You feel like it is the right time to upgrade and purchase a larger, newer, or better vehicle. Perhaps you have multiple cars, and you want to sell one of them for profit. Either way, you’ve decided that now is the right moment to sell your vehicle. But what will happen with the insurance once you sell the vehicle? At its essence, you have two options when it comes to your car insurance policy.
Option #1: Cancel the Car Insurance Policy
The first thing that you can do is to cancel the car insurance policy. It is important not to rush with this decision. The situation when canceling the car insurance is justified is when you don’t plan on owning a vehicle any time soon. Since you won’t be having a car, there is no need for car insurance. Here is how the process of canceling the car insurance policy should look:
- Contact the insurance company to ask for details about the cancellation process. Inform that that you’ve sold your vehicle and want to cancel your policy.
- Make sure to ask about potential cancellation fees.
- Send the required paperwork to the insurance company and pay the fee.
Depending on how much you have left on your car insurance policy and other details of the agreement, you might be eligible for premium refunds. If you are paying monthly, the odds are that there will be no or low refunds. However, if you paid for the entire contract time in advance, a refund might be approved.
Option #2: Change the Vehicle Covered by the Car Insurance Policy
You might be selling a vehicle, but that doesn’t mean you are not acquiring a new car. Perhaps you are selling the old model to purchase a new one. If you plan to buy another vehicle and continue driving, you don’t need to cancel your car insurance policy. Instead, it is much better to replace the vehicle covered by the insurance plan. Updating your car insurance policy should be a straightforward process. It starts by contacting the insurance company and informing them that you sold the old and purchased a new vehicle. An agent will get in touch with you to discuss details about updating the policy. Specifics like the estimated value of the vehicle might need to be changed. Once you reach an agreement, you will receive a fresh certificate of your insurance plan for the new vehicle. Make sure to check for the effective date of your new policy. That is the day when the obligation of the insurance company officially begins. If any damage occurs before that date, they cannot be held responsible.
Why You Shouldn’t Cancel Your Car Insurance Policy Before You Sell Your Vehicle
Many people rush and decide to cancel their car insurance policy even before they finalize the selling process. You might think that you won’t drive your vehicle anymore, especially if you have an interested buyer. But what if the purchaser gives up at the last minute? What if there is an emergency and you need to take the car to another part of the city?
Driving without car insurance is a huge risk, which is why you should keep your policy intact until you finish the selling process. That way, you can use the vehicle until the last moment without worrying about potential consequences.