Fee for auto insurance cancellation?

[KRZY403]

So my insurance policy was up for renewal at the beginning of May and I had received the new pink cards in the mail. I was already in the process of getting better coverage elsewhere. I cancelled the existing policy 3 days after the renewal date and the broker/agent wants to charge me an outrageous $350 fee for the early cancellation! Can they do this?? I never even said I wanted to renew my policy with them in the first place! Will anything happen if I decide not to pay them the $350?

[wannabelow]

from what i have been told is that you pay 2 months in advance so technal they should be giveing you money back

[KRZY403]

Actually I haven't paid them so they probably dont owe me anything.

[2EFNFAST]

I've never heard of that before. Soundsl ike they're trying to ass rape you.

[KRZY403]

my thoughts exactly! Im just worried that its going to affect my credit rating if I decide not to pay it. Well since I'm still a student and assuming I won't be taking out any loans or anything like that till my late 20's I should be ok right?

[Zero102]

It says right in the insurance policy and sometimes on the pink slips themselves that your policy will automatically renew without your involvement. This is to protect you as many people do forget to renew things, and with something as important as car insurance this is pretty reasonable.

You cancelled 3 days after the renewal date which means you are into the new policy. I wouldn't be surprised if they hold 1 month for your late cancellation, but unless your insurance is $350/month that sounds high to me.

[BlackArcher101]

Originally posted by KRZY403
Actually I haven't paid them so they probably dont owe me anything.

You better, cause as soon as you stop paying them, your insurance is void... wouldn't want to be caught driving without insurance.

Insurance companies also auto-renew all the time, because if they don't, some people forget to renew and start driving without insurance. It's up to the person with the coverage to call in and cancel it, or else the company can get into big shit. Pay up bucko or else they'll have collections after your ass.

[Ashers]

Check out the fine print. My insurance policy states that there is a "$100 fee in the event that the policy is cancelled or terminated". Yours may just be a little higher, or a fee and 1 month insurance, as technically they have provided you coverage for 3 days.

[2EFNFAST]

Originally posted by Ashers
Check out the fine print. My insurance policy states that there is a "$100 fee in the event that the policy is cancelled or terminated". Yours may just be a little higher, or a fee and 1 month insurance, as technically they have provided you coverage for 3 days.

Who's the underwritter? I've never seen that before.

[403Gemini]

I'd have to dig up one of my old CIP course books, but yes, insurance companies can, and do indeed do this.

[Masked Bandit]

It's called "short-rate" cancellation.

In Alberta, all auto policies automatically renew (I think the insurance companies are legally obligated to do this) whether or not you have paid them. So technically if you cancelled the policy three days in, you will be subject to the short-rate tables. At three days I think the total charge is something like five or six percent (I can look it up on Monday if you want) but $350 would mean your annual premium is crazy high.

Did you get coverage somewhere else ON YOUR RENEWAL date? If so you may be able to get your broker to re-process your cancellation effective of your renewal and avoid the penalty.

[KRZY403]

5 or 6%? they told me it was 8... is this short rate cancellation the same for every company? I got coverage with meloche monnex effective 3 days after the renewal date and when I asked they said they couldn't "back date" the policy 3 days.