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If you want to cancel your car insurance because you’ve found a better deal elsewhere or no longer need cover, regulations updated in 2022 make this process much easier. Just be aware that you might need to pay an admin fee.
This step-by-step guide explains how to cancel your car insurance, how likely you are to get a refund and what to be aware of.
Yes, you can usually cancel your car insurance at any time – you’re not tied into a contract. While car insurance policies are typically taken out for 12 months, you can cancel your policy earlier if you’ve sold your car, applied for a Statutory Off Road Notification (SORN) or renewed your car insurance early with another provider.
Cancelling car insurance is usually a relatively quick and easy task, but there are some things to be aware of.
Before cancelling your car insurance, it’s worth keeping the following points in mind:
You’ll usually need to phone your insurance provider to cancel your insurance policy, but in some cases, you might be able to do this online. Remember that if you share a car insurance policy with another driver, the insurer will want to speak to the main policyholder.
Each provider will have its cancellation process, but you can usually expect to follow the steps below.
If you can’t get through to your insurance provider on the phone, you can send an email to explain that you want to cancel your policy and that you’ve been unable to contact them by phone.
Yes, if you’ve taken out a car insurance policy and decide to cancel within the 14-day “cooling-off” period, you’re legally entitled to a refund. This period, mandated by law, grants you at least 14 days from receiving your car insurance documentation (or from when the policy starts, whichever is later) to change your mind and cancel the policy.
If you cancel within this timeframe, you’ll receive a refund reduced by an amount proportional to the number of days the policy was active before cancellation. Your provider might also charge you an admin fee of around £25. Always check the terms and conditions of your insurer’s cancellation policy, as they will vary.
If you cancel your car insurance policy after the 14-day cooling-off period, you might still be eligible for a refund if you haven’t made a claim. However, again, you’ll likely be charged admin and cancellation fees, which could be higher than the refund you were expecting. Fees are typically around £55. You should also keep the following points in mind:
Refunds from car insurance cancellations are typically processed within five to 10 business days, although this will depend on the insurer.
There’s nothing to stop you from disputing car insurance cancellation costs, but you might not be successful. Before you go ahead, be sure to check your policy cancellation documents carefully so you know what cancellation fees apply.
If you feel you should be entitled to a larger refund or the fees are unfair, you should contact your provider first to discuss your concerns. Your provider should have a complaints procedure available on its website, and there might be a complaints form to complete.
It’s important to keep a log of all your documentation for tracking purposes, including copies of emails and letters, with the dates of each correspondence. Doing this will help you remember the specifics of who you spoke to and what was discussed. It can also prove beneficial if you want to escalate your complaint to the Financial Ombudsman Service. You can do this if, after eight weeks, your insurer has not replied or you’re unhappy with the response.
Yes, you can cancel your car insurance policy if you pay monthly. Again, the best way to do this is to ask your provider to cancel your policy. You’ll likely pay a cancellation fee, so make sure your provider has explained this to you.
What you can’t do is simply cancel your car insurance direct debit and assume everything is sorted. Doing so would constitute a breach of contract, and it could show up on your credit report as a missed payment, which could negatively impact your credit score.
Yes, you can cancel your car insurance policy even if you’ve made a claim. However, receiving a refund is highly unlikely, especially if you paid for your policy upfront. Given the policy has already facilitated a payout, granting a refund wouldn’t be equitable to the insurer.
If you pay for your car insurance every month, you’ll usually be required to pay the outstanding amount in one lump sum. This also applies if you’ve written off your car. In this situation, it’s worth considering whether cancelling your policy is worth it, as it could be quite expensive.
There are several reasons why your insurance provider might choose to cancel your policy. It might be because you haven’t made insurance payments or have breached your policy conditions. It can also happen if you fail to declare penalty points on your licence or don’t inform your insurance provider about modifications to your car.
If this happens, your car will no longer be insured, so you’ll need to arrange new cover quickly or declare your vehicle off the road with a SORN. Driving without insurance on UK roads is illegal, and if caught, you could face a fixed penalty of £300 plus six penalty points on your licence. You might also be disqualified from driving.
When you apply for a new car insurance policy, it’s important to declare that your previous insurance provider cancelled your policy. This could make it harder to get cover elsewhere, but you need to be honest. If you’re struggling, you might need to approach a specialist provider. Be aware that your new policy is likely to be more expensive.
Yes, if you’re selling your car, you should cancel your car insurance, but only when the car is officially sold. If you don’t cancel your insurance policy when you’ve sold your vehicle and the new owner is involved in an accident, they could potentially make a claim on your insurance policy, bumping up the cost of your cover.
If you’re selling your current vehicle and buying a new one, it’s worth asking your insurance provider to transfer your existing car insurance policy to the new car. If this is possible, you might have to pay an admin fee and a higher car insurance premium, but once your insurance is up for renewal, you can shop around and find a better deal elsewhere.
