Considering switching to LOOP, but stuck in your current car insurance contract? Think again. LOOP provides better car insurance than what you're used to. We're offering a product that is fair and transparent for more people. If you’re like most people considering LOOP, you probably already have a contract with Progressive, GEICO, Allstate, or Statefarm.
You're not locked into your current contract. You don’t have to wait until your policy expires to switch—which can be anywhere from 6 months to a year from now. Insurance companies function like banks. They accept a deposit, in this case, your premium, paid upfront, to cover the upcoming month or the entire length of your contract. They hold your cash and invest it, making about 4% of the invested premium.
However, choosing the right insurance provider can be a complex task. For a detailed guide on what to consider when shopping for car insurance, including factors like price, underwriting guidelines, discounts, and payment options, check out our previous blog post.
Insurers hold premiums, but they “earn” it by day, after time has passed. If you decide to cancel before your contract expires, your insurer owes you the outstanding balance from the day you cancel, onwards.
So you can switch this month if you want to.
How Does Canceling My Car Insurance Work?
So, let’s say you bought a six-month policy and you paid the entire $846 upfront or $141 per month. You’re two months into your current contract and you cancel on the 15th day of the month to switch to LOOP. You are entitled to a refund of $494 ($141 x 3.5 months) if you paid upfront or $79.50 ($141 x 0.5 months) if you’re paying monthly.
Insurance companies don’t advertise this information because they want to hold and invest in your premiums. But carriers are not like cell phone or cable companies where you are locked into your contract. You can have a six-month policy and cancel one month into the contract and bring your business elsewhere. In the case of insurance, you, the consumer, have control over where you bring your business.
Step-by-Step Guide to Canceling Your Car Insurance
This section provides a detailed guide to help you understand how to cancel your car insurance.
- Contacting Customer Service: Reach out to your current insurance provider through their customer service hotline or email. Explain your intention to cancel and ask for any specific instructions or forms that need to be completed.
- Finding Your Policy Number: You can find your policy number on your insurance card, online account, or on your latest billing statement. You'll need this information when speaking with customer service to make sure they locate your account.
- Reviewing Cancellation Fees or Penalties: Ask about any fees or penalties that might be associated with canceling your policy early. This information will help you in making an informed decision about whether to proceed.
- Understanding the Cancellation Process and Timeline: Familiarize yourself with the entire process, from initial contact to receiving a confirmation of cancellation. Understand how long it may take and any steps you need to follow to complete the cancellation.
- Checking for Any State-Specific Requirements: Some states may have unique rules or regulations around insurance cancellation. Research or ask your provider about these to make sure that you're in compliance.
Legal Considerations and State Laws
- Understanding Legal Obligations and State-Specific Laws: Depending on where you live, there may be legal requirements that you must adhere to when canceling car insurance. Consult your state's insurance department website or speak with an insurance agent who is familiar with your state's laws.
- Finding Legal Advice: If you need more personalized guidance, consider consulting with a legal professional specializing in insurance law.
Potential Downsides of Canceling Car Insurance
- Weighing the Drawbacks and Challenges: Canceling your current policy might lead to a gap in coverage, affect your credit score, or expose you to financial risks such as potential liabilities. Consider all these factors before making a decision.
- Evaluating if Canceling is Right for You: Think about your specific situation, your reasons for canceling, and the alternatives available. Consult with an independent insurance broker if you need assistance in evaluating your options.
Other Options If Canceling Isn’t For You
- Exploring Modification or Negotiation with Your Current Provider: You might be able to adjust your coverage levels or negotiate a better rate with your current provider. Explore these options before deciding to cancel completely.
- Understanding When and How to Approach Alternatives: If you're unhappy with your current rate but satisfied with the service, negotiating or modifying your coverage could be a viable option. Speak with your current provider to explore these possibilities.
We’re Ready For You If You Want To Try LOOP Out
Canceling your car insurance is a decision that requires careful consideration of various factors. From understanding the cancellation process and any associated fees to evaluating potential downsides and exploring alternatives, it's important to make an informed choice that aligns with your unique circumstances and legal obligations.
Remember, you have control over your insurance needs, and seeking professional guidance can help ensure you make the best decision for your situation. If you find that canceling is indeed the right option for you, the step-by-step guide above should make the process smoother and more transparent. And if you’re looking for the best option out there, with the best pricing, get a quote with LOOP today