The time has come for you to change your auto insurance policy. It may be done for a variety of reasons; maybe you’re selling your car, or you’ve got a job in another state and don’t need this car, or maybe you’re just plain unhappy about your present insurer’s service. If you’re one such person, then read on to know some important points that one must keep in mind while switching auto insurance policies.
Send a written notice to cancel the policy
The first thing to keep in mind is that a sufficient notice period must be given to your insurer, else you will end up spending more money and the whole thing will affect your credit history in a bad way too.
At any point of time during the term of your policy one may send a written application to the auto insurance company mentioning the cancellation date on it as well. This is the practice most followed and allowed by insurers. The first and biggest mistake that many people make is to assume that if they don’t pay the next bill; their insurance policy would be automatically terminated by the end of the policy term. If a cancellation notice is not written and sent to the insurer, the individual will be billed in advance for the premium payment of the next month. Now at this point, if one doesn’t pay the bill, the company cancels the policy and it goes on the person’s credit report.
Very often this information is not divulged to the client; the company may only inform the client that if they don’t make the premium payments on time their policies will be canceled, but they do not necessarily have to discuss about the effects that it may have on the credit report of the individual.
Canceling an auto insurance policy can affect you adversely
Another thing to bear in mind is that when an individual allows his insurance policy to be canceled, it adversely affects his chances of getting auto insurance in the future. When a person doesn’t make timely payments for the premium, the policy can be canceled, and if this is the way in which one’s auto insurance policy is terminated, then other auto insurance companies have the right to tout such a person as a high risk individual; they may refuse to insure him, or they may charge him ridiculously high amounts to be insured.
If you terminate your auto insurance policy in a timely manner, this can be avoided. Call the insurer and let them know that you intend to cancel your policy. Give the company an effective date, you can play it safe. The insurer thereupon will send you a form known as a cancellation request form. This must be read carefully, reviewed, and then signed and sent back duly to the insurer.
Switching an auto policy
While switching auto policies, it is extremely important to bear in mind that there should be no time lapse between the cancellation date on your old policy and the starting date of your new one. In other words, the cancellation of the old policy must be on the same date as the starting date of the new policy. If indeed there is a time lag between the two, and the car being driven meets with an accident, then it will remain uninsured and will be another financial burden.