If you sell your car and don't purchase a new one, you no longer need automobile insurance. Unless you inform your insurance agent, there is no way for your insurance company to know that you no longer need its services. It will continue to send you bills, which can cause problems if you never formally cancel the policy and don't pay the premiums.
Although canceling an insurance policy doesn't affect your credit score, having a debt sent to collection causes major damage. That's what might happen if you don't formally cancel a policy and the insurance company just keeps sending you bills. By the time the debt collection agency contacts you, it's not just a question of canceling your policy but of trying to repair your credit rating. Picking up the phone or emailing your insurance agent to cancel the policy takes little time and can save you a lot of problems. Your agent will tell you exactly what needs to be done. You might even receive a refund from the unused portion of the premium.
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