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Can auto ins companies charge an early termination fee
Anonymous4 views2 answers
In the past I have signed up for auto insurance on a six month basis, and make monthly payments. The payments include extra charges for paying monthly. The latest 6 month period started 2 1/2 months ago. Last month I sold my car and since I live at home with my Dad (I am 39 years old), he put me on his insurance and has an extra car that I drive. I called my insurance company (Infinity) and told them I wanted to cancel my insurance with them. They told me there was a $50.00 early termination fee. Can they do that?
Thanks
It depends on the terms of the contract. In California, there is no legal obligation to provide a refund of your premium if you cancel your insurance during its effective period. Some insurers will refund you your premium anyway, usually on a proportional basis, or with some sort of fee. Their charge of a $50 fee, if provided for in the insurance policy, is likely legal.
If the terms of your policy allow them to charge an early termination fee and you agreed to it, then it's an enforceable contract.
As my colleague noted, many insurers pro-rate policies and provide a refund for the unused portion of the term, and the language of your policy may provide for that refund (as well as this early termination fee).
Your broker's commission will very likely not be refundable, since it's not their fault that you're cancelling your coverage.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
