policy, make sure to finalize the transfer of ownership first. Canceling any earlier could leave you liable for damages while the vehicle is in your name.

Sell your car before canceling coverage

The penalties for

driving without car insurance

apply even if you’re just letting potential drivers take your vehicle for a test drive. In some states, you can also be penalized for knowingly letting someone drive your car without insurance—even if you’re watching the new owner take your former car home.1

As long as the vehicle remains in your name, it’s your responsibility to maintain insurance coverage. Don’t cancel your policy until you’ve signed over the title.

Learn More:

Do you have to have car insurance?

Finalize the transfer of ownership

In the US, proof of vehicle ownership takes the form of a car title (or certificate of title), which the seller passes to the buyer.

The process of transferring ownership after

selling a car

is different in every state, but in general, the steps are:

Gather your title and any required paperwork: Contact your state’s

Department of Motor Vehicles (DMV)

for the forms and instructions on what to do with the license plates. If you currently lease or finance your car, talk to your lender about transferring the lien.

Write a bill of sale: If you’re selling your car to a dealership, they’ll handle the title transfer. If you’re selling to an individual, you’ll need to complete a bill of sale, which is an official receipt proving that you sold your car.2

File the paperwork: The buyer and seller are responsible for filing their respective paperwork with the DMV within 30 days of the sale. As the seller, you may be required to file a Notice of Release of Liability form (NRL) telling the DMV you no longer own the car and are no longer responsible for it.3

Learn more:

How to transfer a car title when buying or selling

Read more about how to complete a title transfer in your state: AL, AK, AZ, AR,
CA
, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

Contact your provider to cancel coverage

You can cancel your policy after selling your car by contacting your car insurance provider in person, online, by mail, or by phone. Here’s what to do:

Find your

proof of insurance

card: You’ll need to provide your details—including the vehicle’s VIN and your insurance policy number—to the insurance agent.

Have the bill of sale in hand: Tell your insurer when you sold the car. If you’re calling ahead of time, you can ask for your policy to expire on the date of the sale—but you’ll be in a bind if the deal falls through.

Complete the paperwork: Keep a pen handy in case you have to note any important information, such as a handwritten cancellation request or a 30-day notice period.

Ask for a refund: You’re entitled to a refund of any unused car insurance premiums if you cancel your policy early. That being said, refund calculations vary from state to state, and you may have to pay cancellation or administrative fees. It never hurts to ask!

Buy new car insurance: If you’re going to buy a new vehicle, don’t forget to tell your insurer about it so you can transfer coverage to your new ride.

Learn more:

How to cancel your car insurance

The advantages of keeping your car insurance policy

Instead of canceling your coverage outright, consider dropping extra add-ons or switching to

non-owner car insurance

. A non-owner insurance policy offers a way to maintain both your insurance history and financial protection while you use a rental or borrow a friend’s car. Plus, it’s cheap—non-owner policyholders pay between $585 and $748 per year.

Keeping your current auto insurance policy active could save you money. Your provider may leverage a cancellation fee for leaving in the middle of your contract, ranging from $50 to a percentage of the total insurance premiums owed over your entire term. Moreover, by avoiding a

gap in your insurance history

, you’ll save an average of 68% on future coverage.

Whether you’re looking for minimum or full coverage,

Jerry

can help you find the lowest car insurance rates in your area. The app compares free quotes from dozens of top providers—and it can even help you cancel your old policy!

FAQ

Can I cancel my car insurance if I sell my car?

You should cancel your car insurance only after you've completely transferred ownership of your vehicle. However, you might want to consider alternatives like dropping coverage or switching to a non-owner policy to avoid cancellation fees or a lapse in your car insurance history.

Is there a penalty for canceling car insurance?

Most of the time, there’s no penalty for canceling car insurance, but some providers may charge a cancellation fee. Fees range from $50 to a percentage of the remaining unpaid premiums.

What happens if you stop paying your premiums without canceling your car insurance policy?

If you skip your payments without initiating the cancellation process, your car insurance company will probably suspend or cancel your account for non-payment. The time you’ll save isn’t worth it—not only can

a missed payment sink your credit score

, but it can also cause higher rates in the future.

Can you pause car insurance if you’re not driving?

Whether or not you’re allowed to pause or suspend your auto insurance policy depends on your policy and where you live. Some (but not all)

providers will allow a temporary suspension

if you put your car in storage, go on vacation, or are barred from driving by illness.

Meet our experts

Jasmine Kanter

Jasmine Kanter is a non-fiction writer specializing in comprehensive content that's accessible to beginners, experts, and everyone in between. Since joining the Jerry team, Jasmine has penned over 300 articles on car insurance requirements, driving tips, and car maintenance.

Prior to joining Jerry, Jasmine worked as a graphic designer, storyboard artist, and French customer service representative. She enjoys collecting hobbies and babysitting ducks in her spare time.

Kianna Walpole

Expert Insurance Writer & Editor

Kianna Walpole is an insurance writer and editor with a comprehensive background in consumer behavior and online publishing. With experience in car insurance, maintenance, and repair, she is dedicated to building informative content that helps customers reduce costs while achieving the best service. Prior to joining the Jerry editorial team, Kianna worked as a junior editor in the content marketing industry, using consumer data and key insights to create and edit content for an array of large-scale clients in the real estate, cybersecurity, and healthcare industries.

SOURCES

https://www.mdtriallawyer.com/knowingly-driving-uninsured-vehicle.html

https://www.law.cornell.edu/wex/bill_of_sale

https://www.upcounsel.com/release-of-liability-form-car-sale