If I cancel an insurance policy do I still owe the insurance company any money if the premiums are paid up at the time that the policy is cancelled?

UPDATED: Jul 19, 2010

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If I cancel an insurance policy do I still owe the insurance company any money if the premiums are paid up at the time that the policy is cancelled?

My insurance company says I can’t cancel the policy until the renewal date on my snowmobiles unless they are sold or wrecked. They told me that even if I cancel they will continue to bill for remaining term of the policy. Never heard of not being able to cancel insurance,is there something special about policies on snowmobiles?

Asked on July 19, 2010 under Insurance Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Insurance is a contract; both parties are bound by its terms. The first  thing to do is to read your policy, including specifically the "fine print" carefully; also read all correspondence from the insurer which you have received, including the backs of invoices, bills, and statements--they often contain terms modifying the policy or agreement. What do these documents say about your right to cancel?

As a general matter, you cannot necessarily cancel an  insurance policy mid-term without being responsible for remaining premiums unless you either (1) dispose of the insurered asset; or (2) provide replacement insurance; e.g. when people change auto insurance midstream, they are cancelling the old policy be replacing it with a new one.

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