Have you ever thought about what happens when you cancel your car insurance? Maybe you’re looking to cut costs or change providers, but before you make any moves, it’s important to understand the potential consequences of cancelling.
From legal penalties to financial risks, this decision can have a significant impact on your life and finances. In this blog post, we’ll explore everything you need to know about cancelling car insurance and why it’s crucial to tread carefully!
You could be sued
If you cancel your car insurance, you could be sued if you get into an accident. If you have an accident and don’t have insurance, the other driver could sue you for their damages. This is why it’s so important to have car insurance.
Your rates will go up
If you cancel your car insurance, your rates will go up. This is because insurers view customers who cancel their policies as higher-risk than those who keep their coverage in place. As a result, you can expect to pay more for your coverage if you do choose to cancel it.
You’ll have to get SR-22 insurance
SR-22 insurance is a type of insurance that is required by some states for drivers who have been convicted of certain traffic violations. If you cancel your car insurance, you may be required to get SR-22 insurance before you can reinstate your policy.
Your credit score could suffer
Your credit score may suffer if you cancel your car insurance. Insurance companies report cancellations to the credit bureaus, which could lead to a lower credit score. A lower credit score could make it difficult to get approved for loans or credit cards, and could lead to higher interest rates.
You may have to pay a cancellation fee
You may have to pay a cancellation fee if you cancel your car insurance policy. The fee may be charged by the insurer, or it may be charged by the agent or broker who sold you the policy. Cancellation fees vary, but they are typically a percentage of the premium, and they may be pro-rated if you cancel mid-term.
You’ll still need insurance if you lease or finance your car
If you lease or finance your car, you will still need insurance. Your lender or leasing company will require you to have full coverage insurance, which includes liability, collision, and comprehensive coverage. If you cancel your insurance, your lender or leasing company will likely purchase insurance for you and add the cost to your monthly payment.
Conclusion
Cancelling car insurance can be a tricky process and should always be handled with caution. Before deciding to cancel your policy, make sure you have carefully considered all the associated consequences, such as a potential increase in future premiums or penalties for cancelling early.
As long as you understand what happens when you cancel car insurance and weigh up all of the options available to you, then you can ensure that the decision is made with confidence and that it’s in your best interest.