Car insurance is mandatory to obtain for all motorists, but what happens if your circumstances change? You may find yourself wondering, "Can you cancel car insurance?" Maybe you’ve decided to sell your car, or you’re off travelling and want to keep your car off road for a while. Or worse, maybe your car has been stolen or written off. Well, the good news is, yes you can cancel car insurance and it's so easy! Whatever the reason, it is possible for you to get a refund on your car insurance.
With regards to cancelling car insurance, this is one of the easy questions to answer. No matter what your circumstance is, the reason behind wanting to cancel your policy, or what type of policy you have, you can cancel car insurance. Throughout this guide, we will discuss how to cancel car insurance, how much it may cost and when the best time to cancel is to help you time it right to get as much of your money back as you can.
If you want to cancel your car insurance the first thing you should do is check your policy – every company will have a different policy and incur a different cancellation fee. Find out the possibilities and how much you could be refunded before you make a decision.
Once you have the information you need and are happy to continue with the cancellation of your car insurance, then you need to contact the insurance company. If you are paying your car insurance via direct debit, simply cancelling your direct debit isn’t enough. You need to contact your insurer directly and inform them of your intentions.
Each company will follow different procedures to cancel car insurance, so find out how you can cancel yours from their website. They will most likely ask you to sign a declaration form but how you start the process depends on the company and your preference. Here are the main processes to cancel your policy:
Some companies will allow you to cancel your car insurance online. Usually, you would need to sign into your account and enter a few details, but this is probably the most convenient way as the process is already in place and allows you time to find out the information they are asking for. You may need to allow extra time for the cancellation to be confirmed as they process your request.
You could email, or more traditionally, write a letter, to your insurance company to cancel your policy. Ensure all the relevant information is included to prevent the insurers needing to request more information before they can process your request. Again, you would need to wait for a response before your insurance has been cancelled.
Alternatively, cancelling your car insurance can be done via the phone. This is probably the quickest way as they will make sure they have all the information they need there and then and get the process started for you straight away. If you prefer this approach, make a note of the time and date of your call and the name of the person you spoke to so you can reference when you made the call to cancel. It is also worth following up the phone call with an email to confirm the cancellation so your request is in writing too.
When you decide to cancel your car insurance, no matter how far into the policy you cancel, there is often a cancellation fee. This is often to cover the cost of administration fees. How much you are charged to cancel your car insurance will not just depend on how early you cancel, but also will depend on the insurance providers themselves. Each company will have their own costs, so it is something to consider checking before you decide to cancel.
Technically you can cancel your car insurance at any time, although you wouldn’t want to cancel right before your policy is about to end. For maximum chance of a full (or nearly full) refund, the best time to cancel is in the 14 day ‘cooling off’ period. If you’ve just bought your policy you usually have 14 days to change your mind to be eligible to receive most of your premium back, but unfortunately, even in this period, you won’t get a full refund. You may still need to pay an administration fee and any days you were covered, but the main bulk of what you paid should be back in your pocket.
Once this period is over, your car insurance refund will take a huge cut and the refund you receive may be limited. If you cancel your car insurance mid-cover you may expect to receive half of the fee, but this isn’t necessarily the case. What you will receive will depend on the company you are insured with and your circumstance. It is most likely that you will be charged a car insurance cancellation fee and you also might not be refunded any additional covers you added to your policy, for example, breakdown cover. So, if you know your car insurance needs to be cancelled, get it sorted as soon as possible to get the maximum possible refund.
If you have recently sold your car and bought your next one, you don’t necessarily need to cancel your insurance, you can simply update your policy with your new vehicle, including the value of the new car. However, you will be charged for this so it might be worthwhile to shop around and see which option works best for you. If you decide to cancel, make sure there is an insurance overlap with your new insurer. The last thing you want is to end up with no insurance at all, even if it’s just for a day.
There are times when it’s more worthwhile to hold on and refrain from cancelling your car insurance because it could end up costing you more money, or being a waste of time - especially if your insurance is close to renewal anyway.
If you have made a claim during your policy, unfortunately, you won’t receive any refund from the insurer so there is no point in cancelling the policy. Also, if you are towards the end of your policy, the cost to cancel your car insurance may not be worth the hassle and it might work out more cost effective to see the contract to the end before looking elsewhere.
Sometimes, instead of cancelling your insurance, you could just suspend it. However, there are only certain situations where you can do this. For example, if your car has been written off or is simply off the road for the time being due to an accident, whether it is your fault or not, or if you have sold your car and plan to buy a new one soon. The suspension can’t pass your car insurance renewal date, so check when this is due before considering it. Each company will have different rules for suspending car insurance so be sure to check with your insurer first.
If you feel like you’re being overcharged and you’re not happy with the amount you are being refunded, the first point of call is to complain to the company. If you’re still not satisfied with the outcome you can contact Financial Ombudsman Service free of charge for support. However, there are no guarantees you will receive the refund you desire if the company are following the right procedures.