You’ve decided to sell your vehicle. However, there are a few things you need to get in order before you proceed with the sale. For example, you might still have insurance on the vehicle. As you prepare for an upgrade, figuring out when to cancel car insurance on the vehicle you no longer possess is important.
Why Canceling Car Insurance Is Important?
Car insurance is an asset. The policy protects you from suffering a financial loss if you are involved in an accident. Car insurance covers any fees related to property damage or medical bills. Car insurance also covers any passengers in your vehicle. This policy is also required in many states for you to operate a vehicle legally.
Once you sell a vehicle, you transfer ownership. The buyer is now responsible for having proper registration and insurance, and you are no longer responsible for insuring it. However, do not automatically assume that the insurance is canceled.
The sale of a vehicle implies that you agree to the terms of sale. If you don’t do proper due diligence, the buyer can drive the car under the insurance that you are still paying for. As a result, you are at risk of wasting money and possibly damaging your credit score. Moreover, if the new owner is involved in a crash, the incident will go on your driving record, and you may be held financially responsible for the extra costs.
Canceling Coverage after Sale
Figure out how the buyer will obtain the vehicle. You can opt to have the car towed, delivered to their address, or they can drive it home. Any issues should be resolved in writing. You will want to avoid any problems in the future regarding claims. You may be responsible for paying some of the remaining premium to end the contract early. However, you can avoid those fees if you plan to insure your new car with the same company.
Transferring the Policy
You also have the option to transfer the policy based on the value of the new vehicle. You may have to pay an administration fee, but transferring the policy may be cheaper than canceling it. There is a chance that the buyer would like to take over your policy instead of buying a new one. The terms will be adjusted based on their claim history. You may qualify for benefits if you can go an extended period without filing a claim.
Things to Consider
If you forget to cancel your insurance, look for the extension contract and then cancel it immediately. You may be able to negotiate a refund. You want to avoid a possible situation of double insurance. Two insurance policies on the same vehicle could be seen as a fraud, so it’s a good idea to cancel the policy as soon as possible.
Consult with Kneller Insurance Agency
Canceling car insurance is an important step in finalizing a sale. Failing to cancel the coverage properly could lead to serious consequences down the line. If you have any questions, the experts here at Kneller Insurance Agency will guide you through the process. Contact us today to learn more!
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