How Long Does It Take to Get a Refund from a Canceled Insurance Policy?

February 7, 2013 6 Comments »
How Long Does It Take to Get a Refund from a Canceled Insurance Policy?

Insurance Q&A: “How long does it take to get a refund from a canceled insurance policy?”

So you canceled your existing insurance policy and switched to a new insurer. Congratulations on taking a leap of faith. Most people “set it and forget it,” never realizing they could be saving money each month.

If you didn’t make this move well in advance of your policy renewal, or even during the middle of your policy term, your previous insurer will owe you for the amount you overpaid for their “too expensive” insurance.

The million-dollar question is, “How long will it take to get your money back?” The truth is; it depends on the insurer who owes you the money after the policy is canceled.

Who Owes You Money?

Some insurers are “dialed in” when it comes to accounting and the return of overpaid premium in the event of a policy cancellation.

For example, Progressive Auto has a knack for delivering a return premium check within seven (7) days of cancellation, which is pretty amazing as far as insurance companies go.

Great, only seven days, no sweat. Not so fast. Many insurers are not as quick as Progressive, or other insurers like them.

The reality is that you should expect a slightly longer time frame to receive your return premium check from most insurers.

We are talking about giant, multi-billion dollar corporations here, so your “few hundred dollars” is not typically considered a crisis situation to many of these companies… no matter how important it is to you!

What’s a Reasonable Time Frame?

On average, you should prepare yourself to wait 2-4 weeks for your premium refund from an insurance company.

Let’s face it. The average human being (or company, for that matter) is not in a terrible hurry to return your money after you’ve told them to take a hike.

Not to mention the process typically requires signatures on mandatory cancellation forms, which might have to change a few hands before landing on the desk of the person (or computer) who writes the return premium check.

What If It’s Been More Than 4 Weeks?

In some cases, you may have to rely on an insurance agent or broker (broker means different things in different states) to provide you coverage.

In this situation, your request to cancel a particular policy may have to pass through a couple sets of hands before a return premium check is issued.

Each company involved may have an “accounting period” of up to 30 days. One insurer may require 30 days notice of cancellation to offer a return premium.

If you have an agent or broker who sold you a policy that “went through” another insurer, you can double that 30-day waiting period to 60 days, as the reporting and accounting cycles are realized. It all adds up!

At the end of the day, most of us prefer to avoid confrontation at any cost. Often, this means putting off “the conversation” related to cancelling an insurance policy.

The best bet is to “pull it off” like a Band-Aid. Just call and get it over with. You will get a much better response, and likely a faster turn time on your refund, if you contact your agent ahead of time and let them know you are switching insurers.

Is There a Best Time to Cancel?

Escrowed Homeowner’s Insurance

If your homeowner’s insurance payments are escrowed, it is relatively easy to avoid the hassle of waiting for refunds. You would simply call your lender at least 60 days prior to your policy renewal (the existing policy) and instruct the lender not to pay it. You should tell them you are shopping your coverage – for whatever reason – and will notify them when you have made a decision.

Once you find a new policy you like, contact your lender and approve the payment to the new insurer.

This should be done 60 days in advance to avoid having your lender pay the renewal for the policy you no longer want. It is not uncommon for insurers to send renewal invoices that early in the game. If your lender makes the payment, you may have to pay for the new policy out of your own pocket and wait for the refund check.

Lenders who hold your note and service your policy will often make more than one policy payment for one term (12 months) and simply ask you to apply the refund you receive from the cancelled policy to your escrow account once it’s received. Just be sure to send them the refund money or your escrow account will be short and you don’t want that.

Examples of these lenders would be big banks such as Bank of America, Wells Fargo, JPMorgan Chase, etc..

If your mortgage is serviced by a company other than the lender who holds the note, you will likely have to pay out of your pocket and reimburse yourself as described above.

Learn more about switching homeowner’s insurance companies when you have a mortgage.

Auto and Non-Escrowed Home Insurance

Both of these policies are paid by direct bill, meaning you personally pay the insurance either by mail or electronic funds transfer (monthly e-check or credit card).

There really is no rocket science to determining the best time to cancel these types of policies to avoid having a double payment out there and waiting for reimbursement.

You must simply determine the exact last day your “money runs out” on your existing policy. If you have paid through the 15th of the month, you should have your new policy start on the 15th and stop payments to your old insurer after that point.

Can Anything Go Wrong?

We’re glad you asked. Yes, things can go wrong if you do not time everything correctly. Worst case scenario would be having a problem of some sort with your new policy after cancelling the existing policy…leaving you without coverage for a period of time.

Getting into an accident and/or having to file a claim when you don’t have coverage can be financially devastating. You really don’t want to be in this position if you can avoid it.

But encountering a problem with a new policy is pretty rare, so you shouldn’t be too worried about it. A good agent will be able to ensure there are no lapses in coverage. That’s what they get paid for.

To avoid such complications, simply obtain a new policy before cancelling the one you don’t want anymore. Of course, you’ll be back in the same boat of waiting for a refund if you go this route.

At the end of the day, if making the switch is really worth it, you shouldn’t care too much if you have to wait for the refund.

Read more: How to lower your auto insurance bill.

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  1. Perla C Roldan February 19, 2017 at 7:53 am -

    My Geico policy was cancelled last December. I am still waiting for January & February refund whom the woman I spoke with will be credited back to my bank account within a week. Checked my bank & no refund yet & it’s already been two weeks since I spoke to a representative. Kindly check! Thanks!

  2. Mr Albert Gray April 25, 2017 at 12:08 am -

    Where is my refund check it’s been since February 2017 April 17 I was told that my check was being mailed to me well where is it i didn’t get it that’s why I am asking can some one tell me where it’s at

  3. Shane September 13, 2017 at 6:25 pm -

    I didn’t know that Progressive was going to raise my home insurance premium by several hundred dollars until the renewal offer arrived. This was well within the suggested 60 day notice of cancellation suggested by the author. So, I lost a few days shopping for another carrier and then submitted the cancellation notice. The problem was that my mortgage holder had already dispersed the new amount to Progressive a full month before the policy was to expire. Now, I’m in an escrow deficit and awaiting a refund from Progressive for the full amount. Hopefully, it won’t take long.

  4. Jacob Phillips January 13, 2018 at 1:01 pm -

    Cancelled a Geico insurance policy back in the beginning of October, it’s now mid January (over two months.)

  5. P'd at progressive March 7, 2018 at 2:14 pm -

    Progressive states they applied my refund to an expired debit card used only once to make payment. I asked them to mail my refund. That was APRIL 2015. I waited on the “no problem” mail and obviously ran into a problem. Its policy to credit account payment made from – would make sense had I made more than one payment on the card during my two years of coverage. I located an old statement and contacted Issuer of the debit card Am told credit would not be applied to an expired card and i did not renew so funds would have been returned to source…. that being progressive It does not matter which volley player I ask…. no one has escalated and no one in three years has located said funds…. Another big buisness where all have rights and no one has responsibility. Thank you to no one at PROGRESSIVE for their assistance -There must be some sort of incentive pay as each inquiry has been closed before it is ever investigated. Sometimes too big is just too much for each member to conceive settlement of funds.

  6. wendy April 14, 2018 at 10:56 am -

    on april1 2018 i was purchasing auto insurance from the progressive app. for some reason it didnt show it took my first policy so i tried again. same policy different amount this time the policy completed. i call progressive to let them know and they proceded to tell me i opened 2 policies. I told them what there app did they closed the first one and said I will receive a refund in a few days. I said ok believing them because they have never done me wrong in all the years i have used them. come 5 days later no refund i called was told they hold the money 12 days to make sure the amount cleared the bank…they said funds will be released to my bank April 13 and after that it depends on how long it takes my bank to post it. i called pnc and they confirmed as soon as the money is released to my bank it will show up right away. It did not. so I called progressive again and they today told me that since it was friday it may show in my account on monday. Well i called progressive today and was told not only did they hold my money 12 days they told me today it was gonna be another 12 days until it gets to my bank…wtf it is all done electronic and why does it take another 12 days after the intial 12 day waiting period. I have never had any trouble with progressive before. my bank even seemed puzzled by the whole thing…it is unacceptable…

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