How Canceling Your Policy Could Affect Your Future Car Insurance Rates

This is how canceling your auto policy now can affect your rates in the future.

Whether you are selling your car or moving to a new state, there are a variety of reasons why you might want to cancel your auto policy before your term ends. Many car owners are concerned about what policy cancellation means for their future rates. Here’s what canceling an auto policy now will mean for you in the future.

Understand the Difference Between Canceling Your Policy and Having Your Policy Canceled

There is a major distinction between canceling your own policy and having your policy canceled by your insurer. When you cancel your own policy, insurers tend to be understanding of the circumstances that forced you to do so. For instance, if you are canceling because you are selling your car or moving out-of-state, this cancellation will have little to no effect on your ability to secure affordable car insurance in the future.

However, if your insurance provider actually chooses to cancel your policy, this is an entirely different story. Oftentimes, cancellations are caused by missed payments, an excessive number of claims filed, or failure to meet the conditions of your policy. If your policy is canceled for one of these reasons, you will be flagged as high-risk. This will make it more difficult and more expensive to secure auto coverage from a new insurance provider.

Watch Out for Gaps in Your Auto Coverage

If you have voluntarily canceled your policy for a legitimate reason, it’s important that you secure new coverage immediately. For instance, if you cancel an existing policy because you are moving, you need to have a new policy lined up right away. This is because having a gap in your auto insurance could make you appear high-risk to insure. Of course, higher risk will translate into higher insurance costs. So, if you want to avoid paying more for your car coverage than you have to, be careful to avoid gaps or lapses in your auto insurance coverage.

Do you have additional questions regarding your auto insurance coverage? If so, then contact the experts at Pierce Insurance Group. Our dedicated team is ready to assist you with all your insurance needs today.