You may want to terminate your current auto insurance policy for any number of reasons. Maybe you are moving to some other state, getting rid of your car altogether, or maybe you are just dissatisfied with your existing company's services. Beware, however, that if you do not give your insurer sufficient notice, it could end up costing you more money, or will negatively affect your credit history.
Standard practice, for most of the insurance companies, is to allow you to cancel your policy at any time during the policy term by sending written notice mentioning the date of cancellation. Your auto insurance policy does not necessarily terminate at the end of each policy term, so it is not safe to assume that you can just cancel by failing to pay your next premium amount. If you do not send notice of cancellation your insurance company will automatically bill you in advance for the next term's premium payment and If you don't pay it, they will cancel your policy and it will go on your credit report.
Don't expect this information to be made explicit in your policy; while insurers are quick to inform you that your coverage will terminate at the end of the policy period if you do not pay your next premium, they will not always inform you of the backlashes you may face for not giving formal notice of your policy termination.
Another thing to keep in mind is that allowing your auto insurance policy to be canceled may hurt your chances of obtaining auto insurance coverage in future. A cancellation in your insurance history may cause other companies to label you a high-risk applicant, hence giving them a chance to charge you a higher premium. You can easily avoid this trap by officially terminating your policy in timely manner.
Here is what to do, Call your insurer, tell them that you want to cancel your policy and give them an effective date. They will send you a cancellation request form. Review this form carefully before signing it and return it to your insurer.
If you want to switch to another insurer, and you plan to drive your car throughout the process, you have to make sure that there is no lapse in your auto insurance coverage. So, be sure to coordinate the effective starting date of your new policy with the termination date of your old policy. The last thing you want is to get in a road accident during an uninsured interim, how stupid would you feel if that happened?