Everything you need to know about cancelling car insurance

Want to cancel your car insurance policy? Our easy-to-follow guide tells you how to do it, what costs you might have to pay and whether you're entitled to a refund.

Want to cancel your car insurance policy? Our easy-to-follow guide tells you how to do it, what costs you might have to pay and whether you're entitled to a refund.

Daniel Hutson
From the Motor team
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Posted 19 APRIL 2021

Can I cancel my car insurance policy?

A typical car insurance policy will last 12 months but you can cancel it at any time. Just bear in mind that you won't automatically get your money back and your insurance provider may charge you a cancellation fee. And if you took out your car insurance policy via a broker, be aware that the broker could charge you a cancellation fee, as well as the insurance provider. 

How do I cancel my insurance policy for my car?

You need to tell your insurance provider you want to cancel. Insurance providers have different procedures for cancelling. These will be written in your policy terms and conditions.

You might be expected to inform your insurance provider in writing, either by a letter or email.

If you're able to cancel your policy by phone, make a note of the time, date and the name of the person you spoke to. It's worthwhile following up the conversation in writing too, just to be sure.

Will I get a refund if I cancel my car insurance during the cooling-off period?

Yes, if you cancel and transfer your car insurance within the 14-day cooling-off period, you're entitled to a refund minus any days the policy was active for. However, you may have to pay an administration fee, so check the policy terms and conditions.

The 14-day cooling-off period starts when you receive the paperwork, and it's an entitlement by law for all types of insurance.

What is the cooling off period?

When you take out a car insurance policy, you’ll start a “cooling off” period. This means you have at least 14 days to change your mind about your insurance, and cancel your policy without paying any extra fees. Once the cooling off period ends, you’ll need to pay cancellation charges.

Will I get a refund if I cancel after the 14-day cooling-off period?

It depends. If you cancel your policy, be prepared to pay cancellation charges as well as administration fees. It could be that those charges add up and cancel out any refund you were expecting. Otherwise, there are these things to consider as well:

  • If you paid for your policy in full upfront, your refund will be calculated on a pro-rata basis, minus any charges. For example, if you cancelled your policy after three months, you'd be entitled to a refund of nine months, minus a cancellation charge and any administration fees
  • If you pay for your insurance monthly, then you might not get a refund. In fact, you may have to pay extra to cover the time you've been insured, as well as a cancellation fee and any administration charges
  • Add-ons are often non-refundable. Also, be aware that if you selected to include optional add-ons that are supplied by another company, breakdown cover,

    you could still be paying for those add-ons after you've cancelled your car insurance policy and you might need to contact the add-on provider to cancel.

  • If your insurance provider decides to cancel your policy for a specific reason, it's most unlikely that you'll receive a refund.

Can I cancel my car insurance if I pay monthly?

Yes, a lot of people choose to pay their car insurance monthly, and there’s nothing to stop you from cancelling. Just tell your insurance provider that you want to cancel, and they’ll arrange it for you. You’ll probably face some admin and cancellation fees though, so make sure you know what to expect before cancelling. Also, don’t just cancel your direct debit and think you’re sorted. That’ll just cancel your payments, not your policy, and will mean your provider will start chasing you for the money you’ve stopped paying them.

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

Yes, you can. If you've paid upfront though, you probably won't be eligible for a refund. If you pay by monthly instalments, you'll still have to pay for any remaining time you have on your policy, or you can pay it off as a lump sum in one go. The same applies if your car's been written off.

Will I lose my no claims discount if I cancel my car insurance?

If you cancel your insurance mid-policy, it's unlikely that you'll earn that year's no claims discount. That's because you can only earn the discount after one full year of claim-free driving.

I've bought a new car. Do I need to cancel my existing car insurance?

Not necessarily. Most insurance providers will update your existing policy to cover the new car. Just bear in mind that your insurance premium could go up or down depending on the type of car it is. Also, expect to pay an administration fee for the update.

Can I cancel my insurance if I’m selling my car?

If you’re selling your car and not buying another one to replace it, you should cancel your insurance as soon as you’ve sold it. This means you’ll be completely rid of any liability for the car, putting the full responsibility on the new owner to insure it.

If you’re selling your car but buying a new one to replace it, then you can just talk to your provider and transfer your policy to the new car, rather than going through the hassle of cancelling and then taking out a new one. Changing the policy will usually force you to pay an admin fee of some sort, and your insurance could become more expensive (or get cheaper) with a different model, but it’s still simpler than taking out a whole new policy.

Should I cancel my insurance if I register my car SORN?

If you declare your car as SORN, you won’t need to insure it. This means you can cancel your existing policy once it’s declared off the road. This won’t be done automatically for you, so you’ll need to get in touch with your provider to cancel.

Can I dispute the cancellation costs?

You can try to dispute the cancellation costs, but you may not be successful. A better option is to make sure you know exactly what the cancellation fees are before you take out the policy, so you aren't hit with any surprises.

If you think the charges are excessive and you can explain why you think they're unfair, you should talk to your insurance provider directly.

What other charges can you expect after cancelling car insurance?

Cancellation fees can have many names between different insurance providers. “Cancellation fees”, “admin fees”, “processing fees”, the list can go on. Make sure you read your policy carefully before cancelling, so you know what to expect. Some insurance providers will charge you a percentage of the remaining cover you have on your policy, which, depending on how long you have left, can add up. Don’t go in to cancelling your policy blind, in order to avoid any nasty surprises.

What happens if my insurer cancels my policy?

There are a few reasons why your insurance provider might cancel your car insurance policy. This could be because you’ve not kept up with your payments, or you’ve violated the terms of your policy somehow. If that’s the case, you’ll no longer be covered and will need to sort out new cover as soon as possible. It’s illegal to drive a car without insurance, so you need to either get new cover or declare the vehicle as SORN.

You may find it more difficult to get a new insurance policy if you’ve had a previous one cancelled, and you’ll need to declare this to every new insurance provider in future. Just be as honest as possible, as it’s always worse to be caught out in a lie. While it might be harder to get cover, you might be able to find a specialist provider who will offer you cover.

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