Cancelling an insurance policy: What you need to know

AMAZING! You just scored your dream job…on the other end of the country. Amidst the frenzy, you realize (last minute) that you need to cancel your insurance policy. Ugh.

You’re not looking forward to calling your insurance broker, being put on hold, and waiting for your outstanding balance to be mailed to your address you no longer reside at. We get it. There are circumstances in life when you might need to cancel your insurance policy early and easily. But what do those fancy words “pro-rata” and “short-rate” actually mean and how can you protect yourself from unwanted fees? Let’s take a look, shall we?

Pro-Rata Cancellation
When cancellations are done pro-rata, the unearned premium is returned to the client without any penalty for cancelling. Whoo-hoo! Another way to look at it is, you get what you pay for. If you have had 7 months and 2 days of insurance, you would pay for that and not a minute more.

Short-Rate Cancellation
Short-rate cancellation is a method of calculating the return premium on a policy subject to cancellation fees. Think of it like renting a movie at Blockbuster. (Sorry to the millennials who don’t get this reference. Blockbuster was AWESOME!). You pay your initial rental fee, but if you change your mind and want to keep your movie (cancel your plan early), you are changing the initial agreement. Therefore, you’re subject to fees. The method in which the short-rate penalty may be applied varies from insurance companies. Typically, the short-rate penalty may be calculated by a percentage, usually 10%. *Note that the only time insurance companies should charge a short-rate fee is when you (the insured) cancels the policy.

The Good News
At Insurely, we never use the short-rate basis for cancelling your policy! We live in a fast-paced, digital world and we believe in getting what you pay for. 2020 was hard enough and you should be able to buy insurance without the added fear of extra fees if something were to occur. Here’s how it would happen: You call us, explain your situation and we cancel with a click of a button. Rest easy knowing we got your back. Hey, that’s what friends are for. *hugs*

There you have it. But just like your pants after the Christmas holidays, one size does not fit all. The same is true for insurance policies. If you have any doubts about your coverage, reach out to your insurance provider to set your mind at ease. And if you just aren’t getting anywhere with them contact us. You can easily schedule a call with us today. It’s that easy.

January 18, 2021