Is there an early termination fee for canceling an auto policy?

Answer 1

That depends on the insurance company, the brokerage (if applicable), and the state you are in. I'm an insurance broker in California, and I sell policies for 30 companies or so. Many of them charge early termination fees, and some do not. Regardless, my brokerage still charges a fee for cancellation within the first year, since we are the ones who have to foot the bill on the chargeback. This also helps prevent insurance fraud; some people like to buy a policy, get an insurance ID card that shows they will have one full year of coverage, and then cancel shortly thereafter. That way they can show a false proof of insurance to the police, DMV, etc. If that happens often in one brokerage, it can start to look like the broker is in on the scheme.

If you are not certain whether there is an early termination fee, read your contract AND broker agreement - some brokers are not as straight forward and honest about fees as I am...