A guide to cancelling car insurance

A guide to cancelling car insurance

Cancelling your car insurance policy is always possible, but how this affects you financially will depend on when you cancel and the terms and conditions of your insurance provider.

If you cancel within 14 days of starting your policy and have never made a claim or have a claim pending presently, your car insurer will likely refund you in full. However, if you’ve had the policy longer than 14 days, there’s a good chance you’ll still be able to cancel but will have to pay a cancellation fee.

While these are typical rules of many car insurance companies, you’ll find exceptions and different insurers will have their own rules. Always examine your insurance policy closely before signing, especially the terms of conditions and how to cancel.

There are several reasons why a car owner might want to cancel their car insurance policy. While for most the motivation is usually financial, this can be due to a better deal elsewhere or a change in personal circumstances. Whatever your reason, if you need to cancel your policy and require more information, you’ve come to the right place.

While the positive news is that you can always get out of a car insurance policy, whether you receive a refund and how much it will be will depend on several factors. In this post, you’ll find everything you need to know when it comes to cancelling your car insurance. From what to expect when you call your insurer to the fees associated with a cancellation, we’ve got you covered. Read on for the first steps you’ll need to take to cancel your insurance, along with other important points to remember when ending your policy.

Can I cancel my car insurance?

You can cancel your car insurance policy within the first 14 days of your policy and get a full refund of all premiums you’ve paid, on two conditions.

The first is that you’ve never made a claim on your insurance policy and the second is that you don’t have a claim on this cover that’s pending. This 14-day term is sometimes called a ‘cooling-off period’, and effectively it gives you a two-week window after buying your car insurance to change your mind and decide whether you want it or not.

If your car insurance cover has already commenced, your insurance provider can deduct an amount of money from your refund to cover all the days it provided you with insurance for, plus an additional administration charge. Cancellations made past this period will usually result in a significantly smaller refund.

How to cancel car insurance

If you’re confident in your decision to cancel your car insurance policy, your first step is to contact your insurance provider and inform them officially of your desire to cancel. If you cancel within the cooling-off period of 14 days preceding your policy commencing, you’ll be awarded a full refund of everything you’ve paid towards your cover, provided you’ve met the two conditions listed above. As mentioned before, if you’re outside the cooling-off period, funds will be deducted for each day you were covered and you’ll be charged an administration fee, sometimes called a cancellation fee.

If you’re unhappy with your refund, you have a right to complain (you’ll find details on the appropriate procedure on your insurance policy) and if you can’t come to an agreement with your insurer, you can contact the Financial Ombudsman Service (FOS) with the details of your case and ask them to investigate. They’ll then examine the facts and decide if they’ll uphold your case and seek compensation from your insurer on your behalf. You’ll have six months from the time you reach a deadlock with your insurer to contact the FOS.

Before making a cancellation, it can be worth doing the maths first. It can sometimes be profitable to wait until your insurance policy is up for renewal before making your move.

It’s also important to know if your car insurance policy automatically renews each year. If it does, you must halt the process in order to move your car policy to another insurer. Not all insurance companies reward loyalty in customers, so it’s always worthwhile gathering a collection of quotes for comparison.

As soon as you’ve successfully cancelled your policy, ensure you get another one in place before driving your car. Driving without insurance carries fines of up to £300 and six points on your driving licence if you’re caught by the authorities. Additionally, if the case goes to court, the fine payable can be unlimited.

Can I cancel my car insurance if I pay monthly?

Just like when buying a car, many drivers decide to spread the cost of their car insurance over a number of months via direct debit payments. It’s worth remembering, however, that just because you cancel a direct debit, this doesn’t mean that you’ve successfully cancelled your car insurance policy.

In order to officially cancel your policy you must inform your car insurer that you wish to cancel and request a receipt of this information or you could find yourself being hounded for unpaid instalments. You’ll also be putting yourself at risk of receiving a claim against your car insurance policy even if you haven’t sold your vehicle.

Although paying in monthly instalments might mean you’re paying for your car insurance as go along, your insurance provider won’t see it this way. When you request a policy cancellation from your insurance provider, you may find yourself paying not only a cancellation fee, but also an additional percentage worked out from the total price of your policy on top.

Can you cancel car insurance at any time?

Although you can cancel your car insurance at any time, the refund you receive will depend on when your policy is officially ended.

Under UK law, car insurers must offer all customers a 14-day “cooling-off” period. This begins as soon as your cover starts or when you receive your insurance documents - whichever of the two circumstances is later.

While it’s not typical, some insurers may still tag on an admin fee for cancellation at this point, but it’s not likely to be as high as what you’ll pay if you’re outside of the 14 days when you cancel. While the 14-day cooling-off period is the legal minimum insurers can offer you, many offer longer periods for you to cancel freely. Double-check all terms and conditions before agreeing to any insurance policy.

When to cancel insurance after selling your car

If you’re selling your vehicle but have decided not to replace it, you should cancel your insurance policy as soon as possible. If you don’t, you’ll be paying to insure a car you don’t own unnecessarily. Also, if you fail to end your insurance, it could cause a claim against your policy if your car’s new owner is involved in an accident.

You won’t have to cancel your policy if you’re planning on replacing your old car as most car insurance providers will be happy to update the details of your policy to provide cover for your new vehicle. An additional charge will usually be incurred for amending the insurance policy and if your new car is associated with additional risks you may be asked to pay more for your cover.

Even with the charges associated with amending a policy, this may still be more cost effective than cancelling cover and acquiring new insurance, but this isn’t always the case. Do the maths first and always look at which is the more affordable option before committing to a decision.

What happens if I cancel my insurance early?

If you’re outside of the cooling-off period when you make a cancellation, your insurer will deduct any days that you were covered from your refund. Therefore, the earlier you cancel, the larger your refund should be. Remember that your insurance provider will also usually take an administration fee on top of this.

Can I cancel my car insurance before it starts?

You can cancel your insurance policy within the 14-day cooling off period before your policy is in effect, and typically receive a full refund. Some car insurers will still charge you an administration fee, although this isn’t always the case.

Can you cancel car insurance mid-policy?

You’re entitled to cancel your insurance mid-policy. However, if you opt to cancel a typical 12-month car insurance policy half-way through your payments, you’ll usually only receive four months’ worth of premiums in refund. This is due to insurance providers funding their administration costs with the payments received in the early months of your policy.

Do I have to pay to cancel car insurance?

Whether or not you pay a cancellation fee will vary from insurer to insurer. Outside of the 14 days, fees become more likely, but some providers also charge for setting up a policy and deduct this fee from your remaining insurance cover later as a percentage. This can add up to a notable sum.

Do you get a refund if you cancel car insurance?

When you cancel your car insurance you should receive a refund that’s pro-rata for time remaining on your policy, but there are points to note.

Firstly, some car insurance providers will charge a cancellation fee once you’re outside the cooling-off period. This amount is usually so high that it will greatly decrease your refund. Secondly, the way policies work needs to be taken into consideration. If you’ve got six months remaining on your policy, you might be expecting six months of payments back in refunds. However, in reality, you’re likely to just get less than four month’s worth of payments. Insurers usually don’t refund the last two months’ worth of premiums as they use the earlier payments made to cover admin costs.