A car insurance policy can be a lot to commit too. Generally, car insurance policies are worked out on an annual basis, but there may be reasons that lead you to want to cancel your car insurance earlier. Can you actually do it, and if so how do you go about it?
Can you cancel your car insurance?
The first thing to know is that you can cancel your car insurance policy at any time within the first fourteen days without incurring any charges.
Something else to consider is that, though car insurance policies are annual and they’re contracts, you’re still allowed to cancel them whenever you like. The thing to remember is though that cancelling your car insurance policy outside the initial fourteen-day window may incur a variety of charges and fees. This makes it essential that you thoroughly read and understand the terms of your policy before you agree to it.
How do you go about cancelling it?
All you have to do is contact your insurance provider. You should have either a telephone number or a customer service email address you can contact. Just get in touch and tell them that you want to cancel your car insurance policy and they will do the rest.
If you choose to do this during your cooling-off period you will likely get a refund of whatever you paid to establish the policy, minus certain charges. If you do it outside your cooling off period make sure you’re aware of any further charges they intend to bill you for cancelling the policy. The cooling-off period is designed specifically for you to be allowed to change your mind. Insurers may take off an administration fee minus any days of that two-week period you were covered when calculating the refund that you’ll get. But it still works out to be the cheapest cancellation period.
Cancelling outside the cooling off period
There’s no standardised fee when it comes to cancelling your car insurance outside your initial two week cooling off period. It comes down to your specific insurer and the nature of your policy. There are some things to consider, though, when it comes to cancelling:
- Paying your insurance monthly will likely limit your chances of getting a refund, and you could end up paying more for administration charges
- If you pay annually, you will be refunded on a pro-rate basis minus any relevant charges incurred from cancelling your insurance policy early
- Cancelling your policy and direct debit are not the same thing, and there may be additional charges incurred from cancelling the direct debit
- Any additional options you chose on your coverage are unlikely to be refunded, you will usually only get the cost of your minimal legal coverage
- If the insurer is the one electing to cancel your policy early rather than you, it’s unlikely you’ll receive any kind of refund for anything
Will your no-claims bonus be affected?
It’s possible, because a no-claims bonus is generally calculated on a rolling annual basis. Interrupting your insurance coverage by cancelling it and switching to another provider may mean your no-claims bonus is affected. It’s best to ask your insurer directly before you make your decision to cancel.
What about when selling a car?
Cancel your insurance policy immediately after selling your car. There’s no reason to keep paying for the coverage of a car that you no longer own. Also if the car’s new owner was to get in an accident while it was still covered by your insurance, it’s possible a claim could be made and you’d have to pay the excess.
Are early-cancellation charges disputable?
Yes. Make your complaint directly to the insurer as soon as possible, and they will have up to eight weeks to respond. Most insurers will have a dedicated complaints channel that you should follow. Be aware that you should keep all appropriate records, including every piece of correspondence between yourself and your insurer. If you do not hear anything back or your answer is unsatisfactory you can take the matter further by contacting the Financial Ombudsman.
It’s important to note that if the company has acted in accordance with their stated early cancellation charges and protocol, your claim won’t be successful.
Always shop around
You should never let your policy auto-renew. Always shop around when it comes time for renewal to see if you can get a better deal elsewhere. This gives your current provider more incentive to compete for your business by offering more competitive prices and incentives for continuing your cover with them.