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Do I need to cancel an old policy I don’t need anymore?

Maybe you changed insurers or maybe you just don’t need your policy anymore. However, there’s still a question about what happens to the old policy. Does it just go away?

Some people do nothing, expecting the policy to expire. But this can be costly sometimes and can lead to additional premiums. Here are some considerations.

Automatic renewals
Many types of insurance policies automatically renew. Nearly all auto and home insurance policies work this way. Your policy term might be for a year or it might be for 6 months, but the policy usually auto-renews. This is convenient because you don’t have to contact your insurer to buy new coverage every year. But if you changed insurers or just don’t need the policy, it can become an expensive “feature”.
Since most policies auto-renew, it’s wiser to cancel the policy you no longer need. This also lets you choose the end date.
Mid-term changes
Often, insurance needs a change in the middle of a coverage term. Maybe you sold your car and decided to ride your bike instead. Maybe you changed insurers. To avoid paying for coverage you don’t need, be sure to notify your insurer so you aren’t billed for premiums on a policy you don’t need.

Autopay
Having an extra policy can be especially problematic if you’ve set up automatic payments with your insurer. Autopay is convenient and often saves money but it’s also like a robot that never stops. Give your insurer plenty of notice to avoid an automatic debit from your bank account or credit card.
Cancel in writing
Calling your agent or broker may not be the best way to cancel your coverage. In fact, most offices will tell you they need a request in writing. There may even be a form to sign.
Your agent or broker isn’t trying to be difficult. In fact, the opposite is true. They are trying to be accurate and to respect your wishes — to the letter.
Sending your cancellation request in writing reduces the chance of misunderstandings. It also creates a record of the request, including the effective date you’ve requested. Some offices can accept cancellations by email as well.

12:01 a.m.
What’s so special about 12:01 a.m. anyway?
Well, it’s when most insurance policies expire.
Let’s say you’re selling your house on December 1st and you want your coverage to end that day. You send a note to your agent or broker saying you’d like to end the policy effective on that date.
Your closing is at 1 p.m. but at 12:30 p.m. there’s a small fire. Are you still covered?
Probably not. Here’s why. Your coverage ended on December 1st, just like you requested. However, it ended at 12:01 a.m. while you were probably sleeping. In this example, the house was uninsured for over 12 hours before the fire started.

Cancelling with an effective date of the 2nd would have protected your home in this example.
If you have questions about what to do if your coverage needs change, reach out to your broker or one of our specialized team members.