Is it free to cancel insurance?

Wondering if you can cancel your insurance for free? The answer depends on timing, payment method, and your insurer’s policy. Here’s what to expect and how to minimize costs.

1. The 14-Day Cooling-Off Window

Many insurers offer a 14-day cancellation window from the policy start date. Within this period, you can cancel and usually receive a refund of unused days—minus administrative fees. Some insurers allow full cancellation without fees during this short window.

2. Cancellation After the Cooling-Off Period

Once the initial period closes:

• Pro-rated refund: If you paid upfront, insurers may refund unused days proportionally.

• Short-rate refund: Some insurers apply a penalty, commonly around 10%, thus reducing your refund.

• No refund for installment plans: Policies paid monthly often don’t offer refunds—and may incur additional fees.

3. Administrative or Cancellation Charges

Many insurers deduct a flat cancellation fee, typically between $30 and $150, from any refund amount. In some cases, they also remove earned commission or apply short-rate penalties.

4. Cancelling Mid-Term: Payment Matters

• Prepaid policies: Eligible for pro-rated or short-rate refunds.

• Installment policies: Often non-refundable, with continued charge obligations until the end of term.

• Optional add-ons: Additional coverages—like roadside assistance or legal protection—may not be refunded unless canceled separately.

5. What if the Insurer Cancels Your Policy?

If cancellation is initiated by the insurer (not for non-payment):

• You may receive a pro-rated refund, as long as the insurer is at fault or coverage is no longer viable.

• If cancellation is due to non-payment or high risk, refunds are unlikely and fees may still apply.

Summary Table

Final Thoughts

Cancelling insurance isn’t always free. If done within the cooling-off period, you may receive a refund with minimal fees. Cancelling later often triggers prorated fees, short-rate penalties, or may provide no refund at all—especially for installment plans. Always check your insurer’s full cancellation terms before proceeding.