Planning to Cancel Car Insurance? Here's What to Know

Posted on: Aug 11, 2023 | 3 mins | Written by: HDFC ERGO Team

Planning to Cancel Car Insurance? Here's What to Know

Car Insurance protects car owners from sudden financial loss that may happen due to unforeseen events. Accidents can lead to third party damages; they can also cause physical injury or even death to a third party. Your Insurance policy offers a protective cover from the liabilities arising from such circumstances. No wonder the Indian Motor Vehicles Act has made Insurance mandatory for all motor vehicles on Indian roads. But still, there may be some specific reasons that may require Insurance cancellation.

What are the circumstances that may lead to cancellation? Do car owners face such situations commonly? Let us find out the reasons that may prompt you to cancel your car insurance.

Reasons to cancel car insurance

When you sell the car

The validity of Insurance plans is usually for one year. Therefore, you may cancel the policy for the remaining period when you decide to sell your car. In addition, some plans offer extended coverage for up to five years hence cancelling the balance term makes sense.

Service Issues with Insurance Provider

If you are unhappy with your current insurer, you may shift to another provider for better service. You must cancel your existing policy first and then move to a different insurer.

However, changing the service provider for better financial terms should be examined in detail. Some companies may offer schemes to entice you to shift your Insurance, which may ultimately be attached with strings. Therefore, consider all points before you cancel your car insurance.

Other reasons

There may be a few other occasions to cancel the insurance policy:the theft of the car (without comprehensive coverage) and scrapping of the vehicle due to age.

How to cancel car insurance

• The process is quite simple once you are sure of cancelling the insurance policy. You have to get in touch with your insurance provider and follow the procedure suggested.

• While the basic requirements are the same, different insurance providers may have different processes for cancellation of their insurance policy.

• The process starts with a notice to the insurer in the form of a letter of declaration;

• The insurer may require documents regarding the reasons for cancellation, like the sale deed of your car, in case your reason for cancellation is selling the vehicle.

The Refund Process

• After you have complied with the requirements, the refund process begins.

• The insurance company will send you the cancellation notice and the refundable amounts per the cancelled policy's terms.

• If applicable, the No claim bonus certificate will also be part of the refund.

• Generally, the process to cancel car insurance takes around two weeks.

In the event of the policy cancellation before the beginning of the policy term, a full refund is granted, subject to the deduction of service charges.

A pro-rata refund is given when the cancellation happens within the policy term year; the insurer will refund the pro-rata premium amount for the remaining months.

Long Term Car Insurance cancellation

Long-term comprehensive policies covering own damage and third-party liabilities usually offer better terms to the customer, and several car owners prefer to buy long-term policies.

However, suppose you need to cancel such long-term policies during the tenure. In that case, the refund will be based on a) the total amount of the future years, b) on a pro-rata basis for the year in which the policy is cancelled, provided there are no claims, and c) in case of any claim made during the particular year, there is no refund of premium.

Apply for a New Policy

Having completed your cancel car Insurance formalities for whatever reason, arranging a new one is an immediate necessity if you wish to continue driving your car.

Similarly, if your existing car insurance has expired, you must apply for a new one immediately. It is best to remember that driving with expired car insurance is a legal offence involving penalty/imprisonment.

When buying new car insurance, choosing a comprehensive insurance plan for your car is always best, which provides third party coverage and takes care of your own damage. The plan protects the insured car from loss and damages due to accidents, theft, fire and natural calamities.

Therefore, whether you have opted to cancel your car Insurance or the Insurance policy has expired," car insurance policy renew" is a top priority. The renewal process is straightforward and can be done online or offline, depending on your choice. All leading Insurance providers in India have several attractive car Insurance plans. But to decide on the best-suited plan, you need to study and understand the nuances of the schemes.

The overall benefits and facilities offered by the various insurers throughout the plan tenure should be considered for the entire plan tenure. Sometimes one spot offer may appear attractive but may need to be more beneficial.

HDFC ERGO, among others, is a top insurance provider in India. The company offers many unique top-of-the-line consumer benefits. For example, HDFC ERGO helps with emergency roadside assistance through a vast network of cash-less garages nationwide. Moreover, HDFC ERGO offers add-on benefits like pay-as-you-drive and more to enhance the value of coverage that may appear customised for you!

Conclusion

Insuring your car is mandatory, and a vehicle without a valid insurance policy is liable to be prosecuted. However, there are a few occasions where you may need to cancel the Insurance, but getting a new policy without delay is a prime necessity.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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