Cancellation fees depend on state laws, insurance companies and the particular policy you have. Some companies charge fees, and others don’t. The arrangement might differ depending on whether you cancel a policy or the company cancels your insurance. You have an easier time canceling a policy if you’re near the end of a term and switching policies. Read your policy for terms on cancellation or talk to an agent.

Canceling Your Policy

When you cancel your car insurance, some companies have no cancellation fees. Others may charge up to $50 or take out a small percentage of your remaining premium if you cancel your policy early. Companies might charge penalties of up to $30 if you still owe $300 or require at least two monthly payments in which they still keep $50 as a penalty for cancellation. Check with your insurer for any changes in policy. State laws could limit the amount of charges by an insurer.

Hidden Fees

Companies claiming to have no cancellation fees could have small, hidden fees you don’t notice. For example, if you find cheaper auto insurance and decide to cancel your current policy, companies are usually required to return a certain amount of your paid premium to cover the period the carrier does not insure you. The hidden fees could be included in your refunded amount.

Insurer Cancellation

You can even receive a refund of unused premium if the company cancels your policy. You would receive a prorated refund based on the amount of unused coverage. However, the specific policy can state that you receive no refund for cancellation, which often happens to people with poor driving records. A company can cancel your insurance for nonpayment or too many traffic violations and accidents.

Tenant Policy

Renters insurance usually works the same way as car insurance. You can cancel your insurance at any time, but check the policy for cancellation terms. State laws often regulate when an insurer can cancel your policy, such as for nonpayment or fraud in applying for the policy. Individual health insurance policies also differ, but they typically require you to fulfill your contract of paying until the term ends.

Stay in Touch

Make an effort to avoid cancellation fees by contacting your insurance carrier if you switch coverage. Whatever the reasons for switching, your reputation remains in good standing by staying in touch with insurers. You’ll need to switch to another carrier if you still have your car and you’ll want to make the transition while you're still insured. Sometimes you can lose your insurance if you don’t renew your policy, which might result in you receiving cancellation fees and having no insurance. Keep up with your payments or ask about setting up automatic withdrawals from your bank account to avoid lapses.