Car Insurance Refund

Frequently Asked Questions About Getting a Refund Return Insurance Check

Photo: Nick M Do/Photodisc/Getty Images

If you’ve decided to stop driving your vehicle for whatever reason—whether desiring to lower your carbon footprint and commute on public transportation, moving to a different country or state that doesn’t require car insurance, ​or trading in your vehicle for a motorcycle or RV—you will likely want to cancel your auto insurance policy as well. You may also just be looking to switch insurance providers because of a more affordable or comprehensive plan and may be looking to cancel your current policy. If you cancel your policy before it expires, you may be entitled to a refund.

Car insurance refunds are nice, but how do they work? Knowing how your car insurance billing system works, and any fees that may apply to early policy termination, can help you make decisions, like when to switch your car insurance or when to drop coverage on a vehicle.

Key Takeaways

  • If you decide to stop driving your car or no longer need the same level of coverage, you may be eligible for a car insurance refund.
  • The amount of the refund and other specific details will likely depend on how frequently your car insurance was billed.
  • In order to avoid problems, consider canceling or changing your policy on your insurance renewal date.

Car Insurance Refund if You Paid in Full

If everyone paid in full on their car insurance, billing would be easier to understand. Refunds can occur for many different reasons. The further in advance you have paid, the more likely you are to get a refund on you insurance premium if you cancel your policy. Common ways to become eligible for a refunded insurance premium if you paid in full include:

Example: Jack paid for a full six months of car insurance on three vehicles. Three months later, he sold one of the vehicles. He will receive a refund for the three months of insurance he did not use on the sold vehicle.


Figuring out the amount of your insurance refund can be tricky. Sometimes your insurance agent or an insurance representative can calculate the refund amount immediately. If you can’t get the exact dollar amount from your agent at the time of your policy change, you will usually be able to get an exact answer within a couple of days of the change request.

Car Insurance Refund if You Pay Monthly

If you pay your insurance on a month-to-month basis, you have less money being paid toward the future. More than likely, any changes you make to your vehicle will come in the form of a credit toward your future billing. In other words, a refund is less likely and a credit will probably reduce your future payments instead of generating a refund. The best chance of getting a refund on your premium if you pay month-to-month is to cancel your car insurance policy mid-billing cycle.

Example: John pays month-to-month on his car insurance. He makes a payment on the first of the month and decides to cancel his insurance on the 10th of the same month. John would be eligible for a small refund, because he just paid for an entire month and only needed 10 days of coverage (one-third the length of an average month).

Tips to Avoid Car Insurance Refund Problems

  • Cancel on your car insurance renewal date.
  • Cancel on your monthly payment due date if you pay monthly.
  • Make changes on your car insurance renewal date.

Using your renewal or payment date as the day to make changes leaves it so that you will not owe them any money and they will not owe you any money. Prior changes to your car insurance could make that statement untrue, but most of the time you will be all set if you stick with your renewal date.

Frequently Asked Questions (FAQs)

Is there a fee for canceling car insurance?

A fee can be charged if you choose to cancel your car insurance, but it's up to the insurance company. A good customer who had held the same policy for a long time is less likely to face a fee than someone who just signed up for the policy a few weeks ago. If a fee is charged, it will be subtracted from your refund amount if any is due. Check with your insurance carrier about cancellation fees.

How long will it take to get my car insurance refund?

The traditional refund method is by check, sent in the mail. Expect to wait approximately two weeks to receive it. Some insurance carriers route the money back to your bank account if your car insurance is set up with EFT payments. If you are paid by direct deposit, you will likely get your refund within 10 business days. You should ask your insurance agent or representative for more information about your refund delivery method.

I did not receive my refund check. What do I do now?

If you have waited two weeks without receiving a refund check or direct deposit, call your insurance carrier. Assuming the check was not fraudulently cashed, your insurance carrier will be able to put a hold on the issued check and send you a new one.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. North Carolina Department of Insurance. "A Consumer's Guide to Automobile Insurance," Page 14.

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