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Know About Car Insurance Policy Cancellation

By Vikas Chandra Das
21 July 2022, 11:46 AM

There might come a point of time when you are tired of the lackadaisical attitude of your insurance service provider or feel that you are in need of better policy coverage for your car insurance.

You have every right to act on this wish and cancel your current policy and opt-in for a new one. Do not forget to do the latter though to avoid any legal repercussions in the immediate future!

Possible Reasons for Why One Thinks of Cancelling the Policy

  • You want to sell your car.
  • Your car has been stolen.
  • You have an old car.
  • You are unhappy with your existing car insurance or the company.

Please note: There is no option of cancellation in case of a long-term third-party car insurance policy before the expiry of a period of 3 years. Only in circumstances that the car is sold, in disuse, lost, or is stolen, then the policy may be cancelled.

What is the Process of Cancelling the Car Insurance Policy?


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Please note that the policyholder must submit the following documents to cancel his or her policy-

  • Car insurance policy papers.
  • Driving license.
  • RC (Registration card).
  • Letter requesting cancellation or document cancelling the insurance.
  • Declaration form for cancellation.
  • Any other identity proof (if need be).

Repercussions of not Buying a Policy Immediately After You Have Cancelled One

  • Hefty fines for driving the car without insurance – as it is a legal mandate as per the Motor Vehicles Act, 1988 to have third-party liability insurance.
  • No claim settlement in case of an accident in this period – there would be no financial security to the car owner in case of an accident thereby burning a significant hole in his or her pocket.
  • Higher premiums in the next insurance policy due to delay in the purchase – as the insurer will categorise such an individual as a high-risk individual.


Opting for a car insurance policy takes a considerable amount of research and homework. Cancellation of a policy is no different.

One must understand the consequences of cancellation of the policy, the alternatives available, further course of action, and the benefits of taking such a step before making this decision.

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