Car insurance cancellation fees

Nobody likes cancelling agreements or appointments, it’s inconvenient and you always feel a little bit rude doing it. But sometimes needs must, and if you’ve got a car insurance policy that you decide to cancel, it’s good to know where you stand and what your rights are.

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Can I cancel my car insurance?

Yes – you can cancel your car insurance and for whatever reason you like. It could be that you’ve had it with cars and decide to ditch four wheels in favour of two, or you may have sold your car (or been unfortunate and had it stolen) and not quite be ready for a replacement. Alternatively, you might have bought a policy and simply changed your mind or even found a better deal elsewhere.

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Your 14 day cooling off period

With car insurance, you get a statutory 14 day cooling off period. If you cancel during this time you’ll usually get a full refund (if you’ve paid upfront) minus an amount for the time that you were covered.

However, some insurance providers will charge you for cancelling even within those 14 days. By law, any charge within the cooling off period has to be ‘reasonable’ but of course what’s deemed ‘reasonable’ will depend on which side of the fence you’re standing.

What about cancelling mid policy?

If you decide to cancel your car insurance once the policy has already started, then the cancellation charges will usually be a lot more compared to cancelling within the cooling off period.

Exact amounts depend on individual providers, but you’ll usually find a list of charges and fees tucked safely somewhere amongst the terms and conditions of your agreement – some insurance providers could charge as much as £50 to cancel, and for telematics policies it can be even higher. You may also be expected to pay admin fees on top of the cancellation charge – so all in all cancelling mid policy could be a hefty burden on your wallet.

If the reason for cancelling is because you’ve found a better deal elsewhere, make sure you’ve considered all the fees you’ll be charged because they could swallow up any potential saving. If that’s the case, you might be better off waiting until your policy ends and then switch.

If you’ve paid your whole premium up front, then your refund will typically be calculated on a pro rata basis, so you’ll get some money back with deductions made for the time you’ve been covered. If you’ve paid in monthly instalments, then any refund will depend on when you’ve paid up to and you may even end up paying your insurance provider to include all the time you’ve been covered up to that point.

If you do cancel mid policy, you’ll forego that year’s no claims bonus (NCD) too because your NCD is only awarded for a full year.

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Can I dispute cancellation fees?

Insurance providers will state their charges and fees in their policy terms so when you take out cover, it’s worth having a quick read to make sure you’re happy with the consequences of cancelling. But if you feel the fees you’ve been charged are unreasonable then you can make a complaint to your provider. You’ll have to be prepared to explain why you think the charges are unfair or unreasonable.

Comparing car insurance

Of course the best way to make sure you get the best deal in the first place is to comparethemarket and with more than 100 trusted partners right here at your fingertips, you can be sure about finding a policy to suit you – so let’s start comparing.

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