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Cancelling Your Car Insurance Policy

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Last updated: 17/03/2021 | Estimated Reading Time: 4 minutes

A car insurance policy can often seem like a big burden on your finances, especially because it’s a year-long commitment. When it comes to cancellation, the best thing to remember is that you have 14 days from the start of the policy to cancel without any charges. This guide will take you through the different aspects of cancelling car insurance so that you can make the process as cheap as possible.

In This Guide:

Is it possible to cancel your insurance policy?

Typically, when someone takes out a car insurance policy it will last for at least 12 months. The important thing to remember is that even though you have a contract you can still cancel your car insurance policy at any time, you just might incur charges or extra charges. As long as you know the terms surrounding your car insurance policy you can avoid having to pay a large fee when you cancel.

How do I cancel my car insurance?

When you decide to cancel your car insurance, the first thing to do is contact the insurer as soon as possible, in case you are in the 14-day ‘cooling-off’ period which means you will be entitled to a full refund.

What is the cooling-off period?

When you receive the paperwork for your car insurance you will have 14 days to confirm your policy, referred to as the ‘cooling-off’ period. During this period the insurer can still apply an administration fee, and they will deduct the days the policy has been active. However, there is usually a much larger cost if you were to cancel it after the 14-day period so it’s worth acting fast.

What about after the cooling-off period?

There is no ‘one’ fee when it comes to cancelling your insurance after the cooling-off period, and it will all depend on your specific policy. There are a few things you should consider when you try to cancel your insurance after this period:

  • If you are paying your insurance on a monthly basis you are more likely to not get a refund at all, and in fact pay more for the administration and cancellation charges. Importantly, cancelling the direct debit is not the same as cancelling your policy, and you could be liable for any charges.
  • If you pay on an annual basis then you will be refunded pro-rata minus any charges. For instance, if you cancel your insurance after 4 months you will be refunded 8 months deducting any charges the insurer puts on.
  • Add-ons will not be refunded; these are the optional cover you have paid for when taking out your policy.
  • If it’s the insurer cancelling your policy for any reason, you will most likely not receive any refund at all.

Will cancelling affect my no-claims bonus?

When cancelling your policy, you may well lose your no claims discount. This is because it’s often calculated on a yearly basis and you will not have had your insurance for the full year.

What should I do if I'm selling my car?

As soon as you sell your car you should cancel your insurance immediately. Not only is it pointless to pay for cover of a car you do not own, should the new owner get into an accident then a claim could be made against your policy and you could then have to pay the excess.

Can I dispute charges?

Yes, the best way to begin this process is to make a complaint with the insurer directly. The way to do so will normally be outlined on their website, and they have up to 8 weeks to respond. Make sure that you keep records of all of your correspondence with them. Should you want to take it further, get into contact with the Financial Ombudsman Service.

Never auto-renew

Never, ever auto-renew! With insurance policies unfortunately, you’re not always rewarded for your loyalty. It’s always worth concisely comparing insurance to make sure you have the best deal for you the end of your policy. The first step to take is to cancel the auto-renewal on your insurance, this means at the end of each policy you can review different options and make the best choice for your needs without any penalties. You can use our free online comparison tool to get cheap car insurance quotes from numerous insurance providers and find the most suitable cover for your car.

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