Insurance plays a very important part in the life of one person. For instance, if we take a look at a recent survey we will see that as many as 54% of Americans are covered by life insurance. And that is only one drop in the vast sea of car, comprehensive, property, and other insurance products sold to countless users every second. Even if we seldom desire to charge them, these policies offer invaluable help if some accident comes knocking at our doors.
That being said, not every insurance product is suitable for every customer which is a fact we are not always aware of before signing the contract. It is possible then to ask for a refund after the ink has dried and, if so when we are allowed to ask to get our money back?
Let us try to find out together.
General insurance terms
Let us break some good news right from the start. The insurance industry, in general, uses a practice of free cancelation and full refunds to the customers in question in the period immediately after signing the contract. How long does this so-called ‘free-look’ or ‘cooling-off period lasts depends on the policy you have subscribed to.
For instance, US law proscribes that all insurance companies offer their clients a minimal period of at least 14 days during which they can cancel the policy without any specific reason and get all the money they have paid back. In the case of life insurance, however, the cooling-off period is extended to 30 days. The same free-look facility is applied to online policies and the policies that are sourced across a certain distance.
We would like to remind you that this free-look practice applies only to new insurance users. If you are, for instance, renewing your car insurance policy, you won’t have this two-week period to consider the benefits. Of course, the cooling-off period can’t be leveraged if you have made any claims, either.
Now, let’s quickly go through some exceptions related to some of the most common insurance policies that should help you find your way out of some more specific problems.
If you are not familiar with the term, junk insurance describes the insurance product or a contract add-on that is unnecessary or worthless to the customer but still consciously being sold to the benefit of the insurance company. This practice is considered extremely unethical in the insurance industry so the law doesn’t recognize any time restrictions for filing a complaint. So, if you have noticed such clauses in your policy and you are wondering can I get my junk insurance refund, the short answer is – yes, whenever you see fit. Taking into consideration the nature of such complaints, you should get legal assistance.
Things are much more complex when it comes to car insurance. Let us start with the gap policy. So, no matter how well you take care of your older vehicle, its price will depreciate as time goes by. The gap insurance, effectively, covers the gap between its current market value and the cash you need to pay for the loan you raised for its original market price. If you, for instance, sell your vehicle before the loan term ends or you pay the installments in advance, this insurance is no longer considered useful so you are allowed to ask for a partial refund. But, that applies only if you have made a lump-sum payment at the start of the term.
Regular car insurance
When it comes to regular car insurance, in some cases, you will be able to get a partial refund even if you cancel the policy outside the free-look period. Under what terms really depends on the insurer but the general practice usually excludes the final two months of the total policy duration. Also, a refund can be obtained through various changes to the original policy agreement like, for instance:
- Removing one of the vehicles from the policy
- Removing additional items like collision coverage and comprehensive coverage
- Decreasing overall policy limits
- Any kind of changes that are made by the insurance company
For the very end, let us quickly circle back to life insurance. Although it features the longest free-look period out of all insurance policies, life insurance doesn’t entail any form of refund clause you can use if you are not satisfied with the agreement terms. What you can do, however, is subscribe to a fixed-term premium policy that usually covers the period between 20 and 30 years. If your family doesn’t make a claim in that period, you will get a full refund for all installments paid by that moment. Keep in mind, though, that in this case, the interest rates are also considerably higher so you are making a serious gamble.
So, that was our short breakdown of some of the most important insurance policies on the market and the conditions under which you are allowed to ask for a refund if you no longer feel satisfied with the agreement you have signed. What’s most important to remember is that regardless of the policy type you have at least two weeks of time to further inquire about the agreement and, if needed, ask for a full policy refund. Use this time wisely and find the product that truly suits your needs.