You might decide to sell your car because you want to make the switch to a newer model, or plan to hang up your keys altogether. Whatever your reason for selling, it’s important to think about whether you should also cancel your existing car insurance policy.
In this guide, we’ll cover all the key considerations, including the benefits and drawbacks of cancelling early in various scenarios. We’ll also answer some pertinent questions around selling your car and cancelling insurance.
Finally, we’ll explain how to cancel your car insurance when selling your car, and outline the processes to follow for some of the most popular car insurance providers on the market.
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Should I cancel my car insurance when I sell my car?
It may seem like a no-brainer to cancel your insurance when you sell your car, but before you take that step, there are a few factors to take into consideration.
In most circumstances, cancelling is the right decision, but equally, there are others in which it’s worth keeping your policy going. We’ll explain these scenarios in the next section to help you decide what’s best for you.
The options:
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Cancelling your insurance policy during the 14-day cooling-off period
Unless you’ve had a dramatic change of heart or circumstances, it’s unlikely that you’ll want to sell your car within two weeks of buying it.
However, this isn’t impossible, so you may be pleased to learn that when you take out car insurance, you have a minimum 14-day cooling-off period, during which you can legally cancel your policy and get a full refund.
Many providers charge a small cancellation fee. Check your policy documents to find out whether this will apply to you.
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Cancelling your insurance policy after the 14-day cooling-off period
Don’t panic if you’ve passed the two-week cut-off. You can still cancel your insurance policy after the cooling-off period expires; you just won’t get a full refund.
However, you may be able to get some of your money back. This will depend on how long you’ve had your policy and how you paid for it:
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If you chose to pay yearly, you’ll get a partial refund based on how long your policy has left to run.
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If you pay monthly, you’re unlikely to get any money back. You’re paying as you go, so you won’t be in credit.
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In both cases, you’ll probably have to pay a cancellation fee. So, check your policy documents to see how much you’ll be charged.
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Cancelling after the cooling-off period also means you’ll probably lose your no-claims bonus, as this depends on you going a full year without making a claim.
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Cancelling your insurance policy if you’ve made a claim
You’re allowed to cancel your policy if you’ve already made a claim, but this isn’t usually a good idea. Here’s why:
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You’ll have to pay cancellation charges and potentially, other admin fees.
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It could also affect how much of a refund you’ll get.
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In some cases, you might have to pay off the remainder of the policy in full.
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So, before you decide to cancel, read the terms of your policy carefully. This will help you avoid any nasty surprises.
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Cancelling your insurance policy if your car has been declared SORN
If you have made a Statutory Off Road Notification (SORN) for your car, you don’t legally have to pay tax or insurance.
So, what if you make a SORN for your motor, but your insurance policy still has a while to run? Should you cancel it?
If your car isn’t worth much, isn’t in a driveable condition, and/or is so damaged that it’s unlikely to be a target for theft, then you might want to cancel your insurance.
However, if you do cancel and your car gets stolen or damaged, then the liability lies with you. Therefore, in many cases, it’s worth keeping the policy running until it expires. This way, you’ll also get your no-claims bonus.
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Transferring your car insurance
If you plan to replace your car, you don’t need to cancel your insurance and buy a brand-new policy; you can simply transfer your existing policy to your new car.
Just contact your provider, give them the details of your new car - and they’ll make all the necessary changes.
However, there will be a small charge for this. Before you confirm this, check how much your new premiums will be:
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If they’re the same, lower or slightly higher, it’s probably worth sticking with your current provider.
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If they’re significantly higher, you might want to shop around to find an alternative provider.
Bear in mind that if you do leave your current provider, you’ll have to pay cancellation fees, and you’ll lose your no-claims bonus.
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What happens with car insurance when a car is sold?
When you sell your car, your insurance will continue until you cancel it. You’re not legally obliged to cancel your insurance when you sell your car, but you should do so as soon as possible for a couple of reasons:
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You’ll be paying for something that you’re not using.
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More seriously, if your car’s new owner has an accident, you could still be liable for any claims.
Do I get any money back if I cancel my car insurance?
You could get some money back when you cancel your car insurance, depending on whether you paid monthly or yearly, and whether you’re still within the 14-day cooling off period.
Generally speaking, you’ll get a full refund if you’re still within the cooling-off period - and a partial refund if you’re out of it. You’ll get a partial refund if you pay yearly (this will be calculated according to how long the policy has left to run).
However, if you pay monthly, you’re unlikely to get any money back. You’ll probably also have to pay a cancellation fee.
Can you keep your insurance when you sell a car?
You can sell your car and keep the insurance going, but you do need to tell your provider that you don’t own the car anymore.
However, it’s better to cancel your insurance, so that you don’t end up paying for something you don’t need, and you won’t be liable if the new owner has an accident.
What’s more, if you’re getting a new car, having two policies running at the same will complicate matters unnecessarily.
Do I lose my no-claims bonus if I sell my car?
You won’t lose your no-claims bonus if you sell your car, unless you have a gap in your insurance for over two years. This may happen if you SORN your car or don’t replace it.
You should ask your provider for a copy of your no-claims bonus when you contact them to cancel. This will be valid for two years.
How to cancel your car insurance
Before you cancel your car insurance, take some time to go through your policy documents to ensure you understand all the terms and conditions (e.g. cancellation fees, additional fees, refunds, and how much notice you need to give).
You should also check the FAQs and guides on your provider’s website for further guidance.
Once you’ve done that, gather all your details, including your policy number, car details, and the date you want to cancel, then contact your provider. It’s usually easiest to do this over the phone, although you may be able to contact them via their website, or by email.
Whichever method you choose, you’ll need to provide your details, state that you want to cancel your policy, and specify from when. You should also ask them to confirm the cancellation in writing.
Don’t forget to cancel any automatic payments. Just remember that this doesn’t automatically cancel your insurance; you still need to do this yourself. Finally, double-check your final statement to make sure your policy has been cancelled from the date you specified, and that you’ve received any refunds.
How to cancel Tesco car insurance
There are two ways to cancel your Tesco car insurance policy:
Call Tesco Bank Customer Service: on 0345 673 0000.
Write to: Tesco via Freepost RSJB-RZZY-HTJB, Tesco Bank Customer Service, P.O. Box 276, Newcastle Upon Tyne, NE12 2BT.
You can also opt out of automatic renewal at any time by logging in to your insurance account and clicking ‘Manage Renewal’.
Tesco charges £25 if you cancel your policy within the first 14 days, or £50 if you cancel after 14 days. The cancellation can only start on the day you contact Tesco, or at a later date – cancellations can’t be backdated.
How to cancel Aviva car insurance
Aviva also offers two ways for you to cancel your car insurance:
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Call them on 0345 030 6984.
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Fill in an online cancellation form. There are different forms for cancelling different policies, as well as a separate one if you want to stop your policy being automatically renewed. So, check carefully to make sure you’re filling in the right one.
If you cancel within the 14-day cooling off period, there’s no charge. After that, you’ll have to pay £38 plus insurance premium tax. It’s free to cancel auto-renewal for your policy.
How to cancel Hastings Direct car insurance
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With Hastings Direct, you can cancel your car insurance policy through your online account or via their app.
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You can also call 0333 321 9801.
You won’t have to pay a fee if you cancel before the 14-day cooling-off period, but you also won’t get a refund for any fees you paid when you bought the policy.
If the policy has already started, you’ll also have to pay for the days you’ve been insured, but you’ll get a refund for your remaining premiums.
If you cancel after the cooling-off period, you’ll have to pay a £45 fee.
How to cancel esure car insurance
The easiest way to cancel your esure car insurance is via their live chat service. To access this, click on the ‘Need help’ button on their website.
You can also call esure Car Insurance Customer Service on 0345 045 1000.
If you want to cancel your auto-renewal, log into your account and manage it from there.
In your first period of cover, esure charges £26 if you cancel within the 14-day cooling-off period and £60 thereafter. If you cancel in any period after that, you’ll have to pay £35.
How to cancel AXA car insurance
In most cases, you can cancel your AXA car insurance online by logging in to your account. You can also access a contact form from your account if you need more help, or call them on 0330 024 1158.
If you cancel within the 14-day cooling-off period, you’ll be charged for any days’ cover you’ve had, but won’t have to pay a cancellation fee. You can even backdate the cancellation to the start date of your policy. If you cancel after 14 days, you’ll have to pay a £52.50 cancellation fee.
How to cancel Diamond car insurance
You have three options if you want to cancel your Diamond car insurance:
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Cancel online via your account.
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Write to them at: Customer Loyalty, Diamond, Ty Admiral, David Street, Cardiff CF10 2AA.
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Phone the Customer Loyalty team on 0333 220 2037.
You’ll have to pay a £25 cancellation fee if you cancel during your 14-day cooling-off period, or £55 after that.
How to cancel Direct Line car insurance
If you want to cancel your Direct Line car insurance, you can:
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Call their helpline on 0345 878 5155.
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Speak to a virtual assistant on the website.
If you cancel before your cover starts, you’ll get a full refund. If you cancel in the 14-day cooling-off period, you’ll be charged for the period you’ve been covered. You won’t be charged a cancellation fee in either case. After the 14-day cooling off period, you’ll have to pay a cancellation fee of £48.16.
You may also temporarily suspend your policy if you meet certain criteria: for example, if your car has been written off following an accident and you’re yet to buy a new vehicle.