Cancelling your car insurance

Posted by mustard.co.uk on March 22nd, 2018

Deciding you want to cancel your car insurance is one thing – doing it can be quite another, especially if you’re not entirely sure about what your rights are, or whether you’re entitled to a refund. Our guide to cancelling car insurance, sets the record straight – so, here are the facts.

When can I cancel my car insurance?

You can cancel your car insurance policy at any time but depending on when you do, you may have to pay a cancellation fee and you might not get all your money back.

How to cancel my car insurance

If you decide to cancel your insurance policy, check your terms and conditions to see if there are any specific procedures you need to follow, in most cases you should be able to do it:

  • Online – if you manage your policy online then you might be able to cancel it simply by logging into your account and taking the necessary steps.
  • By phone – if you call your insurer to cancel your policy then make a note of the time, date and if you can, the name of the person you spoke with. You should also follow up the conversation with an email to ensure the cancellation.
  • In writing – some insurers may want a written letter, if that’s the case then make sure you include all your relevant details including name, address and policy number.

Whether you choose to contact your insurer online, by phone or in writing, always make sure you receive confirmation that it has actually been cancelled.

If you’ve set up a Direct Debit, cancelling the debit instruction isn’t the same as cancelling your policy – it will just mean that the automatic payments will stop and your insurer will end up chasing you for the unpaid amount.

Cancelling car insurance

Can I cancel if I pay monthly?

You can cancel your policy at any time – even if you pay your premium monthly, but you might not be entitled to any refund. In fact, you may have to pay more to your insurer to cover the time your policy has been active for.

Does car insurance come with a cooling off period?

Yes, by law, you get a 14-day cooling off period when you buy car insurance. The 14 days begins on the policy start date, or from the day you receive your policy documents – whichever is later.

You can cancel your policy at any time during the 14-day period. If you do, your insurer will charge you for any days that the policy was active for; but everything else will be refunded. Your insurer may also charge you an admin fee for setting up the policy in the first place.

Can I cancel my car insurance after the cooling off period?

You can, but if you cancel it after the cooling off period, then you’ll probably face a hefty cancellation fee and further administration costs.

If you paid for your policy in one lump sum and have not made any claims, your insurer may offer you a refund depending on how many months you have left.

If you’re paying for your policy in monthly instalments, you might end up owing your insurer for the days you were covered and not be eligible for any refund.

Before you cancel your car insurance, always check any terms and conditions set out in your policy beforehand because some insurers may not offer you any refund at all if you’re more than halfway through your policy. If this is the case, then it often makes more financial sense to see your policy through to the end, than to cancel it part way.

Something else to bear in mind, is if you’ve chosen extra features provided by a third party – for example, breakdown cover – then you might need to contact them directly to cancel their services (refunds may also be at their discretion).

What happens to my no claims bonus if I cancel my car insurance part way through?

If you cancel within the 12-month period, you won’t earn any no claims bonus for that year.

Can I cancel my car insurance if I’ve made a claim?

You can still cancel your car insurance even if you’ve made a claim, but it’s unlikely you’ll be given a refund for the remainder of the policy, even if you’ve paid for it in full and upfront.

If you’re paying in monthly instalments, then you’ll be expected to pay for the rest of the policy in full. It might seem unfair, but from your insurer’s point of view, if you’ve made a claim, then the policy has served its purpose – in which case a refund isn’t appropriate.

Why has my insurance provider cancelled my policy?

Insurance providers may choose to cancel a policy if they suspect:

  • Fraud – for example in cases like fronting where a more experienced driver says they’re the main driver in order to get cheaper insurance for a younger, less experienced motorist.
  • Non-disclosure– this can be down to something as simple as forgetting to mention an accident that happened previously.
  • Non-payment– if a policyholder has missed a payment or repeatedly missed payments, then insurers have the right to cancel. If you know you’ll struggle to meet a monthly instalment, then speak to your insurer before you miss it – they’re more likely to be sympathetic beforehand and come to an arrangement about payment.
  • If you’ve got black box insurance (or telematics insurance) then your car cover could be cancelled if you break any of the conditions set out in your policy. For example – if your policy states you can’t drive after 11pm but you continually do so, then your insurer could void your agreement.

    If your provider has taken the decision to cancel your policy, then they should tell you so that you can find an alternative insurer.

    Having a policy cancelled or refused in the past, can make finding car cover more difficult (and more expensive). It’s also something you have to declare each time you buy car insurance – if you don’t mention it, then that in itself counts as non-disclosure.

    When should I cancel car insurance if I’m selling my car?

    If you’ve sold your car and haven’t replaced it, you should cancel your policy as soon as possible as you no longer own it and there’s little point in paying for a policy you don’t need.

    Should I cancel my policy if I’m buying a new car?

    You don’t need to cancel your policy because in most instances, your insurer will be able to amend it to reflect your new vehicle. If your new car is more powerful, or has been modified, then you should expect your premium to increase – but for advice on how to keep costs down, head to our guide to saving money on your premium

    What should I do if I disagree with the cancellation charges?

    If you don’t agree with the cancellation fees you’ve been charged or think there’s been a mistake, then contact your insurer in the first instance – your policy booklet will have details of your provider’s complaints procedure.

    In your complaint, you should detail any events that led to your decision to cancel the policy and outline why you think the cancellation charges are unfair or too high.

    If you don’t think your insurer is being reasonable or taking your complaint seriously, then you can refer it to the Financial Ombudsman Service

    Getting value for money on your car insurance

    At mustard.co.uk, we understand that sorting out your car insurance can be confusing, but our handy guides will help you make a decision based on facts. Plus, with our Cheapest Price Guarantee*, you can be confident about getting value for money too.