Can you get a refund on car insurance?

Your insurance company may issue a refund if your policy is canceled, and you've paid your premium in advance. Receiving an insurance refund will largely depend on why you're canceling the policy and how much of the premium you paid in advance. If you pay your full premium upfront, then you'll typically get a refund when you cancel your policy. If you pay your premium monthly, then you may or may not get a refund depending on when you cancel.

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If I cancel my auto insurance, will I get a refund?

If you cancel your auto insurance before the end of your policy term, you may receive a refund if you paid your premium in advance. There are a few scenarios where canceling a policy may qualify you for a car insurance refund.

Switching insurance companies

If you switch car insurance companies and find better rates with a different insurer, you may want to cancel your existing policy before it expires. In this case, if you switch insurance companies you can get a refund. Depending on your insurer, you may have to pay a cancellation fee.


If you move out of state, your insurer will cancel your old policy and issue you a new one. Since insurance premiums are partially determined by where you live, you may get a lower rate on your new policy if you move to an area where rates are cheaper, and your insurer may refund part of your insurance premium. Learn about state car insurance requirements and how moving affects car insurance.

Selling your car

If you sell your car and no longer need coverage, your insurance company may send you a refund check if your policy is canceled before the end of your term. Note that you may have to pay a cancellation fee in this scenario too. Learn when to cancel your insurance after selling your car.

Removing coverage

You might also qualify for an insurance refund if you make changes to your policy, such as those listed below. However, you may receive a credit on your account instead of a refund, depending on your insurer:

It may no longer make sense to carry certain types of coverage. For example, if you don't have an auto loan and your vehicle isn't worth much, it may make sense to drop comprehensive and collision coverage.

Decreasing policy limits

Typically, higher insurance coverage limits result in higher premiums. If you reduce the amount of coverage you have, you may get an insurance refund.

Removing a vehicle

If you remove a vehicle from your policy, your rates will typically decrease, which could result in a refund. Before you cancel your auto insurance, check your insurer's rules regarding cancellations. Some insurers may charge a cancellation fee that could offset your refund amount.

Pro tip:

If you sell your car and buy a new one, you'll still need coverage because most states require drivers to have auto insurance. Be sure to add the new car to your policy so you have the coverage you need.

How does your payment schedule affect your car insurance refund?

If you choose to cancel your policy, or your insurance company cancels it, you typically won't get a car insurance refund unless you've paid the premium in advance. For example, let's say your policy term is 12 months, and you pay the premium for the entire year upfront. If you cancel your policy after only three months, your insurer will issue an insurance refund for the remaining nine months.

If you pay in monthly installments and cancel your policy at the end of the month or billing cycle, you probably won't get a refund. But if you were to cancel your policy in the middle of the month or billing cycle, then you may get a small refund since you've already paid your premium for the full month.

Important note: Whether you pay monthly or upfront, you may have to pay a cancellation fee when you cancel your policy — depending on your insurer.

Will I get a check for my insurance refund?

Insurance refunds are typically issued through the same payment method you use to pay for your insurance. So, if you pay your premium with a check, you'll usually get an insurance refund check. Likewise, if you pay with a credit card, your refund will appear as a credit on your card balance. However, the exact method of distributing refunds may vary by insurer.

Will I get a refund if the insurer cancels my policy?

If the insurance company cancels your policy, you'll usually receive a car insurance refund unless they cancel the policy for non-payment. If non-payment occurs, you will not receive a refund and will continue to owe the insurer any unpaid premiums.

There can be multiple reasons why an insurance company cancels your policy, including having too many accidents or tickets on your driving record, getting a DUI, or failing to pay your premium.

How should I cancel my auto insurance policy?

If you're going to cancel your existing policy and you plan to continue driving, don't cancel your old policy until you find a new one. When you have the effective date of your new policy, you can ask your current insurer to cancel your existing policy effective the first day of your new policy.

It's essential that there are no gaps in your coverage because even a small one could create problems. If your car is stolen, damaged, or involved in an accident while you're uninsured, you could be responsible for repairs and medical bills. Any gaps in coverage could also raise your insurance rates, even if it's just for a day.

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