A car insurance policy is a contract between you and the provider. Typically, you can cancel a policy and have no further obligation to the provider unless you are behind in premium payments. The act of cancelling a policy has no bearing on your credit, according to the Murray Group Insurance Services. However, if you owe premiums and the provider sends your debt to collections, your credit can be adversely affected.
Other Cancellation Implications
If you are current on your car policy payments, you likely get a refund of unused coverage time once you cancel. The only time you would likely owe premiums is if you start a policy and the insurer bills you, or if you fail to pay your renewal on time and cancel the policy after the renewal date has passed. When you cancel, it is best to pay any outstanding premiums to avoid any potential negative credit consequence.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.