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» Insurance » How to calculate car insurance policy premium refund?
memberPosted by amber 8 views.

How to calculate car insurance policy premium refund?


I sold my car one week after renewing my car insurance policy. I required to cancel my policy and asked for the refund. The first time I faxed them my cancellation letter, they asked me to call back after 2 weeks to ask for the check. But after 2 weeks, they told me they didn't received my fax and asked me to pay for the extra 2 weeks, although I have evidences that I required to cancel my policy 2 weeks ago. Also when I renewed my policy, I told the agent that I will sell my car within 2 weeks, so the agent told me I can only pay 32% of the half year policy premium. But now when I asked for refund, he told me that because I only paid 32% of the total amount, they will charge me more (53% more) and refund me much less. Is this common in this industry or they just try to steal money from me? Thanks.
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1 Comments :

member1 by PamelaS 8 years ago.
I gather from your question that you are dealing with your agent. Do yourself a favor and call your insurance company directly.
If you have proof of the date of the sale of your vehicle, that would, with any of the companies I have worked for, be proof of the end of your need for coverage. It would have to be proof, a signed (preferably notarized) bill of sale, a change in registration if you can acquire that from the buyer. The reason for this, is that if your company cannot establish the date of sale and your buyer gets into an accident, and the vehicle is still registered to you, your insurance policy can end up having to pay for that accident.
More than once I've had an insured sell a car and leave their old registration and insurance card in it, only to have them be presented to police by a buyer who months later still hasn't insured or registered the car.
Once you have established the date of cancellation, determine how your insurance company calculates refunds.
There are two methods: Pro Rata and Short Rate
Pro Rata is very straighforward - the company figures out how many days of coverage you paid for and calculates a daily rate. They then keep the appropriate amount for the number of days of coverage that they actually provided, then refund you the difference.
Short Rate is not straightforward - it basically charges you a penalty for cancelling mid-term. I am not a fan of this method, but it is very common and spelled out in the policy contract that you signed, so there is no way to fight it.
I am not disrespecting your agent, but I find that it's easiest to get a straight answer on these two issues by calling the insurance company directly.
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Tags : Calculate*(122), Car*(11817), Insurance*(40306), Policy*(6510), Premium*(2023), Refund*(205)

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