A sticker behind a car read: “Back off! My brakes are good, how’s your insurance?” Clearly, that’s an excellent sticker, given that fender benders are the most common car accidents. With road accidents being so common, basic motor insurance has been made mandatory in India. But that doesn’t mean you need to stick to the same policy even if you are dissatisfied with it.
Of course, you would want some form of vehicle insurance, as this protects you from the financial losses arising from road mishaps. But, if you are unhappy with the services of your existing insurer or are planning to sell your car, you can cancel the motor insurance, provided certain conditions are met.
Read on to learn more about the process and terms for motor insurance cancellation.
Reasons to Cancel Motor Insurance
The most common reason to cancel a motor insurance policy is that the vehicle will no longer be owned by you. This could be because you’re selling it to buy a new car. Apart from this, other reasons, like dissatisfaction with the insurance provider and finding a policy with better terms, also lead to motor insurance cancellation.
Whatever may be the reason for you to cancel your motor insurance policy, you will need to inform the insurer about your decision, in writing. The process of cancellation of a motor insurance policy may differ from one insurer to another. Check your insurer’s policy on the same to understand what their process is and so that there are no lapses from your side.
Step-by-Step Cancellation Procedure for Motor Insurance Policy
The first step for motor insurance cancellation is informing the insurance provider and enquiring about the process and conditions for the same. Some insurance providers may need you to fill out a form, while others just need a written declaration. Some insurers may also ask you to submit the sale deed or any other documents for completing the motor insurance cancellation. This is followed by the insurance provider completing necessary formalities and approving the cancellation.
Some things to remember while you are cancelling the motor insurance policy:
You may be entitled to some refund of the premiums paid for your motor insurance if the policy duration is still valid. The amount is calculated on a pro-rata basis.
You should also seek the return of the vehicle insurance policy document since it may be required while buying a new one and to safeguard your No Claim Bonus.
The policy cancellation process may take up to two weeks.
Insurance providers offer to substitute the vehicle covered under motor insurance, if it is of the same class of vehicles, by asking you to pay the differential premium amount.
Remember, motor insurance is mandatory. If you have sold your old car to buy a new one, get another car insurance policy immediately. If the reason for motor insurance cancellation is dissatisfaction with your existing insurer, apply to cancel the policy only after you have identified a new insurance provider. This will help you avoid penalties for driving a vehicle without motor insurance. In case of a long gap between two car insurance policies, you may have to pay a higher premium and not get the benefit from the No Claim Bonus of your earlier policy.
