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Insurance company fee penalties, are they legal?

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Junior Member
What is the name of your state? Florida
I want to know if it is legal for an insurance company to charge you a fee for discontinuing service before the end of the term if you find that another company can offer you a cheaper premium. I just recently moved from North Carolina to Florida and I got a quote from my current insurer that is more than double what I was paying. However, other companies are quoting me considerably less premiums than my current company and I want to switch but my company says I have to pay 10% of the total premium and that it will be toward the premium in florida not to the premium I've already made an installment payment on in NC in order not to have a lapse in coverage. The other companies I've gotten quotes from do not have this ridiculously unfair penalty fee attached if you switch carriers mid-term. They wouldn't lose me as a customer if their prices weren't so much higher. Can you help? I feel like I am being taken advantage of.What is the name of your state?

Country Living

Senior Member
Short Rate Cancellation

It's called short rate cancellation and, unfortunately, is legal. What your soon-to-be-previous insurance company fails to realize it's not as much about the money as it is about good will. You will NEVER go back to them NOR will you EVER recommend them.

Towards the back of your auto policy contract is the policy termination provisions. It will tell you how they refund, either pro rata or short rate.

You did a good thing in getting quotes from several companies. There are a few that lowball you then run the underwriting and increase premiums. Or they give you a low rate the first six months then hit you with substantially higher rates at renewal. Make sure you're dealing with reputable companies.

Wait for Moburkes to get more insight.


Senior Member
Yes, its absolutely legal. MOST companies will pro-rate when you are cancelling because you are moving to another state. From your post, though, it sounds as if you already replaced the NC policy with a FL policy THEN decided to change. So, at that point, you can't say that you are moving, since you've already done it. Hmm. Maybe you can ask for a supervisor to make an exception. However, like CL said, they know you ain't coming back so they really have nothing to lose by saying NO.

Sorry to say this, but OF COURSE the premiums doubled or tripled or quadrupled when you moved from ANYWHERE, USA to FLORIDA. That's only common sense.

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