There are times that you are required to cancel a car insurance policy for various reasons. Some of them are listed below:
Reasons for cancelling a car insurance:
- Selling your car - If you are planning to sell your car and do not plan to buy a new car in the near future, you can terminate the older policy and get a refund.
- If your car is stolen – If in case your car gets stolen and you do not have a comprehensive cover, you must cancel your policy. If you have a comprehensive cover, you can place a claim request and the insurance company will pay the IDV (Insured Declared Value).
- If your car is very old – If you do not wish to drive your car any longer, or have plans to dump it, it is advisable to cancel the car insurance policy.
- Dissatisfied with your current insurance company – Sometimes you may realise later that the benefits provided by your current insurer are not good enough, or if the claims take too long to be approved, you may cancel your car insurance with that company.
Process of cancelling a car insurance:
Given below are the basic steps involved in cancelling a car insurance policy:
- If in case you have decided to cancel your car insurance, you must first inform the current insurance company. The insurance company then starts the cancellation process, which takes up to 7 to 15 days.
- The insurance company then guides you through the cancellation process. Some insurers require you to sign a document for cancelling the policy. Some companies may require you to send an email to them. Some may also ask you to provide a signed declaration giving a go ahead for the cancellation. After the cancellation is approved, the company will confirm the process. The due refund is also mentioned in the letter.
- You should not forget to request the company to return your certificate of car insurance policy. This certificate is useful when applying for a new insurance policy and to safeguard the NCB (No Claim Bonus).
- Do not forget to check for refund if the policy has some time left. If you have paid the annual premium, it is definite that you will be liable to receive a refund from the insurance company.
- Remember to apply for a new policy, while you apply for cancellation of the old one. If you do not do so, you may have to face penalties, liabilities in case of an accident causing personal injuries or damage to property, or you might have to pay a higher premium in case of a new policy.
Although it is fairly easy to cancel an old car insurance policy, it is advisable that you have a solid reason to do so. You must also be prepared with plans and quotes of the new car insurance that you want to apply for. Despite all the issues you are facing with the current insurance company, never driver without a comprehensive car insurance.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017