DQOTD re. home/auto insurance bundling

[Sojourner]

Currently I'm with two different insurance companies, one for auto, another for homeowners insurance. I want to drop one (or both) and bundle everything with one company. But the coverage dates are misaligned, so I'm wondering about how refunds will be handled when I cancel my coverage with one (or both).

Question: Do insurance companies issue full, prorated refunds when you cancel coverage in the middle of a prepaid term?

FWIW, I realize I could call my insurance company to ask this question, but I figured I'd probably get a more unbiased (and probably more knowledgeable) answer here first.

 

[audreyh1]

Yes, insurance companies generally offer prorated refunds.

 

[MichaelB]

Currently I'm with two different insurance companies, one for auto, another for homeowners insurance. I want to drop one (or both) and bundle everything with one company. But the coverage dates are misaligned, so I'm wondering about how refunds will be handled when I cancel my coverage with one (or both).

Question: Do insurance companies issue full, prorated refunds when you cancel coverage in the middle of a prepaid term?

FWIW, I realize I could call my insurance company to ask this question, but I figured I'd probably get a more unbiased (and probably more knowledgeable) answer here first.

Whenever I’ve changed policies the unused portion was prorated and refunded.

 

[Stormy Kromer]

let me suggest applying for a replacement policy with an effective date about 30 days or so in advance. That way the application can go through underwriting and arrive with the coverages and price you were expecting.

You don't want to cancel an existing policy until you have a replacement policy in your hands.

Its best to give them a cancellation date in the future rather than duplicating coverage and asking them to cancel it back. That doesn't always work well.

When your new policy arrives you can notify your former company to cancel on the upcoming effective date on your new policy.

You'll be tying up premium with each for a while, but your former company will issue a refund for the unearned premium remaining on your policy. It is typically pro-rated.

 

[pb4uski]

....Question: Do insurance companies issue full, prorated refunds when you cancel coverage in the middle of a prepaid term?...

Yes. Not sure, but I think it may be required by law, but even if it isn't it is a common practice.

 

[PaunchyPirate]

State Farm always refunded a prorated amount quite quickly when I cancelled a policy with them. Check arrived about 2 weeks after cancellation.

 

[OldShooter]

There is a gotcha I have seen in business policies once in a while, where the premium is considered "fully earned" when it is paid. IOW, if you want to cancel early, you get no refund.

I have never seen it in consumer policies. If you contact your state's Attorney General, he/she will have staff whose job it is to deal with voter questions like this. Just ask.

 

[Kings over Queens]

let me suggest applying for a replacement policy with an effective date about 30 days or so in advance. That way the application can go through underwriting and arrive with the coverages and price you were expecting.

You don't want to cancel an existing policy until you have a replacement policy in your hands.
.

This is good advice that I'll take one step further, especially if talking about home (property) insurance. You might want to purchase the new policy as much as 60 days in advance to allow the company to perform an inspection, if they are so inclined. Some do, and policy language allows them to cancel if they find something they don't like. Old roof, or cracked sidewalks are prime examples.

You wind up jumping out of the pan into the fire, as it were.

To the OP question, the vast majority of personal auto or home policies will be cancelled and refunds issued on a pro-rate basis.