If you want to cancel the motor insurance policy then you can do it on some conditions. But you should think double before cancellation of your two-wheeler or private car insurance policy.
Having a motor insurance policy in India is a must. You can’t drive motor vehicles on Indian roads without valid insurance. If you will drive without valid motor insurance policy then you may face heavy penalties.
There may be many reasons to cancel the insurance policy. You must have a valid reason to cancel your insurance policy. If it can be resolved after endorsement then avoid cancellation.
What are the Steps to Cancel Motor Insurance Policy?
The process of cancellation is almost the same for all the insurance companies. Although, process and documentation may vary in different insurance companies. Some companies want physical documentation and signature.
However, may companies may have an online cancellation process also. You can send an email to your insurance company to cancel the policy. But all steps of cancellations are required either you cancel it offline or online.
Following are the steps to cancel motor insurance policy:
1- Inform to your Insurance Company
The first step is to intimate to your company that you want to cancel your motor insurance policy. The company would like to know why you want to cancel it. Even you also have any confusion regarding cancellation then you can ask them.
Normally, the company takes 7 to 15 days time to cancel the policy. It is better to inform your insurer on time.
If you have finalized that you want to cancel then don’t do any delay in it. Inform the insurance company about your decision immediately.
2- Submit Request Letter and Documents
Based on your decision the company will ask you to submit a written request letter and some required documents.
Normally, you have to submit a current insurance policy, request letter with a valid reason, and KYC documents. The insurance company may ask one more thing that is the cancel cheque or bank account proof. Company will refund the amount in this account.
Try to submit all the documents in one go. So that your policy cancellation may process smoothly.
3- Alternate Policy and Approval
After submission of all the document company will verify it and process the cancellation. Company may take more than one week to cancel the policy. First of all, the company will approve the cancellation.
On case to case basis company may ask you to submit an alternate insurance policy. For example, you are not satisfied with the company and you want to purchase a policy from another insurer.
In this case company will not cancel your policy without submitting the replacement of the policy. Motor insurance policy is mandatory in India and any insurer may not cancel the policy without getting an alternate policy.
4- Cancellation and Refund
After verify and completing all the required processes, the company will cancel your motor insurance policy. The company will refund you the amount on the basis of certain parameters and calculations.
Normally you will get a refund for the balance tenure of the insurance policy or according to the refund structure. For example, you had purchased the policy for 1-year tenure and you are canceling the policy after 3 months. In this case company may refund you for the rest of the 9 months.
You must read your policy terms and conditions before the cancellation of the policy.
What May be the Reasons for Cancellation of Motor Insurance Policy?
There may be following reasons for the cancellation:
Dissatisfaction from current insurance company: Maybe you have purchased a motor insurance policy from a company. But due to some reason you are not satisfied with the company.
Maybe features and benefits or services of the company are not satisfactory to you. In this case you can cancel the policy and switch to another.
By Mistake you have purchased the wrong policy: Yes, It is also possible that you have purchased a wrong policy. For example, you wanted to purchase a policy for your x car but by mistake you have purchased for Y car. There may be many other reasons also.
You are selling your current vehicle: You want to sell your car and want to purchase a new one. In this case you can cancel your motor insurance policy.
Your vehicle is so old and wants to dump it: If your vehicle is very old and you want to dump it. Then you can also cancel the policy
Your vehicle Stolen: Suppose you have only a third party insurance policy for your vehicle. After some time the vehicle is stolen. In this case you can cancel your policy.
There may be many other possible reasons to cancel the policy also. It totally depends on the situation.
When You Can Cancel Your Policy?
You can cancel your policy as per your requirement. It may be before the risk start date or after the risk start date of the policy. Reason should be valid and right. If you cancel the policy before the risk start date then possible you get the full refund of the policy.
But when you cancel after the risk start date of the policy then there may be a deduction of a certain amount. Normally you will get a refund on a pro-rata basis.
Have You Received Insurance Certificate?
Please be sure that you have received your insurance certificate after the cancellation of the policy. Possible that you have no claim bonus in your policy which you can utilize in your further policy.
Let;s understand with an example..
Suppose you have a vehicle insurance policy in the XYZ company. You are running the policy for many years and have no claim bonus of 45%. Now you want to sell this car that’s why you have to cancel the policy.
Now if you have an insurance certificate after cancellation then you can transfer your no claim bonus in your next car.
Consequences after Cancellation of Motor Insurance Policy
Make sure you have purchased an alternate insurance policy on cancellation. If you are driving your vehicle without insurance policy then you may face many problems.
- You may have to pay heavy fines because driving without third party insurance policy is a punishable offense.
- If you damage a third person or third person’s property by your car then you may face legal liability and or financial liability for a third party.
- If your car is damaged in accident or theft of vehicle then you may face financial loss.
In the coming few months there may be the options of floater motor insurance. It is for multiple cars in a single policy. Cancellation of policy for floater motor insurance will be accordingly.