Insurance Cancellation Fees: How Much Will You Pay?

Insurance policies are binding contracts and, as with any contract, you need to be aware that fees can be applied to your account for a number of reasons. Insurers throughout the United States have fees for late payments, of course, but what are the insurance cancellation fees for each of the large insurance companies in the U.S.?

Insurance Cancellation Fees

The top auto insurers in the country include State Farm, GEICO, Progressive, All state and Nationwide. Each of these insurers have specific markets throughout the country and provide different incentives for different drivers. Usually insurers will use their competitive rates to draw customers to their services over the competition’s.

One incentive many insurers provide for their customers is no insurance cancellation fees. However, not all insurers provide that. As with any contract, insurance cancellation fees are a possibility. In the contract the cancellation fees may be worded as “early termination fees” or “pro-rate or short-rate.” Not reading the contract and cancelling your insurance early may mean that you are charged a fee. You’ll need to know if your insurer charges and insurance cancellation fee and how much it is. If it is high enough it may be more beneficial to wait until your insurance needs to be renewed to cancel it.

So, which insurance companies have cancellation fees and which don’t? This is a list of most of the common companies and their associated fees:

Insurance Cancellation Fees by Company

Company	Fee	Amount	Notes
21st Century	Yes	$50	Penalty may vary by state*
AAA	No	N/A	Pro-rated
Allstate	No	N/A	Pro-rated
American Family	No	N/A	Pro-rated
Dairyland	Yes	Unclear	Hidden, small fee
Esurance	Yes	$50	Pay 2 mos up front, they keep $50
Farmers	No	N/A	Pro-Rated
GEICO	No	N/A	Pro-rated
GMAC	Yes	$0-$50	Penalty may vary by state*
Liberty Mutual	No	N/A	12-month policies
Mercury	Yes	10% of remaining premium	$30 penalty if still owe $300 on policy
Nationwide	No	N/A	Pro-rated
Safeco	No	N/A	Pro-rated
State Farm	No	N/A	Pro-rated
The General	Yes	10% of remaining premium	$30 penalty if still owe $300 on policy
The Hartford	No	N/A	Pro-rated
Travelers	No	N/A	Pro-rated
USAA	No	N/A	Pro-rated

*All of this information may subject to change based on state requirements and company policies.

How and Why Insurance Cancellation Fees Are Different

As you can see, insurance cancellation fees vary from company to company but why? For the most part each company is providing the same services. However, companies that have cancellation fees may have better incentives. They are also usually smaller, less popular insurance companies (like Dairyland).

Looking at the chart above you can see that it would be extremely expensive to cancel insurance with some of these companies. For instance, if you had a 6 month premium that cost $1,000.00 with The General you would have to pay an insurance cancellation fee of $100.

Most of the time people cancel their insurance to switch to a different company. To determine whether or not cancelling your insurance is worth it, you’ll need to know what the fee to cancel is and if you’ll be saving money by switching. For example, if you are only saving $50 but the cancellation fee is $100, you may want to hold off until your insurance is up to switch. However, if you are canceling because you are no longer able to drive (car accident, revoked license, etc.), you will benefit greatly from canceling your insurance whether there is an insurance cancellation fee or not.

Be sure that you always read your insurance contract before signing it and agreeing to paying for 6 months or a year of insurance. When it boils down to it you will have to give your insurance company a call if you are looking to cancel but you can avoid insurance cancellation fees all together if you simply read your contract.

Have you had any experience with insurance cancellation fees? How much did you pay?

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