There can be many reasons you would want
to shift your car insurance--you're moving to another state
or simply because you're dissatisfied with the existing company.
Don’t ignore informing the auto insurance carrier about
your plans or it may cost you as well as negatively affecting
your credit history.
As a standard practice, all auto insurance companies have
to allow you the right to cancel your policy at any time during
the policy term by sending a written notice stating the date
of cancellation.
But your policy does not seize to exist at the end of each
policy term. You may think that if you do not pay on renewal
your policy is terminated. Well in reality, as a typical practice
most auto insurance companies would simply send in next term's
premium payment slip. So, when you don't pay it, they'll cancel
your policy and send in a remark to the credit bureau.
Though this may come as a surprise to few, this information
may not be very explicit in your policy. Also, many insurers
don’t provide complete repercussions that you may face
for not giving formal notice of your policy termination.
Act of cancellation can raise red flags on your file making
you a high-risk applicant, severely affecting your chances
of obtaining auto coverage in the future and the premium you
have to pay. Most likely you would be required to pay higher
premiums.
Also account any lapse in coverage. If you would be switching
to another insurer, ensure that your new policy is effective
from the termination date of your old policy.
The best policy is to inform your insurer that you would be
canceling your policy. Provide them an effective date. Typically
you would receive a cancellation request form. Be sure to
review this form carefully before you sign and return it to
your insurer.
