Do I have to continue to pay my auto insurance policy until the end of the term after cancelling in the middle of term?

UPDATED: Sep 1, 2011

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Do I have to continue to pay my auto insurance policy until the end of the term after cancelling in the middle of term?

I purchased car insurance for a 6 month term. The company automatically renewed my policy for 2 more terms by mail. I never signed anything. I found better rates and cancelled my policy in the middle of the term but did replace the policy with another company. They are trying to tell me I was under contract and have to finish paying the term and maybe a penalty. Is this the case?

Asked on September 1, 2011 under Insurance Law, Florida


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You need to read the insurance policy agreement as to your obligations to pay on it if you decide to cancel it before the end of the agreed upon term in that its terms and conditions control your obligations you owe to the insurance carrier and vice versa in the absence of conflicitng state law.

From a practical standpoint, most likely if you cancelled your insurance policy mid-term and obatined another insurance policy for your car, you should only be obligated for the insurance premiums up to the point of cancellation.

The rationale is that what if you sold your car to a third person? Why should you have to continue paying premiums for it when you no longer own it? Same holds true if the car was stolen or destroyed completely.

You should contact your state's department of insurance about the problems you are having with your former insrance carrier for your auto. This entity regulates the insurance industry in your state and looks into improper insurance practices.

Good question.

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