‘What is this for?’: Driver switches car insurance, says he paid $521 penalty

Jeff Mason told Action 9 attorney Jason Stoogenke he insured his 1988 Mazda RX-7 through Liberty Mutual.

>>CLICK HERE for more Action 9 reports

Then, back in the fall, Mason bought another car -- a Toyota Camry -- went to add it to his policy, and had sticker shock.

“They gave me a verbal quote over the phone of like $3,000. I’m like, ‘Man, that sounds really high,’” he said.

He says he found a better deal with another company.

“Of course, I did what anyone would do and … I’m going to change this,” he said.

He switched with about seven months left on his policy.

Mason says a few weeks later Liberty Mutual drafted more than $500 out of his checking account.

“I mean, it’s a really simple question: I’m being charged $521 for something. ‘What is this for?’” he said.

If you cancel your car policy before it expires, insurance companies in the Carolinas typically charge what’s called a short-rate penalty for early cancellation.

North Carolina’s Department of Insurance says: “If you cancel your auto policy prior to its expiration date, understand the insurance company may assess a short-rate cancellation. The company will calculate how many days the policy was in force and using percentages in the personal auto manual, calculation will be done to determine how much is owed or if a refund is due. Short-rate cancellation is not a NC law, but it is a part of the policy contract.”

The Insurance Information Institute says: “Auto insurers in North Carolina typically charge what is called a ‘short-rate’ penalty for early cancellation, which is not a fixed fee, but a percentage of the unearned premium retained to cover administrative costs. While often approximating 10% of the remaining premium, this fee varies by insurer.”

The institute added that, “Typically, this just applies to auto insurance policies. However, some home insurers may deduct an administrative or processing fee (ranges from $25–$50) from any premium refund you are owed."

Mason is a substitute teacher and likes to educate folks.

“I don’t want this to happen to anybody else,” he said.

Action 9 asked Liberty Mutual for its side of the story multiple times since March 4. They didn’t respond in time for this report.

Stoogenke says shop around for car insurance, understand all the details of your policy, and it may be worth waiting until your policy is up before making a move. If you do switch, see if the new company will pay the penalty for you.

©2026 Cox Media Group