Switching insurance, timing cancelation of old

[SimonJester]

Unfortunately my increased my premiums 16% this year so I shopped around and found another carrier with lower deductible, higher coverage at a 20% savings. With two teenage drivers in the house insurance is a major budget buster.

My current policies run through the end of April, my new policies will start mid next month.

My question is would you A) Call old insurer now to cancel on the date of new policy start, or B) wait until the new policy is in effect and call that day to cancel. Since I am switching mid month I am leaning towards option B.

[Dottie57]

Wait to have new coverage in effect, then cancel.

[Silk McCue]

Err on the side of caution. Do not cancel until new policy is officially in force.

Cheers

[Jimmie]

I just switched and did this:

First, when you obtain the new insurance, set the date when new policy would be effective. Since renewal of my existing insurance policy was approaching, I made it one week BEFORE old policy ended.

Five weeks before my existing policy was to expire, I sent a letter to my agent advising him NOT to renew my current insurance due to my changing to another agency. About a week later, I received confirmation in the mail from my existing agent of the cancellation.

My policy is about $32 per month, so one week of overlap was of no consequence, but worth the peace of mind.

[HueyLD]

Some states may require you to notify the DMV for any cancellation of automobile insurance. You may have to inform the DMV of your new insurer.

It is possible that you can do this on the DMV website.

[dratkinson]

Make sure new insurance is in place before canceling old... to avoid your life turning into a situation comedy.

Idea: Ask your new insurance company when you can cancel your old insurance, and whom (DMV?) you should notify.

[Thecallofduty]

As everyone stated above make sure new policy is in effect THEN cancel old policy.

[batpot]

Yes, overlap.

Don't need to worry about timing; just make sure the new policy is in effect, and call your old insurance company to cancel.
Sometimes they'll auto-cancel, but don't count on that.
And they will always refund you for the remaining period, so no need to worry about timing it.

When I sold my dad's house, I forgot to cancel the homeowners policy, and called them up months later, with proof of sale, and they sent me a refund check pro-rata from the date of sale.

[michaeljc70]

B. One days premium is going to be insignificant.

[scifilover]

Normally, one cancels the old policy effective on its date of renewal rather than earlier. Many insurance companies will use a short rate penalty table for your situation rather than the pro rata table when the insured cancels the policy earlier than the renewal date.

[michaeljc70]

This probably isn't relevant here if the new policy is already set to go into effect. However, I goofed and didn't pay my renewal ontime. I called the next morning and tried to pay over the phone. That was fine, but I was told it would take effect at midnight and there were no other options. So, I had no coverage for 24 hours. I didn't have anywhere I needed to be so I just didn't drive that day.

[dratkinson]

This probably isn't relevant here if the new policy is already set to go into effect. However, I goofed and didn't pay my renewal ontime. I called the next morning and tried to pay over the phone. That was fine, but I was told it would take effect at midnight and there were no other options. So, I had no coverage for 24 hours. I didn't have anywhere I needed to be so I just didn't drive that day.

It is relevant in how we learn to avoid/recover from mistakes.

The short answer: It's easier to learn from the mistakes of others, rather than by making every one ourself.



His story. In a recent topic, a member describes the sad tale of how he sold a car and left it in his driveway awaiting pickup. During this time he cancel insurance on it, but forgot to tell wife... who drove it to the store and got into a minor fender bender. "Reality ensures."



My story. After joining the USAF, a banker "friend" tells me how wonderful my life would be if I started a living trust with them, and sent all my pay and bills to the bank trust department. The bank would manage my money, pay all my bills, and do my annual tax returns. I could go anywhere and never have to worry about anything. My life would be easy peasy. Sweet. Where do I sign?

Fast forward a few years. Discovered I'd been driving without insurance... for a while. (Called insurance company to update policy when I traded vehicles and was told "You're not insured with us because you stopped paying the policy premium.")

Called bank. Bank's opinion: You haven't been in any accidents, so no harm, no foul. But we still get paid.


When I called locally to reestablish auto insurance, after telling agent my sad story, new company said, "You've been driving without insurance, so there's a fee for that." It was a huge fee. (Having lived under "assigned risk" during my early lead-footed 20s, I knew what was coming.)

So after being insured for "a very short while", searched for auto insurance through another company. New agent asked, "Are you currently insured?" I said "Yes, do you need the current policy number?" They said "No."

So I got new-new auto insurance at a steep cost reduction---relatively---and canceled old policy and got a refund for unused days. Whew!


I also called all my creditors to ensure I was paid up, and had their bills sent directly to me.

I then canceled living trust. Banker "friend" was sad to see me go "...because they added so much value to my life."


Lessons learn.
--No one cares more you me, than me... not even if I pay them.
--If someone is doing everything for you (paying your bills, filing your taxes,...), then you never learn to do this for yourself.
--Have no idea how much money the bank trust department siphoned off.



OP's story. Made sure new insurance was in place before canceling old insurance.

[SimonJester]

Normally, one cancels the old policy effective on its date of renewal rather than earlier. Many insurance companies will use a short rate penalty table for your situation rather than the pro rata table when the insured cancels the policy earlier than the renewal date.

I think I'm going to play it safe and just call to cancel the day the new policy goes into effect vs calling ahead of time.

Ive run the short rate vs prorated calculator and even if they use short rate I'm still saving more with the new company for March & April...

[NavyIC3]

Is it possible to receive the policy of the new insurance before it goes into effect so it can be compared to the existing policy? Just because the limits of coverage are the same doesn't necessarily mean the policies are the same.

[SimonJester]

Is it possible to receive the policy of the new insurance before it goes into effect so it can be compared to the existing policy? Just because the limits of coverage are the same doesn't necessarily mean the policies are the same.

I believe you can receive a sample policy, and I think in my case since I have bound the policies already with an effective date a month out I will receive the policies in the mail ahead of time. Auto is fairly straight forward, however on home owners it goes to underwriting where they can make changes...