Just like cell phone and cable contracts, insurance companies charge an early termination fee. For example, if you paid $600 for a six-month contract and decide to cancel at, let’s say, the three-month mark, you’d expect to get $300 back. Most companies will retain a portion of the prorated refund.They might charge you about $50, and you’d only get $250 back. This is called “short-rate” cancellation. Most companies charge a fee. Progressive, for example, will charge a $50 early cancellation fee if you cancel in the first six months. If you cancel after having the policy for more than six months, they will refund the prorated amount due to you after cancellation without charging you extra. Most other companies will impose an early termination fee based on a downward-sliding formula as you near the end of the contract.
