How To Change Insurance Companies the Right Way

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Great! You’ve found a much cheaper price at another insurance company, however, now you have to break the news to your current insurer. How do you go about doing that in the right way?

Check your expiration date

The first thing you’re going to want to do is check your current policy’s expiration date. This is the date when coverage with your current insurer will expire and they will likely assume you want to renew. If you are on a payment plan where your insurer automatically withdraws payments from your bank account or credit card, they will likely send your renewel documents thirty (30) plus days before your renewal. If you do not cancel by the expiration date, they will assume you wish to continue and they will continue to bill you. 

Pro Tip

**As a good rule of thumb it is wise to inform your insurance company a few weeks in advance before canceling and NOT on the day your policy is expiring.**

What date should I use as my effective date?

You should make your policy with your new insurance company effective on the day when your policy with your old insurance company expires. Otherwise, you’ll have duel coverage and are paying twice for the same insurance -which is also not likely allowed in your state.

How do I tell my old insurance company I wish to cancel?

Every insurance company will require some sort of note as well as signature from you stating that you wish to cancel on such and such date. If you look at the paperwork that comes with your “pink slips” when you receive your renewal documents you’ll notice on the back of the first page of the “declaration page” their will be a cancellation form. It will usually say something along the lines of the following:


In consideration of the return of unearned premium, to follow if any, this policy is hereby canceled and surrendered, and the interim and renewal certificate, if any, for same acknowledged to be of no effect.

SIGNATURE: _____________________________________

CANCELLATION DATE:____________________________

POLICY #:_____________________________________

Alternatively, if you have lost your insurance documents you can call your insurance company and ask them to send you a “cancellation form” or simply just copy the above note and send it to them. Be sure that you fill in your signature, the date you wish to cancel and your policy number. Believe it or not some people miss these things and as a result the insurance company will not be able to process your cancellation -which will only lead to delays and create a whole lot of frustration for you.

Why is it better to cancel during renewal?

In most cases it is best to cancel your current policy on the renewal date because of the way insurance companies charge you for prematurely canceling your policy. When you cancel your policy during the middle of the term you will be canceled on a “short rate” basis. This simply means that their will be additional fees charged to you for “breaking the contract”. For example, if you cancel a few days before your renewal you will likely not get any money back and may in fact be charged a penalty.

If you just can’t wait to cancel with your insurance company, you may want to read: If I Cancel My Car Insurance Will There Be a Penalty?

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