Do You Get a Refund for Unused Car Insurance Premiums in New York?
Last Updated on January 4, 2023
When you cancel car insurance in New York, you may or may not receive a refund.
Some companies refund all unused car insurance premiums, while others do not. Some companies provide a complete refund, for example, while others charge a cancellation fee.
Find out everything you need to know about getting a refund on unused car insurance premiums in New York today.
Table of Contents:
- New York Car Insurance Companies Have Different Refund Policies
- How to Get a Full Refund for Unused Car Insurance Premiums in New York
- New York Prevents Insurers from Cancelling Insurance Mid-Term Without Cause
- How Short-Rated Refunds Work
- How to Cancel Car Insurance in New York and Get a Refund
New York Car Insurance Companies Have Different Refund Policies
Some car insurance companies in New York provide a full refund when you cancel a policy in the middle of a term, while others do not.
If you cancel a car insurance policy in the middle of a term in New York, you could face one of the following refund options:
- A full refund of all unused car insurance premiums, pro-rated to your desired cancellation date
- A full refund minus a cancellation fee (say, 10% of unused car insurance premiums)
- A full refund minus a cancellation fee, administrative charges, and other fees and penalties
- A short-rated refund (which works differently than a pro-rated refund)
Some companies have a generous refund and cancellation policy. They make it easy to cancel a policy, switch to a new provider, and get a full refund on unused premiums.
Other companies have a strict cancellation policy. They deduct cancellation fees and other charges from the premiums you already paid.
How to Get a Full Refund for Unused Car Insurance Premiums in New York
Regardless of your insurance company’s cancellation policy, you can get a refund for unused premiums in New York by canceling a car insurance policy at the end of your term.
All insurance policies have a renewal date. If you had a six-month policy, your renewal is six months after activating your policy. Suppose you cancel your car insurance policy on this renewal date. In that case, you will not have any unused premiums, which means you will not receive a refund (because there are no unused premiums for which you would receive a refund), nor will you pay a cancellation fee.
New York Prevents Insurers from Cancelling Insurance Mid-Term Without Cause
Per the New York State Department of Financial Services, insurance companies in New York cannot cancel a policy mid-term unless certain requirements are met.
Car insurance companies cannot cancel your policy in the middle of a term after a new policy is in force for 60 days, or anytime during a renewal policy, except for limited reasons.
Some of the reasons a car insurance company is permitted to cancel your policy include the following:
- Revocation or suspension of a driver’s license of anyone listed on your policy
- Non-payment of premium
- Discovery of fraud or material misrepresentation
Even in these situations, your insurer must send a notice at least 20 days before the cancellation date (or 15 days prior if the insurer is canceling your policy because of non-payment of premiums). That notice must include the reason for cancellation and any amount owing on your policy.
The New York State Department of Financial Services has no requirements for car insurance policy refunds.
How Short-Rated Refunds Work
Some insurers offer pro-rated refunds. Others offer short-rated refunds. Depending on your insurer’s policy, there may be a significant difference in the amount of the refund you receive:
Pro-Rated Refunds: When an insurer has a pro-rated refund policy, your unused premiums are divided equally among the remaining days. If you paid $300 for one month of your car insurance policy and there are ten days remaining after you cancel, you would receive a $100 refund.
Short-Rated Refunds: When an insurer has a short-rated refund policy, they charge a different amount per day. Instead of providing a flat refund of $10 per day for a $300 per month policy, for example, the insurer may provide a smaller refund. The insurer may argue that your insurance cost $20 per day for the first ten days of your policy, and then $5 per day for the next 20 days, for example, because of the administrative cost of signing you up. This would give you a total refund of $50 (because you used $250 worth of car insurance in the first 20 days).
Contact your insurer to ask if they use a pro-rated or short-rated refund policy to calculate car insurance refunds.
How to Cancel Car Insurance in New York and Get a Refund
Contact your insurer or visit your insurance company’s website to cancel your car insurance and get a refund.
Most car insurance companies in New York make it easy to cancel a car insurance policy and obtain a refund – especially large car insurance companies like State Farm, GEICO, and Progressive.
However, some car insurance companies make it more difficult to obtain a refund. For example, a non-traditional car insurance company may require a written cancellation notice while also charging hefty cancellation fees. If you have car insurance from a high-risk insurer, for example, then you may encounter stricter cancellation policies.
Final Word – NY Auto Insurance Refunds
Car insurance companies in New York may provide a refund on unused car insurance premiums. Some car insurance companies charge cancellation fees, while others short-rate policies to lower your refund. However, you can receive some or all of your unused premiums back after cancellation.
New York does not require insurance policies to follow specific refund-related laws. However, New York forbids insurers from canceling your insurance policy outside of specific situations – like non-payment of policy.
Contact your insurer to ask if you can obtain a refund for your unused car insurance premiums in New York.
