Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 31, 2021

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The lowdown...

  • Selling your car does allow for you to cancel your car insurance coverage on that vehicle
  • You do not want to cancel insurance until the sale is final
  • Buying a new car after the sale means you should transfer, not cancel, your insurance

A car is a type of asset that people buy and sell all of the time. You may purchase a car, keep it for a year or two, and then decide down the line that you no longer need it. Putting the car on the resale market is quite easy, as is going through with the sale of the asset.

When it comes to auto insurance, though, things get a bit more cloudy. When is it that you should go about canceling your car insurance? Can and should you do this right after you have sold your vehicle? We can take a deeper dive into this to learn more.

The reason as to why you want to cancel your car insurance after selling a car is easy; you do not think you need it. Why pay for auto insurance on a vehicle that you do not own?

Auto insurance carriers and professionals in the industry which you rely on want to help you in this area. The goal is clarity so that you know exactly when you can hit that cancellation button and drop the car insurance you’ve had while behind the wheel of your old auto.

Learn more about your auto policy below and make sure to use our free insurance comparison tool above!

Know When to Cancel


The biggest thing is you need to know when you cancel your car insurance policy. The last thing that you want to do is to abort a car insurance policy too early. Withdrawing too soon is going to leave you exposed if you get into an accident while behind the wheel of that automobile.

Canceling too late, though, can also be a bit problematic as you will end up paying for the policy for longer than you should have. You want to be sure that when you are selling your car, the transaction is complete.

You want it to have gone fully through, where the title has been transferred to the new owner, out of your name. Once you have reached this point of the sale, the insurance for that old vehicle is no longer going to be needed. Never get rid of your car insurance policy too early though as it can lead to dangerous risk exposures.

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Buying a New Car

You may be selling a car with the goal of then purchasing a different vehicle immediately. In a situation such at this, you actually should not cancel your car insurance policy. Instead what you are going to want to do is to transfer it.

The idea here is that you take the insurance coverage that you have and remove the old car from it. At the same time that you are removing the old vehicle, you are adding the new one. When there is no lapse in coverage due to this switch, you will still be canceling your old policy, in essence, just changing in a new auto.

No Time Lapse

No matter what you end up doing, whether it is selling a car with no plans on buying a new one, or switching in your old auto for something a bit more fresh, no time lapse is the goal. This means that you are never left in a situation where you are driving uninsured.

Say you cancel your car insurance policy the day you plan to sell your car, but you do it the morning before you bring the car to the new buyer. Instead of making the cancellation effective tomorrow, you do it for that very morning.

On the way to the buyer’s home, you get into an accident. Because you did not have the cancellation go into effect after the sale was fully complete, you are driving uninsured.

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Calling the Carrier

When you have decided to either sell your car outright or sell it to buy a new vehicle, you need to call your carrier. Contact the car insurance company immediately, whether it be through the Internet or by calling them on the phone.

Talk through things with the carrier so that they are aware of the exact date as to when you are selling your old car.

This will allow them to understand when you want the cancellation to go into effect. Once canceled, what you can expect is to get a letter with the cancellation form, letting you know this is complete.

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Get the Dates in Check


Be aware of what you have told your car insurance carrier. You may call them and let them know you plan to sell the car on Wednesday, so they line up the policy to be canceled that evening. On Wednesday morning, all of the sudden the sales transaction is pushed one day, and it is now Thursday.

Be in sync with your insurance carrier in situations such as this so that you can talk with them and have that cancellation pushed out one day. It is all about keeping the insurance carrier informed as they are only going to do what you instruct them to.

Reach Out to the Insurer Early

Insurance carriers have the ability to react very quickly when they get any request from a customer. In most cases, you can call them and on the same day have an endorsement or cancellation done to your policy. You may not want to risk it though if they do not have that type of flexibility and response time.

Provide one week’s notice when you can with the carrier, letting them know what you plan to do, even if it is not entirely finalized as of yet. Canceling a car insurance policy is all about following the proper procedures. Keep on paying your premium, so you are in good standing with your carrier and reach out to them to get everything in check.

Once you decide you are selling your car and not buying another, it is likely you will no longer need to carry insurance. Awareness of the exposure you face from canceling preemptively though is pivotal. Follow the right steps, and you will be fine and save money as a result.

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