How to cancel your 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.

Kate Hughes
Insurance expert
6
minute read
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Last Updated 21 FEBRUARY 2022

Can I cancel my car insurance policy?

A typical car insurance policy lasts 12 months but yes, 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.

Watch out for extra costs if you took out your car insurance policy via a broker though. They could charge you a cancellation fee on top of the insurance provider’s fee.

How do I cancel my insurance policy for my car?

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?

When you take out a car insurance policy, you’ll start a “cooling off” period - something you’re entitled to by law for all types of insurance. It means you have at least 14 days, starting when you receive the paperwork, to change your mind about your insurance and cancel your policy without paying any extra fees. 

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. But check the policy terms and conditions because you may have to pay an administration fee too. 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, so be prepared to pay cancellation charges and admin fees if you cancel your policy. Those charges could quickly add up and cancel out any refund you were expecting. It’s also worth considering a couple of other things:

  • If you paid for your policy in full upfront, your refund will be calculated on a pro-rata basis, minus any charges. So if, for example, 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 might 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 chose to include optional add-ons supplied by another company when you originally signed up for the policy, like breakdown cover, you could still be paying for those after you've cancelled your car insurance policy. 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 pretty unlikely that you'll receive a refund.

Can I cancel my car insurance if I pay monthly?

Yes. Plenty 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. And as we’ve said, don’t just cancel your direct debit and think you’re sorted. That’ll just cancel your payments, not your policy, so your provider will start chasing you for the money you’ve suddenly stopped paying them. It’s not worth the hassle involved in trying to unravel what you owe and when you actually cancelled the policy or didn’t.

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.

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, talk to your insurance provider directly. Don’t forget to keep a record of dates, times and points of discussion whenever you speak to them, as well as keeping copies of any correspondence - emailed or written. This evidence will help if you need to escalate a complaint to the Financial Ombudsman Service (FOS) at any stage after you’ve engaged with your provider.

What happens if my insurer cancels my policy?

There are a few reasons 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 or off the road by registering the change of status with the DVLA.

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.

Frequently asked questions

Do I need to cancel my existing car insurance policy if I buy a new 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. That’s important not just because you won’t be forking out any more payments. It also 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. But that doesn’t happen automatically, so you’ll need to get in touch with your provider to cancel.

What other charges can you expect after cancelling car insurance?

Unhelpfully, cancellation fees are called different things by different insurance providers. “Cancellation fees”, “admin fees”, “processing fees”, the list can go on. We’ve said it before, but 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 into the process of cancelling your policy blind.

Should I cancel my car insurance or let it auto-renew?

Auto-renewing your car insurance might be easier - you don’t need to do anything, but it can come at a cost. If you’re interested in saving some money, the best thing to do is shop around and see if you can beat your renewal quote. Your existing car insurance provider will contact you ahead of your renewal date, explaining your renewal costs with a new quote.  In fact, they have to by law these days. It’s very unlikely that your renewal quote will be the cheapest available, so it’s well worth shopping around for a better deal.

To help make this as easy as possible, we can compare car insurance quotes from dozens of providers to try and find you a cheaper deal within minutes. If you find a better price, you can cancel your existing policy and take out the cheaper one.

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

Unfortunately, if you cancel your insurance mid-policy, then yes, you probably won’t earn that year's no claims discount because you can only earn the discount after one full year of claim-free driving.

If you take a break between car insurance policies, keeping or losing your no claims bonus is up to your provider. As a general rule, insurance providers allow a gap of up to two years between policies. A gap longer than this will likely cause you to lose your no claims discount. Each insurance provider has their own rules though, so you should check the policy wording carefully, before taking out a policy.

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