Why isnt Stae Farm refunding my auto insurance?

Question

I took out insurance on a new vehicle that I purchased in February. I chose the down payment option of paying two months so that I would always be a month ahead. I March I received my bill and it was higher than the agreement that I signed (and had a copy of) when I got the insurance. I decided to cancel and just put my insurance under my mothers since I live with her and wouldn't have to pay but $60 extra to the company she has already. When I went to State Farm to cancel, I told them about the higher bill and they said that it was wrong...and that I should receive my refund for the month of March in the mail. I havent received it yet and called them to get the refund dept number...they wouldnt give it to me and said they would call themselves and call me back. When they called me back they said I wouldnt be getting a refund since I cancelled on March 15th, 5 days into the 2nd month and that I should've paid $300 and something instead of the $200 and something for my down payment.

Answer 1

When you cancel an auto policy midterm, especially early in the term, you rarely get a refund. There are specific rules in your policy about short-rate cancellations and minimum earned premiums. Typically, once you make the down payment, even if paying for two months, and you cancel, all that money is gone.

Answer 2

OK, first of all, you ALWAYS have to pay a month ahead.  That allows the insurance company to not get stuck, if you quit paying, and they have to give you notice to cancel you for nonpayment.

Second, your agent should be explaining why the bill was higher than the quote (not agreement - but QUOTE).  My guess is, it's because either your credit score wasn't as high as you guessed, or there was an undisclosed operator, or undisclosed ticket or accident, that caught up to you.  But that's a GUESS.  Your agent should be able to explain the price difference.

When you cancel a policy, it's NOT purely "prorated".  The insurance company SHORT RATES it.  Effectively, it costs you about a month's premium, when you cancel a policy.   If the EARNED premium is $300, and you've paid in less than $300, they're actually going to bill you for the difference.

Now, you're clearly trying to "outsmart" the insurance companies by being your own agent.  But I'd like to point something out to you:   1.  if the car is titled to YOU, and you put the car on your MOTHER'S policy, then YOU are not insured.  And the insurance company can deny any claims if they feel like it, because your MOTHER has NO INSURABLE INTEREST in the car.  She's not the car owner.    2.  if there's a LOAN on this car, your mother's policy page is NOT going to satisfy the loan requirements that YOU insure the car, because the policy is NOT in your name.  Being a listed driver does NOT work.   So they're going to put forced placement coverage on this car.  I've seen this happen LOTS AND LOTS.    3.  If you are not a listed operator on your mom's policy, you're committing insurance fraud - and so is she.  Oops.   4.  You could have a very hard time getting the inspection or registration renewed on this car, as the name on the plates has to match the name on the title, and the insurance card - they won't match.    

So, your first bit backfired on you, I think this "plan" is going to backfire even more.  Insurance companies aren't as dumb as you think they are.