Get Your Refund When Canceling Insurance

by Kevin on April 25, 2011

When most people purchase homeowners, renters, or vehicle insurance they pay several months in advance. Paying month to month will increase your costs significantly. Buying 6 or 12 months at a time garners you a discount. I also prefer to pay up front rather than monthly because then I don’t have to think about paying another bill for several months. It’s just a smart thing to do.

The flip side of that convenience and cost saving coin is what happens when you cancel your insurance. If you’ve prepaid a year in advance it can be really easy to forget about a couple of extra months left at the end of your policy. That money is yours!

This is extremely relevant to me. I mentioned last week that was saved nearly $250 by switching car insurance carriers. When we moved to Knoxville we left an empty house behind. We had to cancel our original homeowners insurance and buy a vacant home insurance policy. Then when we sold our home, we had to cancel the vacant insurance policy. That’s three policies we’ve had to be refunded in the past three months.

How to Get an Insurance Refund

In most cases the way to get a refund on your insurance premium is to simply cancel your policy. Whatever time is left on the policy will be converted back into a dollar cost and refunded to you. If you are canceling an insurance policy due to moving, you really want to make sure the insurer has your new address. The likelihood your refund check gets lost in the mail is slim, but you never know. The postal service is supposed to forward your mail for up to a year after you move – but only if you remember to let them know you moved!

Thankfully our old insurance company simply put the refund we were owed back on the credit card used to purchase the policy. No hassle in terms of getting a check and taking it to the bank.

Cancel Your Policy Immediately

The key thing to remember is you need to cancel your policy as soon as possible. Don’t delay. Every day that goes by that the insurer doesn’t know you have double coverage is a day you won’t be refunded. For most situations you will buy a new policy in advance. This gives you time to call your current insurer and get everything lined up to be canceled on time. Either way, make sure you get it done as soon as you know you’ve found another policy you like.

Read Policy Fine Print

Make sure you read the fine print on anything you sign.¬†Every insurance policy is different, which means every refund policy is different. Know before you sign up or you won’t have a leg to stand on!

When we purchased our vacant home policy we knew it was going to be short term. They offered policy lengths of 3 months, 6 months, and 12 months. Normally I would purchase a long term policy because, usually, you get a discount for buying more up front. This was not the case. The 12 month policy was the cost of the 3 month policy multiplied by 4.

We bought the 3 month policy and asked what the refund policy was. We were expecting to close on our house in a month, would we get the money back? It was explained to us that they keep $100 regardless if you keep the policy or a month. It would be prorated if the cost of what you used (in terms of days) went over $100. We didn’t have much choice, purchased the policy, and canceled it 25 days later. We got our funds back minus $100. But your policy may be different, so stay on top of all that fine print.

{ 1 comment }

Alexandra Frisbie September 14, 2015 at 8:03 pm


My name is Alexandra Frisbie, and I had a question about Insurance Refunds. I have no idea if you could answer this question, but I’m having a lot of trouble trying to find articles. My parents are divorced and they have an insurance refund check that they have to both sign. The problem is, they didn’t have a very good marriage, so they won’t go in and sign together. Is there anyway to get an insurance company to split the check? The insurance company that my mother previously had is not allowing her to do that.

Thanks in advanced,

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