Here’s How to Get a Refund on Your Auto Insurance

Here’s How to Get a Refund on Your Auto Insurance

Hundreds of New Yorkers every year no longer feel the need to keep their vehicles. Typically, drivers will stop driving due to a job change, personal injury or work accident, or the decision to bike, walk, or use public transit more often if they live in New York City or on Long Island.

However, in the wake of the coronavirus pandemic, when thousands of non-essential workers are still working remotely from home, even more drivers are deciding to hang up the keys. According to the New York State Novel Coronavirus Work Guidelines, businesses that are able to allow their employees to work remotely should continue to do so to help reduce unnecessary exposure. As a result, most remote workers have been left without a need for a personal vehicle if they are only staying local within the City and metro areas.

For whatever the reason, if you or someone registered on your insurance policy are no longer driving your vehicle, it may be time to call and cancel your plan. Canceling your auto insurance before it expires may qualify you for a much-needed refund. In this article, we will cover the types of refunds you could be eligible for, and the common pitfalls to avoid that will cost you more than you planned.

When NY Drivers Qualify for A Refund

To receive any type of refund from your auto insurance company, you must either officially cancel your plan or make significant changes to the policy that reduce a monthly premium paid in advance. For example, drivers may receive a refund for making changes to their plan, including:

  • Canceling a plan;
  • Removing a vehicle from a policy;
  • Changing coverage to another insurance company;
  • Removing a driver from your plan;
  • Selling a vehicle on a policy; or
  • Moving to an area with a lower-risk of vehicle accidents.

Anytime you are no longer using a vehicle for the purpose in which it is insured, it’s crucial to contact your insurance company to see what negotiations can be made to reduce the monthly premium. Canceling a policy directly often results in the largest refund, but drivers should be certain they will not need insurance going forward before making this decision.

How to Secure an Auto Insurance Refund

The type and amount of the refund you receive when canceling an auto insurance policy will depend on two main factors: your payment schedule and your premium amount.

Insurance customers who pay in full or monthly may both qualify for a refund that is calculated differently based on your specific plan. If your insurance company pro-rates your refund (calculates in only un-used days of your policy upon the time you cancel), this would further reduce the amount depending on when you forfeit the policy.

Be aware that if you plan to keep your auto insurance but are simply making changes to your plan that lessen the monthly premium, insurance companies will often post a credit to your plan instead of a refund. Contact your insurance company directly to address this concern before making any changes.

Refunds for Premiums Paid In Full

Insurers who pay the full annual amount owed for their policy upfront are typically entitled to the largest refunds when an auto insurance policy is canceled. The amount of these refunds will vary depending on how far in advance you have paid your policy, and at what point in the payment schedule you made the decision to cancel.

Refunds for Premiums Paid Monthly

Drivers who pay their auto insurance premiums monthly may receive a lower refund when canceling a policy mid-term since they pay smaller increments more frequently. Refunds may include either a portion of the monthly premium or the full monthly amount depending on your insurance company. Canceling your auto-insurance plan mid-billing cycle provides you the best chance of retaining an ample refund for prepaid premiums.

When and How Are Auto Insurance Refunds Received

Every auto insurance company has a different policy for issuing refunds to customers who cancel or change their plans. Most companies do not issue refunds less than ten business days of when the plan was adjusted. Unless your company informs you otherwise, drivers can expect to wait up to two-weeks for refund checks issued through the mail, possibly less if the refund is set up through EFT payments.

The method you use to pay your premium is a good indicator of how you will receive your refund. If you are set up with automatic withdrawals, your refund may be directly deposited back into your account. Confirming these details upon canceling your plan is the best way to payment avoid confusion.

State Penalties for Canceling Auto Insurance in NY

Auto insurance companies are required by New York State to notify the Department of Motor Vehicles electronically under the conditions that your insurance coverage is canceled, reinstated, or changed to a new plan. Unfortunately, this process does not always happen the way it should.

If your auto insurance company does not meet these requirements, the DMV will send you a letter requiring proof for the following:

  • that you still have insurance coverage;
  • that you sold the vehicle; and
  • that insurance coverage was not required in New York State.

If these steps are not followed, the state can suspend your registration and your Canceling your auto-insurance plans mid-billing cycle provides you the best chance of retaining an ample refund for prepaid premiums for the following month. . If a driver wants the option to drive later on or rent a vehicle, having a suspended license could cause major problems.

When to Cancel Your NY Auto Insurance Plan

There are several reasons for why a vehicle owner may choose to cancel their New York State auto insurance, the most popular including:

  • Choosing to stop driving;
  • Moving out of state;
  • Selling a vehicle; and
  • Changing auto insurance plans.

Canceling your auto insurance plan at the wrong time is the most common mistake policy owners can make when it comes to requesting a refund. It’s not out of the ordinary for insurance companies to impose a fee on consumers who cancel too late into a payment cycle or too soon after signing up for the initial policy.

Policies canceled on your car insurance renewal date or on the date your monthly payment due is the best practice for avoiding a disputed refund. It may also reduce or eliminate the fees issued by companies for canceling mid-term; however, always check your policy before assuming that fees will not apply.

Regardless of the reasons you choose to request a refund for your plan, calling your insurance company ahead of time can help sort out details that would cause you to lose a refund. Canceling online without talking to a representative to confirm details may not work out in your favor. Speaking to someone directly at your auto insurance company is the best possible way to determine you are meeting the requirements needed to retain the refund you are entitled to under your policy.

New York City and Long Island Accident Attorneys

Our personal injury attorneys at the law firm of Siler & Ingber, have over 20 years of experience serving clients across New York City and Long Island. We protect your rights by maximizing recovery and securing the financial support our clients need to succeed on their road to recovery. Our winning attorneys know how to navigate through the claim process using past experience as insurance defense attorneys. We are not afraid to fight and are fully prepared to take your case to trial to get a justified verdict over settling for less.

If you or a loved one has been injured in an accident due to the negligence of another, our team at Siler & Ingber is here to help. With a 98% success rate, we have the experience and the know-how to help our clients achieve a favorable outcome. Contact us today at 1-877-529-4343 or schedule an appointment online anytime. We never charge a fee unless we recover money for you.

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