Car insurance is always changing. As you and your family change, vehicles and car insurance coverage will also change. If you reduce coverage on your auto insurance, you will receive a credit on your car insurance balance. Depending on where you are at in your billing cycle, the credit could result in a refund.
What is a car insurance credit?
Any time your car insurance premium is reduced, you receive a credit on your account. It is also referred to as returned premium. The great thing about a car insurance credit it means your car insurance bill has gone down. Credits can occur from any number of changes made to your policy.
Common ways to get a car insurance credit includes:
- Removing a vehicle
- Removing coverage
- Cancelling your policy
Will you get a credit or a refund?
Determining whether you will be getting a car insurance refund or credit is easy. If your unpaid balance is greater than your credit, your future bills will be lowered until your balance is paid off. If your unpaid balance is smaller than your credit, you will get a refund for the difference assuming your insurance renewal is a ways away. A credit can sometimes be applied to your renewal if your renewal date is within thirty days of the policy change.
Example: John makes monthly payments on his car insurance. His unpaid balance is $500. He decides he wants to remove collision coverage from his truck. The cost of the collision coverage is removed from his car insurance policy for the remaining days of the policy period. John receives a $120 credit on his car insurance policy. His remaining unpaid balance is $380. How the credit affects your future payments depends on your insurance carrier. Sometimes your very next payment will be significantly reduced and others divide out your remaining payments equally.
Where can you find out about your credit?
- Declaration Page: Anytime you make a change to your car insurance policy, you will receive a declaration page which reviews your car insurance coverage and premium. The declaration page will list your credit or returned premium. This is when it can get confusing because declaration pages normally do not list your unpaid balance. So all you will see is the credit without knowing your unpaid balance.
- Insurance Agent or Customer Service Representative: Ask questions about your future payments when making a change to your car insurance policy. if you are unsure of your unpaid balance and car insurance credit your agent or representative should be able to get you the information you need.
- Online: Most car insurance policies can be accessed online. Review your coverage and your payment schedule to determine your car insurance credit or refund amount.
Anytime you feel like your car insurance carrier owes you money, make sure to inquire about it. Sometimes if you are switching insurance agencies you may not feel comfortable talking to your old insurance agent. Utilize your insurance carrier's customer service number to get the quickest most reliable answers regarding credits on your policy.
