Car Insurance Car insurance refund calculation Yes, you may receive a refund if you cancel your car insurance midterm. View Carriers Please enter valid zip Compare top carriers in your area By Insure.com's Editor | Updated on December 20, 2023 The page is part of the topic how to cancel car insurance Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. Yes, you may receive a refund if you cancel your car insurance midterm. The amount of the refund depends on various factors, including the insurance company’s policy, the duration of your coverage, and any applicable fees. Key Takeaways Refund is calculated by dividing the remaining days in the policy period by the total days of the policy and multiplying the result by the annual policy premium. Refund calculation is often done on a pro-rata basis, returning a portion of the premium for unused coverage days. Potential deductions include cancellation fees, and a smaller refund might occur due to short-rate cancellation, which considers administrative costs. Understanding refund calculation Pro-Rata basis – Many insurance providers calculate the refund on a pro-rata basis. This means you’ll get back a portion of the premium for the unused days of your coverage. Cancelation fees – Some insurers may deduct a cancelation fee from the refund amount, so it’s essential to review your policy for any potential charges. Short-rate cancelation – In some cases, a short-rate cancelation might apply, resulting in a smaller refund than expected. This occurs when the refund amount is less than the pro-rata calculation due to additional administrative costs. Formula to calculate car insurance refund by Pro-Rata basis method: The reimbursement amount, also known as the return premium, is determined by dividing the remaining days in the policy period by the total days of the policy and multiplying the result by the annual policy premium. Refund = (Total number of days remaining in the policy period / Total days of the policy) * Annual car insurance premium For example: Let’s assume: A: Total number of days remaining in the policy period = 100 B: Total days of the policy = 365 C: Annual premium = $1,800 Formula = (A/B)*C Refund = (100/365)*$1,800 Estimated Refund = $493.15 How to request a refund Contact your insurer -To initiate the cancelation and refund process, get in touch with your insurance provider or agent and provide them with the necessary details. Return required documents – If instructed, return your insurance documents to the company to confirm the cancelation officially. Wait for processing – The refund process may take a few weeks, so be patient while the insurance company calculates the exact refund amount. Conclusion You may receive a refund if you cancel your car insurance midterm. However, the amount can vary depending on how much of the coverage period you have used, the presence of cancelation fees, and any short-rate considerations. To ensure a smooth refund process, reach out to your insurer, follow their guidelines, and understand the refund calculation method. In case you missed it Best Car Insurance Companies of 2024 Car insurance rates by state in 2024 What is full coverage car insurance? How much does car insurance cost for seniors in 2024? A complete guide to adding a teenager to your car insurance policy in 2024 What to do after a car accident that’s not your fault Total warfare: What to do when your auto insurer totals your car Car insurance claims: Who gets the claims check? Used car insurance costs: Most and least expensive models to insure The Best Car Insurance for Bad Credit of 2021 The best car insurance companies for speeding tickets Car insurance after a DUI Guide to car insurance discounts Proper insurance coverage for college-bound children How to read actually understand your auto insurance policy Car Insurance Companies New driver insurance grace period: What you need to know How much do insurance agents make Autonomous cars: 5 delightful and 5 distressing things Busted! Part 1: How insurance companies spot bogus claims Insurance options for rideshare drivers 10 things that are illegal but shouldn’t be 1/1 On this page Understanding refund calculationFormula to calculate car insurance refund by Pro-Rata basis method:How to request a refundConclusion Get instant quotes now ! Please enter valid zip Get Quotes