Buying car insurance is a huge expense and you're also signed up for a year, unless something prompts you to cancel. Possible reasons include:
You’ve shopped around and found a better deal
You are selling your car
You are storing your car off-road (SORN)
You need to make changes, such as moving home, increasing cover or adding a driver and your current insurer is uncompetitive
You've made a claim on your insurance and had a poor claims experience.
It’s always best to shop around for your car insurance and compare quotes to get the best deal.
It's straightforward and easy to cancel car insurance policy, however, you need to remember that:
Your car must be insured at all times if it’s on the public roads - even if it’s just parked
You may have to pay a car insurance cancellation fee and possibly some other admin charges
Insurers don’t tend to refund premiums if the cancellation request is made with two months or less to go on the term.
If you only have a few weeks or months left on an annual policy and you’re looking to swap to a cheaper insurer, you should read the cancellation conditions. It’s possible the savings of your new deal will outweigh the costs of cancelling your current car insurance policy.
Under law you have 14-day window to cancel car insurance. This cooling-off period exists to allow policyholders to take stock of what they have bought.
During the cooling-off period you’re free to change your mind and cancel your policy for any reason at all.
Some insurers will charge an administration fee for cancellations during the cooling-off period, but this’ll still be a lot cheaper than what you’ll pay if you cancel any time after 14 days. Any fees should be detailed in your car insurance cancellation policy, which you'll find in the documents your insurer gave you when you signed up
In accordance with the law, the 14-day period kicks in when your policy starts or when you receive the relevant policy documents, whichever is later. However, it’s worth perusing your policy documents, as some insurance companies have a longer cooling-off period.
If you want to cancel your policy call or email as soon as possible to ensure the cancellation process is started.
If you cancel your policy after the cooling-off period you may get a refund if you've paid upfront for a year's policy. This will usually be for any months you've not used, although you won't get a refund for the period you've already paid out and used.
Always check the car insurance cancellation policy though, as the amount paid back will depend on the insurer. There may also be admin charges for cancelling.
You can cancel your car insurance even after you have already made a claim, However, bear the following in mind:
You won't be able to claim a refund on any months you have already paid for and you may not get a refund on any months remaining on your current term – check the policy document before cancelling
If you pay monthly, you will have to pay off the remainder in a final lump sum.
This is the area of cancellation of greatest concern. If you have made a claim and want to cancel, weigh up if it's worth it, as it could be quite expensive.
You’re well within your rights to cancel your policy if you pay on a monthly basis, even though you’re tied in for the year.
However, you’ll face a cancellation fee, which could be greater than that imposed on someone who paid up-front.
The size of the cancellation fee will depend on the following factors:
The car insurance cancellation policy
How much you have already paid for your cover
How long you have left on the insurance term.
The cancellation costs will be detailed in the insurance policy, and it might be hard to dispute these. However, you may be able to dispute any fees that are charged. These should be fair and relative to the loss the insurer may face if you cancel a policy early.
If you disagree with the fee, you can make a complaint to your insurer. If after eight weeks it has not replied, or you're not happy with the response, you can escalate this to the free Financial Ombudsman Service.
All of the extra features you’re paying for on your car insurance policy, such as breakdown cover and legal expenses cover, are likely to be non-refundable.
So, if you cancel your car insurance, you probably won't get the money back on those features.
There are a few reasons why an insurer might cancel a car insurance policy, including if you've not paid your premium, it finds out you've not disclosed something, or if fraud has taken place.
If you know this is going to happen, it's always better to speak to your insurer to try and fix the problem, as it will be harder to get insurance in the future if you have had it cancelled before.