Canceling a Policy

Let’s say you sell your car or total it in an accident. Obviously in either case, you’re going to want to cancel your insurance policy rather than pay for a car you no longer own. If you ever need to cancel your insurance policy, there are a few simple steps you should follow:

Contact Your Carrier

First, call or write your insurance company and inform them of your wish to cancel your policy as well as the effective date of that cancellation. If you simply let your coverage lapse, the insurance company will still continue to cover the vehicle and bill you for it.

Insurance companies all have different cancellation procedures. While some may simply allow you to cancel over the phone, others will require you to submit your cancellation in writing with a letter or by filling out a form.

Contact You Department of Motor Vehicles

You may need to let your state’s department of motor vehicles (DMV) know about your cancellation. This will depend on your state; you may also need to turn in your license plates and tags.

While you should always abide by your state’s financial responsibility laws, if you sell your car or it’s totaled, then you’re obviously no longer financially responsible.

If you do retain the vehicle, you should stay off the road until you have a new policy to cover it.


If you pre-pay your insurance policy but then your car is totaled or you cancel your policy after a short time, the insurance company will refund the balance on your policy. They will send you a check a short time after the policy’s termination date.

When you cancel your policy, make sure you ask whether you are getting a refund.