Can I Cancel My Car Insurance?
The answer is yes, you can cancel your car insurance policy at any time. However, legal and financial matters like car insurance are never that straightforward. Cancelling your car insurance all of a sudden is likely to cause more problems than it’s worth. Whether or not you should cancel your car insurance depends on your reasons for doing so. Common reasons for cancelling your car insurance include selling your car or taking it off the road, relocating, or simply being unhappy with your insurance provider. When you’re thinking about cancelling or switching policies, you need to consider the penalties. Your car insurance provider will probably charge you for cancellation. You will also be putting yourself at risk of government fines if you are illegally driving without insurance in between policies.
How Much Does It Cost to Cancel Car Insurance?
When you take out a new premium or renew your existing car insurance, there will be a cooling off period. Legally, car insurance companies must offer a minimum cooling off period of 14 days. Some insurers offer a longer cooling off period, so you should check your policy. This period begins as soon as you receive your documents or as soon as the cover itself begins. You then have 14 days to change your mind and cancel if you choose to do so. It is likely that your insurer will charge you an administration fee. They may also charge a pro-rata fee for the number of days of cover you received. However, this is usually less than the cost of an actual cancellation fee. If you cancel after the end of the cooling off period, most insurance companies will charge a minimum of £50 to cancel your policy.
You can avoid a cancellation fee by waiting until your contract expires. You can choose to leave your current insurer instead of renewing your contract for another year. This does not count as cancellation, so it will not incur a charge. When you cancel mid-contract, you will only get a limited refund if you paid for the whole year. Insurance providers usually do not refund the last 2 months. So if you only have a few months left on your policy, you might save money by waiting rather than paying the cancellation fee and losing that refund. If you pay monthly, you will not receive any refunds. It is best to start looking for a new insurance deal around 11 months into a contract if you want to switch. If your savings would be more than the losses from cancellation, then you might consider cancelling early anyway.
Does Cancelling Car Insurance Affect Future Rates?
One of the things to consider before you cancel mid-contract is how this will affect your future insurance rates. Any insurance provider will typically calculate your premium based on several factors. This includes your driving history and your past insurance policies. A policy cancellation tells them that you failed to meet the terms of your contract. Insurance providers may not want to risk doing business with you if they think you might cancel again. Of course, insurance providers understand that life changes do happen. If you have a reason for cancelling such as moving house or selling your car, this probably won’t affect your future rates. Just be truthful with them about your driving history. The other factors they will consider include your car’s make and model and any traffic violations or claims.
They will also look for gaps in coverage. If there is a lapse in car insurance, it means that you either drove illegally without insurance or were not practising your driving skills. These would make you a “high risk” driver, meaning your premiums would then be much more expensive. Therefore, you should never cancel your existing insurance policy until you already have another one in place. A lapse in coverage or lying about cancelling a policy could lead other insurance providers to deny you coverage with them. Having to go to specialist insurers would end up costing much more. If you cancel your insurance because you aren’t using a car, avoid a gap in coverage by asking friends or family members to add you to their insurance policy. It may increase their annual premium, but it will be cheaper.
Should I Cancel My Car Insurance If I Buy a New Car?
If you like your current insurance provider, there is no need to cancel your insurance policy when you buy a new car. Most insurance companies allow customers to update their policies to cover their new vehicle instead of their old one. However, there will still be administrative charges for this. Depending on the “risk rating” of your new car, your premium could increase. If it increases dramatically, you should look around on comparison sites such as Compare The Market or MoneySupermarket. You might find a better deal somewhere else, or be able to use the quotes from other places to haggle with your current provider. If your new car is in better condition, your premium may be lower. Cancelling your car insurance is only necessary if you are selling your car with no intention of buying another one.
Can I Cancel My Car Insurance If I’ve Made a Claim?
You are still able to cancel your car insurance at any time if you have made a claim on the policy. However, you will have to pay the full price. If you paid the annual amount upfront, you will not receive any refunds. Even if you have been paying monthly by Direct Debit, you will have to pay the remaining balance in one lump sum. This can be very costly, depending on how many months you have left of the policy. The cancellation fee will also apply in addition to this. All of this applies even if your car has been written off. Due to the high costs, you might want to consider if cancellation is the best option. If you wait until the contract expires, you’ll get the coverage you are paying for and can then switch to a new provider without the cloud of a claim and a cancellation hanging over your driving history.
How Do I Cancel My Car Insurance?
So, you’ve weighed up all your options and decided you are going to cancel. Doing this should be easy enough. All you have to do is contact your insurance provider to let them know. If you pay monthly, you can’t just cancel your Direct Debit. You need to inform the company so that they don’t end up chasing you over future payments for the ongoing policy. Some insurance providers will have different policies in place for cancellation. Check your policy documents to make sure you do everything properly. You can cancel over the phone, but you may also have to send a cancellation request in writing. Whoever you speak to, make a note of the names, time, and date in case there are any issues later. If you are cancelling at the end of a contract, make sure you inform them before the policy renews.
Remember that in most cases it is best to wait until the end of your contract. Not only will you avoid having to pay any cancellation fees, you can hang on to your no-claims bonus for that year. You should then be able to carry this discount over with you to your new insurance provider. If cancelling mid-contract is unavoidable, you are obliged to pay the fees that you agreed to when you signed the contract. However, if you think the charges are unfair in any way, you can complain to your insurance provider. If you are cancelling because of a mistake made by the insurer, you might be able to challenge the fees. You can take your complaint to the Financial Ombudsman Service if your insurance company does not resolve it. Even after going through this process, you may not be entitled to a refund.
