I want out! It has come time to cancel your insurance policy – how exactly is it done? Is it as complicated as the policy wordings? Well – No! It is actually pretty easy! Of course, it’s a simple conversation if you have an easy-going insurance broker, otherwise it might come with a bit of resistance. As a policy holder, you have the right to cancel, so here is some simple advice on what to do and what not to do when canceling your policy.
Cancellation of insurance policies is a fact of the insurance business and from time to time, clients will ask me to cancel their policies – sometimes due to the fact that I have found a better insurance solution for their needs, other times because the solution that worked at a certain point in time, is no longer working for them and yet other times because they don’t need coverage anymore.
First, you have to know that the regulations are stacked in your favour – For an insurance company to cancel your policy; they have to have registered letters giving ample notice that they are going to cancel the policy, reason and – if you owe money – a chance for you to pay it back and continue along on your merry way.
If you are going to cancel the policy, there are several ways to get it done. Here is an ideal way and a non-ideal way to cancel your policy:
As a consumer you can cancel a policy:
a) In writing – this is the absolute best way to cancel a policy (for you and your broker) – it should contain the following information:
- Insured’s name(s) – the name of the people that are insured under the policy
- The policy number – (may be different than the account number – depending on the company)
- The company that is insuring you
- The date you wish the policy cancelled
For example: In consideration of the return of unearned premium to follow if any, I hereby request cancellation of ABC Insurance Company Policy No. ABC1234 and any renewal thereof and hereby release the said Company from Month Day Year. Your name(s) would appear at the bottom of the letter underneath your signature(s).
- All policy holder signatures – everyone listed on the policy needs to sign consent
b) Stop paying your premiums – Does the job but NOT A GOOD IDEA!
Your policy will be cancelled but the aftermath will be different for the type of policy that you have, for example:
- Auto & Home insurance – cancelled for non – payment: Not good at all to have on your record – may affect premiums in the future
- Business insurance – cancelled for non-payment – Would you do business with someone who doesn’t pay you – insurance companies don’t look too kindly on businesses that don’t pay their insurance bills – it is hassle they aren’t fond of.
- Life insurance – not paying your premiums is actually one of the few ways your “in-force” policy can be cancelled – still it is better to cancel in writing – it really gives you a chance to think about why you are cancelling and perhaps to speak to a representative to get advice.
One thing you definitely cannot do is request a change or cancellation of your policy(s) by leaving a message on your broker’s voicemail – they won’t accept it for several reasons including the fact that we cannot verify that it is indeed you that is leaving the message.
When cancelling your policy always ensure that coverage is in place first to replace the insurance policy that you are replacing (if you are replacing it). You definitely don’t want to be caught without coverage!
So remember, like anything else in life – put it in writing and send it via fax, mail, or email and make sure to get a delivery receipt. Make sure you address the notice to your broker and things should proceed smoothly.