The unexpected costs of cancelling your car insurance

If you’re thinking about cancelling your car insurance, here are some questions you should consider and issues to be aware of before you do.

You can find all the information you need to know about cancelling your car insurance in the policy documents provided by your insurer. You can also get in touch with them to discuss your options and what the implications of cancelling your cover may be.

Cancellation fees during the cooling-off period

When you take out an insurance policy, you get the chance to change your mind. Known as the cooling-off period, this normally lasts 14 days from the date you purchase your policy or receive your documents (whichever is later).

But could changing your mind end up costing you? Check to see if you’ll be charged for cancelling during the cooling-off period if your cover has started. And if you’ve had to claim during the cooling-off period, what are the financial implications if you decide not to proceed with the policy?

Cancelling after the cooling-off period

If you cancel your insurance policy after the cooling-off period, you might have to pay a cancellation fee. There could also be other charges, like an extra admin fee.

Something to consider is what happens if you cancel part way through your term, such as four months into a 12-month policy. Will you get a refund for the remaining months? And if you get a refund, does this include any optional add-ons, like breakdown cover?

If you want to cancel your insurance, always follow the correct cancellation procedures as explained by your insurance provider. 

Remember, if you pay monthly, simply cancelling your direct debit isn’t enough to cancel your insurance and you could be chased for any outstanding charges or fees. Plus, if you pay monthly under a credit agreement, failing to pay if you haven’t properly cancelled your insurance could have a negative impact on your credit score.

Cancelling at renewal

If your insurance is coming up for renewal, and you don’t want to renew with your current provider, check what the renewal process is for your policy. 

Some policies will auto-renew, which means a new 12 months of cover will start and your insurance provider will automatically take payment unless you tell them you don’t want to renew.

If your policy isn’t auto-renew, then your cover will end unless you tell your insurer you want to renew.

Cancelling because you don’t use your vehicle

If you don’t use your vehicle, you can register it as SORN, which stands for Statutory Off Road Notification. You can do this by contacting the DVLA. When a vehicle is registered as SORN it must be kept off the road, for example in a garage or on your drive. 

You can’t register a vehicle as SORN if you keep it on a public road and, in this situation, you’re legally required to still have insurance.

If you register a vehicle as SORN it doesn’t have to be insured. But, remember, even if you don’t drive your vehicle, it can still be damaged or stolen. If you don’t have insurance, then you won’t be covered. 

No Claim Discount

Cancelling your policy could affect your No Claims Discount, which you earn after a whole year without making a claim while insured. 

If you cancel a policy part way through a year, it may not count as a NCD year.

If you take a break before getting another car insurance policy, how long your NCD remains valid for depends on how long the gap between policies is and the approach taken by your next insurance provider. Some providers may allow you to have a gap of three years or more, while some will only allow two years.

Losing customer benefits

Besides the No Claim Discount, your insurer may give you other perks, like a multiproduct or multicar discount. If you cancel, you could lose these.

For example, your insurer may give you a discount if you have more than one policy with them, like car and home. If you cancel your car insurance, you could lose that discount. In this situation, you should contact your insurer to find out what happens if you cancel your car insurance and the options that are available to you.

Driving an uninsured vehicle

Remember, it’s an offence under the Road Traffic Act to drive a motor vehicle on a public highway or other public place without adequate third-party insurance. 

If you cancel your car insurance, your insurer will tell the Motor Insurance Database (MID) that they’re no longer the insurer of your vehicle. The MID is a central record of all insured vehicles in the UK that’s used by the Police and DVLA to enforce motor insurance law. 

Alternatives to cancelling

Before cancelling your insurance, speak to your insurance provider to see if there are any alternatives. For example, you might be able to change your cover if your needs have changed. 

However, before you change your cover, it’s important to make sure it will still meet your needs and cover everything you need it to. 

If you’re thinking about cancelling because you’re experiencing financial difficulties, speak to your insurer first to check what support might be available to you.

Contact us

This article is intended to give general information to help you manage your insurance policy. Before you make any decisions, check the details of your policy, or contact your insurer for more information specific to your cover.

If you have motor insurance with us and you’re thinking about cancelling, please look at your policy documents, which you can find by logging in to MyAviva, to find out the cancellation fees and issues specific to your cover. 

Or, if you’re struggling with your payments, please get in touch with us to see if we can help.

You can also find information on our Coronavirus: car and motor insurance help page.

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