Car Insurance - Cancel Policies

The need for cancellation of car insurance arises in either of two conditions: to get an insurance policy from a new carrier or after selling the car. In the first condition, you need to first get the new car insurance policy before applying for the cancellation of your existing policy. Otherwise, you can face the problem of hefty fines or even cancellation of the new policy due to in between lapse in the insurance coverage.

In the second case, you should call the insurance carrier or an agent before actually selling your car. In case you forget to cancel the car insurance policy before selling it, your policy will still cover the sold car. If any accident happens with the sold car, the insurance carrier will have to honor the policy. As the insurance policy is still in your name, you will bind to pay the entire premiums for all the months starting from the date of selling your car up to the date of accident.

Process of Cancellation

There is a defined process of achieving the cancellation of a car insurance, which is described below:

  • Call the insurance carrier and notify your wish to cancel the policy.
  • The carrier will send you a letter of cancellation to confirm your willingness to cancel the policy.
  • You will need to surrender all living or un-expired motor insurance certificates.
  • In case of loss or damage to the certificates, the carrier will send you a declaration form. You will sign it and send back to the carrier. If you fail to do so, Road Traffic Act will declare you as an offender.
  • Insurance carrier will refund you some money after calculating their premium rates and the time for which the policy was active. Insurance carrier will refund the money in the same account from which it got its premiums.
  • In case of death of the account holder, the carrier will refund the money in the account of the nominee of the insured.
  • At the end, the insurance carrier will issue the proof of “No Claims Discount”, which will certify that you no longer hold the car insurance policy.


If you cancel the car insurance policy within first 14 days of its issuance, the insurance carrier will have to proportionately refund the premiums from the date of cancellation. But, you can’t claim on the refund of any paid fees. If you cancel the project after the first 14 days, the insurance carrier will levy the short term insurance rates for the period the policy was active. Insurance carrier applies the short term insurance rates, assuming you have applied for the policy for only a period during which the policy was active. They do so because short-term policies come with larger premium rates. Along with the cancellation of car insurance policy, the carrier too cancels “Motor Legal Protection and Breakdown Cover”. “Motor Legal Protection” is non refundable unless you have cancelled the policy within first 14 days. “Breakdown Cover” is refundable.

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