Car insurance refunds are nice, but how do they work? A lot of questions come along with car insurance refunds and getting answers is not always easy. Knowing how your car insurance billing system works will help you make decisions like when to switch your car insurance or when to drop coverage on a vehicle.
Car Insurance Refund if You Paid In Full
If everyone paid in full on their car insurance, billing would be a whole lot easier to understand. Refunds can occur for many different reasons. The further you have paid in the future the more likely you are to get a refund if you make a change to your car insurance policy. Common ways to become eligible for a refund if you paid in full include:
- Cancelling your car insurance policy mid-term
- Removing coverage from a vehicle
- Changing coverage or removing a vehicle
- Moving to a lower risk area
- Removing a high risk driver
Example: Jack paid for a full six months of car insurance on three vehicles, then he sold one of the vehicles three months later, he will get a refund for the three months of insurance he did not use on the sold vehicle.
Car Insurance Refund if You Pay Monthly
If you pay your insurance on a month to month basis, you have less money being paid towards the future. More than likely, any changes you make to your vehicle will come in the form of a credit towards your future billing. In other words a refund is less likely and a credit will probably reduce your future payments instead of generate a refund. Best chance of getting a refund if you pay month to month is:
- Cancelling your car insurance mid billing cycle
Example: John pays month to month on his car insurance. He makes a payment on the first of the month and decides to cancel his insurance on the tenth of the same month. John would be eligible for a small refund because he just paid for an entire month and only needed ten days of coverage.
Is there a fee for cancelling car insurance?It is possible for a fee to be charged if you cancel your car insurance. Typically a fee only applies if you cancel your car insurance within the first two weeks of purchasing the policy. Most of the time, if you have had your same insurance policy for a long time, no fee applies. If a fee is charged, it will be subtracted from your refund amount if any is due. Check with your insurance carrier about cancellation fees.
How much will my car insurance refund be?
Figuring out how much your insurance refund will be can be tricky. Sometimes your insurance agent or insurance representative can calculate the refund amount immediately. Car insurance refunds usually are pro-rated meaning your rate is calculated by day and any prepaid unused days will be refunded. If you can’t get the exact dollar amount from your agent at the time of your policy change, usually you will be able to get an exact answer within a couple of days of the change request.
How long will it take to get my car insurance refund?
Many insurance companies have a ten business day period in which your car insurance account must have an overage before a refund check is issued. Expect an approximate two week wait time to actually get the check in the mail.
How will I receive my car insurance refund?
The traditional refund method is by check in the mail. Some insurance carriers will route the money back to your bank account if your car insurance is set up with EFT payments. Because refund delivery methods can vary, it is recommended to ask your insurance agent or representative.
I did not receive my refund check, what do I do now?
If you have waited two weeks and have not received a check or direct deposit, call your insurance carrier. Verify your mailing address to see if they have the correct address on file. The insurance carrier will be able to see whether or not the refund check was cashed. Assuming the check was not cashed, your insurance carrier will be able to put a hold on the issued check and issue you a new check. Some companies require a full 30 days to pass before they will issue a new check. Hopefully your check will arrive in the mail in a timely fashion otherwise, you could be waiting up to 45 days for a replacement.
Tips to Avoid Car Insurance Refund Problems
- Cancel on your car insurance renewal date
- Cancel on your monthly payment due date if you pay monthly
- Make changes on your car insurance renewal date
Using your renewal or payment date as the day to make changes will make it so you are squared up with the insurance company. You will not owe them any money, and they will not owe you any money. Prior changes to your car insurance could make that statement untrue, but most of the time you will be all set if you stick with your renewal date.