Is Car Insurance Refundable?
You can get a refund on your car insurance if your only vehicle is a total loss, you cancel your policy and have paid ahead on your premium or if you have overlapping coverage.
Is car insurance refundable?
Because car insurance is not something that you can feel or touch a lot of people ask this question, especially when they never use their insurance.
Unfortunately, there are only certain circumstances where you can actually expect a refund from the insurance company and most involve cancelling your policy.
Refund for Car Insurance Paid in Advance
When you purchase auto insurance it is for 6 months of insurance. You have the option of paying for the coverage term in full, in two payments or monthly. No matter what you chose though you are paying for your coverage in advance.
For the two payment plan you are paying for the first three months when you buy the policy and then the last three months when you are two months into the term. The monthly payment plan is paid from month to month, but you put two months down when you buy the policy and then you are always paying a month ahead for your coverage.
By doing this the insurance companies make sure that they get the premium for the coverage period in advance in case there is a claim. This also means that if you cancel your insurance policy during your coverage term, the insurance company owes you a refund for the future coverage that you paid for.
Refund for Changing Insurance
If you place your insurance coverage with a different company and forget to tell you old insurance carrier, you are entitled to a refund. Because you already have coverage in place in with a new company, your old carrier cannot use the excuse that they cannot cancel your policy to a past date and give you a refund because they would have provided coverage for that time period in the case of an accident. In this situation be prepared to show proof of your policy start date with your new carrier to get your refund.
Refund for a Car that Is a Total Loss
If you only have one vehicle on your policy and it becomes a total loss due to an accident you could be owed a refund for your coverage. As your vehicle no longer needs insurance coverage because it is not drivable your insurance company could owe you a refund of the premium you paid in advance. The refund should be effective back to the day after the accident. This of course depends on the circumstances you are in and you should consult your agent to see if you are owed a refund.
When Car Insurance Is Not Refundable
Car insurance is not refundable if you do not use it. You are paying an insurance company to make a contract with you that they will cover the damages to your vehicle and also the damages you cause to another person. At the same time if you do have an accident, the insurance company could end up paying out a lot more in damages than you have paid in premium.
It is also not refundable if you have a claim and you have paid more premium than the insurance company ends up paying out for your claim.
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