Q

Can you get a refund on car insurance?

A

Getting a refund on your premiums will depend on the circumstances surrounding your policy cancellation. Most companies will refund you some of your remaining balance if you need to cancel before your policy term is up.

Kara McGinley

Kara McGinley

Published May 1, 2020

KEY TAKEAWAYS

  • If you paid your premiums in full and cancel your car insurance policy before it is up, most insurance companies will refund you for the remaining months

  • You can also get a refund if you make changes to your policy, like if you sell a car or remove a driver from your policy

  • If you pay your premiums month to month you won’t get a refund unless you cancel your policy mid-month, in which case you’d get a partial refund for that month

  • If your insurance company cancels your policy due to non-payment they will not refund you and you will still have to pay the premiums that you owe them

Car insurance is financial protection if you get in an accident and damage someone else’s vehicle or cause them injury. It can also cover your vehicle if it is damaged by a car accident or by a different peril, like falling objects or hail.

In order to keep your policy in-force you need to pay your car insurance premium either monthly, bi-annually, or annually for the duration of your policy period. If you need to cancel your car insurance policy before your policy period ends, it won’t be too hard to do. Most insurers make it easy to cancel a policy online or over the phone.

But what happens if you paid your premiums in full or bi-annually? Can you get some of that money back? Whether or not you qualify for a car insurance refund will depend on a variety of factors, like why you’re cancelling your policy and how you pay your premiums.

In this article:

When can you get a car insurance refund?

The details depend on your insurance company, but you should be able to cancel your policy whenever you want. That said, you might have to pay a cancellation fee. And if you still need coverage, you shouldn’t cancel your insurance policy. If you are switching auto insurance companies, you should make sure your new policy starts the same day that your last policy ends so that you do not lapse in coverage.

How you pay your premiums will affect how much of a refund you can get from your company (if it offers them). A refund for policyholders who paid in full is more straightforward than for those who pay month to month.

Can you get a car insurance refund if you pay in full?

If you paid your annual car insurance premiums in full, that means you paid them upfront when you signed your policy. Many people choose this option, especially because most insurance companies will give you a discount for paying in full at the start of your policy term.

Most insurance companies will give you a refund if you paid in full under the following circumstances.

  • Canceling your car insurance before your policy ends
  • If you move-out-of state and change your coverage amounts
  • If you remove vehicles or drivers from your policy

For example, if you voluntarily cancel your insurance policy mid-term, your insurance company may refund you for the remaining months that you already paid for. And if you decide to remove an expensive driver from your policy, like a teen driver, your premiums will decrease and you will get a partial refund on the premium amount you initially paid.

Can you get a car insurance refund if you pay month to month?

If you pay your premiums month to month, things are a little more complicated. Since you didn’t pay in full, you won’t be refunded if you cancel your policy early, unless you cancel it mid-month. And in that case you’d only be refunded for the remaining half month.

That said, if you remove a driver or vehicle from your policy, moving forward the cost of your monthly premiums will be reduced. The same goes for if you qualify for new discounts — the reduced price will change in the upcoming months, but you won’t be refunded for the past ones since you were paying for coverage in real time.

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Can you get a refund if your insurance company cancels your policy?

There are a few reasons your insurance company might cancel your policy.

Whether or not you will get a refund if your policy is cancelled by your insurer really depends on company policy and why your policy was canceled. If your policy is canceled because of nonpayment, you won’t get a refund and you’ll have to pay your insurance company what you owe them, plus any cancelation or nonpayment fees.

However, if your policy is canceled for a different reason, like because you’re an unsafe driver, then many insurance companies will refund you for the months you already paid for. Even though your insurer is the one canceling your policy, if you paid in full, most major insurance companies will refund you a portion of your premiums.

How will I receive my car insurance refund and how long will it take?

Again, how companies pay refunds varies from company to company. Some insurance companies might mail you a check within a two week period, and others might transfer you a direct deposit within ten business days.

You should check your policy details or talk to your insurance agent about the company refund policy.

Car insurance refunds during COVID-19

Major insurance companies are offering partial refunds on car insurance premiums due to the COVID-19 pandemic. In response to the ongoing coronavirus outbreak, many insurance companies are also pausing non-payment policy cancellations and late fee charges. If the coronavirus outbreak has affected your ability to pay your car insurance premiums, contact your insurer and ask about financial hardship options.

The following car insurance companies have announced car insurance premium refunds or reductions as of April 2020:

Insurance CompanyResponse to COVID-19 as of April, 15th
Allstate- 15% money back based on premiums in April and May
- Extended coverage to policyholders using their personal vehicles to deliver food, medicine, and other emergency goods
Amica- 20% credit on April and May premiums
- No policy cancellations or non-renewals until June 2
Chubb- 35% premium reduction for the months of April and May
CSAA- 20% refund for two months of auto insurance premiums
- Paused non-payment policy cancelations until May 31
Farmers Insurance- 25% premium reduction in April
- Paused non-payment policy cancellations until May 1
GEICO- 15% credit to policyholders as their policy comes up for renewal. The credit will be applied to 6-month policies renewing between April 8 and October 7, 2020 and 12-month policies renewing between April 8, 2020 and April 7, 2021.
- Also extending the credit to new policies purchased between April 8, 2020 and October 7, 2020
- Paused non-payment policy cancelations until at least April 30
Liberty Mutual- 15% refund on two months of auto premiums
- Late fee charges have stopped and non-payment policy cancelations are paused
- Extended coverage for policyholders who use their personal vehicles to deliver food, medicine, and other emergency goods
Mercury Insurance- 15% off monthly auto insurance premiums in April and May
MetLife- 15% credit for April and May
- Paused non-payment policy cancellations through July 1, 2020
- Extended coverage for policyholders who use their personal vehicles to deliver food, medicine, and other goods until May 1
Nationwide- $50 one-time premium refund per policy
State Farm- On average, most customers will receive a 25% policy credit
Travelers- 15% credit on April and May premiums
USAA- 20% credit on two months of premiums for policyholders with active policies as of March 31, 2020
- No policy cancellations or late fees through June, 17 2020