Cancelling the policy
From the insurer’s side, there are clearly defined circumstances in which a policy can be cancelled. However, the insurer should inform the policyholder at least seven days before the policy is cancelled to give them enough time to arrange new cover.
An insurer could cancel a policy if, for example, the policyholder hadn’t paid their premiums or hadn’t disclosed important information to the insurance company. Insurers should take reasonable steps to ensure that the policyholder is made aware of the fact that their policy has been nullified.
Cooling off period
On the other side of the coin, the policyholder has a cooling off period. If you change your mind and don’t want to go ahead with a policy, you can cancel it within 14 days of signing the contract and you will receive a refund.
If you’re looking to cancel because you no longer have the insured car, there will be a choice of options. If you’re trading in the car and buying another one, you’ll be able to transfer the insurance cover. You may have to pay an additional premium if the new car is more expensive to insure.
Before you decide to cancel insurance cover, you need to remember that it’s illegal to park in the street without insurance. That means that if you stop the policy but keep the car, you’ll need to make alternative arrangements.
The need for cover
Legally, you must have third-party insurance as an absolute minimum. This type of policy means you’re covered if you have an accident and cause damage or injury to another person or their property. It will also cover you if a pet or other animal suffers an injury or death and you are to blame for that. Third-party insurance doesn’t cover you or your vehicle.
Calculating the premium
The cost of the policy – referred to as the insurance premium – will depend on a range of factors. These include the circumstances of the driver as well as those of the car. On a personal level, the insurance company will look at your age, experience (including convictions for driving illegally), and any insurance claims you’ve made in the past. Other considerations will be gender, marital status, and occupation, as analysis shows that certain types of people are more likely to make a claim against the policy.
When it comes to assessing the car, the make and model and age are the main factors taken into consideration. A high-powered sports car is a riskier proposition than a family runabout when it comes to the chances of it being stolen, as well as the statistical possibility of it being involved in an accident. As a general rule, the bigger the engine, the higher the premium, so a Range Rover will likely be more expensive to insure than a Fiat 500, for example.
The company will also want to know what the car will be used for and how many miles you expect to drive in a year. If you’re going to be using it for business purposes, it will cost more than if you plan to do a few miles for leisure.
If you want to pay the premiums monthly rather than as a one-off payment, you’ll have to be creditworthy, so it’s normal for a credit check to be carried out before the cover starts.