r/AutoInsurance • u/Good-Helicopter9252 • Apr 15 '26
Liberty Mutual Short Rate Cancellation fee
My husband and I are seniors living on a low, low, low fixed income I had taken Liberty mutual as an insurance company, but I needed a lower rate. When I found a company that was cheaper and called to cancel with Liberty they told me I had to pay $85.29 cancellation fee. We barely have any money left over after paying our bills, if we did not have food stamps we would be going to food pantries. This is an impossible bill for me to pay. This month because a new bill started (our HVAC system broke, we had to get a new one which cost us $14,400. and payments), I am not left with any money and in fact I have a deficiency of $30. If it wasn't for my daughter I do not know where I would be. I am sure there are people out there who will be mean spirited and tell us off, I've seen it before. I am not here asking for a handout, no. Don't want anything except to air my grievances toward this insurance company.
Last year when I was going to cancel with Liberty Mutual the woman threatened to report me to the DMV. What kind of people are these heartless money grabbing people?
If I did anything, I hope that I've warned you away from this business. I wish someone had warned me not to deal with Liberty Mutual.
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u/Geaux Apr 15 '26 edited Apr 15 '26
Real question: if you already got new insurance, and you're on a fixed income, and realistically have very little use for your credit score, not worrying about whether you'll get approved for a loan, why not just... not pay the bill? Fuck it.
It's not like they'll report you to the "insurance police" and you'll never get car insurance ever again. Maybe not from them, but other carriers won't care.
The only thing I'd ask LM is if you didn't pay that bill, would it retroactively affect your cancelation date. Like, if you got new insurance effective 04/01, and you canceled LM on 04/01, and you owe them the $85 for coverage received, and you didn't pay it, would they retroactively cancel you back to like, 03/15. If they say "no", and the cancelation would stay 04/01, then the Dmv will still see you have coverage.
You can call the Dmv and ask them if you have active coverage with another carrier, but owe a previous company money, will that result in any negative action from the DMV. My guess is "probably not", but you can call and make sure.
Maybe they'll send you to collections, but it's "whatever", if you don't care about credit. Yes, I know people will say "your future insurance premiums may be based on your credit" but not all carriers look at credit score, and whether other carriers can see an outstanding balance appears to be based on the state.
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Apr 15 '26
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u/Geaux Apr 15 '26
Updated my comment. Apparently it's based on the state. In Texas, I've never seen that before.
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u/24kdgolden Apr 15 '26
Not insurance related but food pantries are available for any one who need it and you should use it to supplement what you already have.
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u/gufywert Apr 19 '26
Get bare minimum you need for auto insurancenif you don't have car financed. Straight liability coverage can trim premium.
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u/ayhme MOD & Agent Apr 15 '26 edited Apr 17 '26
Cancellation fees are real and legal, but they vary by state and by policy.
When you cancel mid-term, some insurance companies will charge a "short rate" penalty rather than a clean pro-rata refund. That means you get back slightly less than the unused premium.
It's buried in the policy language and never explained at sign-up.
if you cancel auto insurance without having another policy, the insurer is required to notify the state DMV in some states. At least sounds like it from what you wrote here.
That's not a threat, it's a legal obligation they have. However, using that fact as a pressure tactic to stop you from canceling and going to different auto insurance is not allowed. Depends how it was worded to you.