Ways to Cancel Car Insurance Policy

Though rare, car insurance cancellations are pretty much evident in the motor insurance sector. There may be some reasons why one wants to cancel his/her car insurance policy after purchasing one. For instance, shifting to a new location or selling your old car may require cancelling your policy. But can we cancel the car insurance policy? Let us decode this further in the article.

Read more

Reasons Behind Car Insurance Cancellation

As per the Indian motor rules, it is mandatory for every car owner to have a valid car insurance policy to drive legally on Indian roads. However, there may be situations when an insurer would want to cancel his/her four-wheeler insurance policy. Here are some most common reasons for car insurance cancellations:

1. Selling a Car

   If you have purchased a long-term car insurance policy and choose to sell your car, then you must consider cancelling your car insurance policy. Even if you have purchased a yearly comprehensive car insurance policy and still have time left for expiry, you must cancel your old policy and transfer your car documents to the purchaser.

2. Unhappy with Current Insurer

   Another reason for car insurance cancellation is if you are not satisfied with your current insurer and decide to go for a better option. In such cases, you need to cancel your car insurance from the previous insurer while changing your insurer.

Whether you have to pay any car insurance policy cancellation charges depends on when you cancel it. If you do it during the policy term, the insurer may charge you a nominal cost. However, if you cancel it at any other time, the remaining premium will be reimbursed.

How to Cancel Car Insurance?

You can easily cancel your car insurance policy at any time; all you need to do is submit replacement papers to your insurance company. If due to any of the reasons you are looking to cancel your four-wheeler insurance, follow the ways mentioned below:

1. Inform the Insurer

   As soon as you plan on cancelling your car insurance policy, you must inform the insurer about the cancellation. You can get in touch with your insurance company via email or call and tell them to start the policy cancellation process.

2. Take Their Guidance

   Before cancelling the policy, take the guidance of your insurance company as they will help you with the cancellation process. The insurer may ask you to submit a declaration stating the reason to cancel the plan. You may also need to sign a document for policy cancellation. Usually, this process is different for different companies, so make sure to talk to your insurer.

3. Get the Certificate of Insurance

   Once your car policy is cancelled, the insurer will give you a car insurance certificate stating the details of the cancelled policy along with the accumulated NCB till cancellation. Make sure to collect this certificate as it will help you in claiming your accumulated NCB while purchasing a new car insurance policy.

4. Check for the Refund Amount

   When you cancel a car policy midterm or soon after purchasing it, the insurer may refund you the premium amount based on the policy terms and conditions.

   • If you have cancelled the policy before the start of the policy, you are likely to receive a full refund.
   • If you have cancelled car insurance after the start of the policy, you will be getting a refund on a pro-rata basis as you have used your policy for some days.

5. Don't Forget to Buy a New Car Insurance Policy

   While cancelling your policy, if you state the reason as 'Switching insurer', your insurance company may ask for a new car insurance policy. Thus, in any case, do not forget to buy a new car insurance policy from the new insurer. Even if you are selling your old car and purchasing a new one, it is mandatory to at least have a third-party insurance policy.

   If you have had an unsatisfactory experience with your previous insurer, make sure to compare third-party and comprehensive car insurance online from Policybazaar.com so that you can get the best one this time.

Long Term Car Insurance and Cancellation

The cancellation of long-term policies that have a 3+1 year tenure will have standard conditions. Such policies shall have a free-look-up period of 30 days from the date of policy inception. If a policyholder has cancelled the policy within this look-up period, he/she will be entitled to a refund on a pro-rata basis.

The long-term own damage policy can be cancelled during its tenure by giving the notice of cancellation. In such scenarios, the premium refunded will be:

1. A full refund of the future year's premium
2. For the year in which the policy has been cancelled:
   • If no claims are reported: Refund of pro-rata premium
   • If claims are reported: No refund of premium
3. GST and other govt. taxes to be refunded to the extent permissible by concerned authorities.

Wrapping Up!

Above we have mentioned everything you need to know about cancelling a car insurance policy. However, if you still face any issues, you may connect with your existing insurer. If you have purchased a policy from Policybazaar.com, you can connect with our 24*7 customer support executives.