way they won’t have to report a gap in coverage to the Department of Motor Vehicles.
  • Follow up for the return premium. Once the policy is canceled, it’ll take a little while for the insurance company to process the return premium for the unused portion of your automobile premiums. Some companies will prorate the unused portion premiums wile while others impose a short great cancellation penalty. What this means is that there will be a surcharge for canceling the policy midterm. The surcharge usually runs around 10% of the amount being returned, therefore if you were owed $100, you would only receive $90 using the short rate cancellation penalty.
  • Swap out your insurance ID cards. If you store your auto insurance ID card in the car glove compartment, make sure to get rid of the old one and replace it with the new. If the policy was cancelled midterm, the old ID card will won’t show the actual cancellation date. This isn’t a problem until you have an automobile accident and need to complete an accident report. At that point in time you’ll need to have the correct auto ID cards with the correct information. To avoid such a situation, swap out the card as soon as you receive it.
  • Don’t let the insurance policy lapse. Some people feel that it’s easier to allow the old insurance policy to lapse or to cancel for nonpayment of premium. While that is an effective way of canceling the policy is not a wise way. Underwriters frown upon drivers with lapsed coverage and will charge a higher rate accordingly.

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Category: Car

About the Author ()

Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits About Money.

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