Buying car insurance is mandatory in India if you want to legally drive your car on public roads. But have you ever wondered what happens if you want to cancel the policy for any reason? Is there a refund option in such a case? The good news is, yes, it is possible to cancel your car insurance and get a refund. However, you must meet certain conditions to do so.
Just as buying car insurance should be an informed decision, canceling car insurance also requires thoughtful steps. You should think about the consequences of canceling your policy and write down your next steps. Read on to learn more about how to properly cancel your auto insurance and get a refund.
People can have various reasons for canceling their auto insurance policies. Below is a list of the most common reasons the insured would want to do this.
All car insurance is valid for a minimum of one year. Those who have purchased a long-term policy have an extended insurance period of up to five years. If you decide to sell your car, you probably won’t wait until your insurance term ends. You sell the car when you get a good deal or when you think the time is right. In such cases, car insurance must be canceled.
An unwanted interaction with your old insurance company can lead you to search for a different insurer. You will need to cancel your existing policy while switching to a new insurance company.
There is no standard procedure for canceling auto insurance policies, as different insurance companies may follow a different procedure. While the basic principles remain the same, some insurers may have a different tier or two than others. Here is a basic procedure to help you understand the steps required to cancel your car insurance.
Step 1: Contact your insurance company and inform them of your decision to cancel auto insurance. You can do this by calling or sending an email. They will inform you of the details of the cancellation process.
Step 2: Depending on the reason for your cancellation, the insurance company will ask you for certain documents. For example, if you indicate the reason for canceling the policy as “sell a car,” the insurance company will request a sales contract. If you indicate the reason as “Change of insurer”, the new policy will be requested.
Step 3: Once you have submitted the required documents, the insurance company will review them. If your cancellation request is approved, you will receive the policy labeled “Canceled.” Also, you can receive a bonus certificate without any rights.
Online process: In addition to the three-step offline process mentioned above, some insurers may also offer an online cancellation process or an automatic cancellation process. This is where you need to log into their website and go through the process to cancel your policy.
In the event the policy is canceled, you will be entitled to a refund based on when you cancel the policy and its terms and conditions. Take a look at the two scenarios below.
In such a scenario, you are likely to receive a nearly full refund of the payment. Some processing fees may be deducted.
Here the refund is offered pro-rata. In fact, you’ve been covered by car insurance for a few days.
The exact processing time for the refund will depend on your payment process. However, the refund should not take more than 14 business days to arrive.