Four things to consider before cancelling your insurance
If you’re anything like us, you put off certain things until the absolute last moment. (Who among us is going out of their way to clean their oven? Or showing up early for their bi-annual teeth cleaning?) But changing your insurance shouldn’t be one of those last-minute activities, especially since cancelling a policy mid-term doesn’t have to be complicated.
One of the biggest insurance rumors we hear is that policy cancellations always come with a penalty — which is why so many people put off changing theirs until just before a renewal deadline. And it’s true: in some cases, you may owe money. Insurance companies finance policies upfront for a certain period of time, so if you terminate your contract early, you may have to pay the difference.
But — and it’s a big one — most insurers do not charge cancellation fees. For those that do, the penalties can range widely (we’ve heard of anything from $20 to more than $400). So as with most things insurance, read your policy closely or call your insurance agent to confirm their stance on cancellation fees.
And one more note: in most states, it’s illegal for carriers to charge a cancellation fee if you’re within the “renewal period” (generally within 30-60 days of your policy ending). So if you’ve looked into it and your carrier does charge a cancellation fee, you may want to check the calendar to dodge that fee!
Even with the threat of a potential penalty, there are a few primary reasons most people consider changing their policies:
- A rate hike increases their current payments (while a number of factors determine what you pay, sometimes premiums go up for no clear reason)
- They’re not satisfied with their current policy and want better coverage (this one is pretty simple to understand)
- They’re moving and need to update their policy to match
If you’re set on switching, there are a few things you’ll want to keep in mind:
- Make sure to shop around and get a few different quotes, no matter what. You’ll want to pay particular attention to payment terms, since these can vary by carrier. Remember: rates that seem too good to be true, probably are!
- There’s also always the possibility your current provider will consider matching the price of a competitor. Take Marble member Christian: His auto insurance premium rose by more than 15%, but after shopping around and learning that he could pay close to his previous rate elsewhere, his insurance company agreed to match the lower pricing.
- If you have multiple policies from the same provider, cancelling one could affect the others.
- Finally, be aware that most providers will not let you cancel within the first 60 days of purchase.
Regardless of your situation, take the time to do the calculations to make sure that any perceived savings will actually result in more money in your pocket.
Although a lot of insurance companies will let you go without a fee, some can linger like a bad breakup. So do your homework and make sure the juice is worth the squeeze.
And no matter what, we recommend that you stay on top of your insurance by organizing it in your Marble wallet, where we make it easy to see your coverage details, compare your insurance with other providers, and shop around when the time is right.