September 21, 2010

Knowing Your Charges When Cancelling Your Auto Insurance

For many, changing auto insurance companies is something to be feared. Once a great auto insurance quote has been found and a policy purchased, most Americans don't want to leave their provider, especially if they have been through several accidents with them. Not only do they know how the company responds in a time of crisis, but they are comfortable with the steps they have to take to get a claim resolved or see that their car is fixed. However, there are times when switching insurance companies does become a necessity, either because the client is moving or because the company has simply begun to slide downhill. Even great companies sometimes lose their way and begin offering poor customer service or begin making the claims process more difficult. Often, what scares consumers the most is not finding another insurance company, but being forced to pay a large amount of cancellation fees. Here is some useful information to know.

First, understand that cancellation fees may apply to a policy if terminated early, but that they must be spelled out in the policy itself at the time of signing. They may be buried deep in the insurance documentation itself, but they must be there. Companies are also obligated to tell you what, if any, cancellation fees apply to an account that is terminated, as well as what type of schedule they work on-monthly, yearly, etc. Companies are not permitted to be vague or elusive about cancellation fees, and if you believe this is happening, you would be wise to speak with your state's insurance regulation board. Any cancellation fees owed must be stated in writing.

As well, insurance companies cannot hold pre-paid money as a cancellation fee. This means that if you write 12 post-dated checks for an annual policy, and you cancel after four months, insurance companies are not permitted to keep any portion of the next eight months' worth of payments as a form of cancellation fee. As laid out in law, they are not permitted to keep money for services which they did not or will not be delivering. The money must be returned, at which time a cancellation fee can be levied.

If you intend to cancel your insurance, begin by speaking with an agent and ask directly what cancellation fees apply. If anything sounds out of order or not correct, ask for clarification or to speak with a supervisor. If you have a new policy provider with a better auto insurance quote in mind, you may be able to contact them and have them take care of the switch for you, as many newer companies are offering this service as a convenience for their customers.