There are many reasons for canceling your current auto insurance. May be you have found a better car insurance company as compared to your current policy, or may be you have decided to be more environment friendly, and have sold your vehicle in favor of riding a bicycle. Whatever your reason maybe, there is a fixed process to cancel your indemnity so that you would not be charged for something you are not using anymore.

Step 1: Generally auto cover providers offer a provision, allowing you to cancel your car insurance policy at any time. But if you are to cancel in the middle of a policy period, ask your insurance company about their cancellation policy. They might charge you with a fee to cancel early. If they do, you need to find out when you can safely cancel your policy without coverage lapsing.

Have a Replacement Policy in Place: If you are switching to another insurance company, make sure there is no gap in coverage. Talk to your new insurance company, and also ask them for the effective date of your new coverage. You will need this date when you cancel your old policy.

Call Your Current Carrier: You need to speak to an agent of the current insurer and notify them that you intent to cancel. They may ask the reason why you are canceling and they will almost certainly try to get you to change your mind. You have to be prepared for such things earlier.

Draft an Insurance Cancellation Letter: Your current car insurance company should be informed of your intent in written form. Different companies have different cancellation policies and a phone call is not at all enough to cancel a cover policy. Some companies may require you to fill in a form they will provide, while with some, writing an indemnity cancellation letter will suffice.

Get Your Money Back: Many people pay their indemnity premiums every month while there is also paying in full option available. For those, who paid for the entire policy period in advance, but want to cancel before the policy period ends, he will be due a refund. In that case, you have to ask the customer services about when you call to cancel.

Notify Your Lienholder: You also need to keep the bank informed when canceling the auto insurance cover and also make sure the new coverage meets the lienholder's requirements.

Notify the DMV: Some car insurance companies require you to inform the Department of Motor Vehicles (DMV) while canceling your auto insurance. So you must check your state's DMV guidelines before going further.

Doing the right process of cancelling your current insurance policy will not only free you from your obligations with your insurance company. It will also make you more volatile and fluid in investing for your own safety.