How to cancel car insurance

It’s a great feeling when your car finally goes off the market, but you need to do a few more things before you can bid the car goodbye – like cancelling or transferring your insurance.
In this guide, we go through how to do so and what to expect before you contact your insurance provider.

You should contact your car insurance provider as soon as your car is delivered to the buyer as then you’re no longer the registered keeper of the car.
By cancelling your insurance, you can avoid paying for a service you no longer need. Even if you don’t get a refund on cancelling the insurance policy, contacting the provider helps stop the policy from auto-renewing.

If you’re ready to cancel your car insurance, get all the information needed to hand. Find your policy documents with your policy number and renewal date.
Once you have the information needed, contact your insurance provider online or by phone. It always helps to note down whom you’re speaking to, what date and time you contacted them in case you need to re-contact them about any issues. Once you’re in touch with the insurance company, you should clarify how much refund you’re eligible for and how much money you owe them – whether for cancellation fee or remaining premium that’s due. Once you know how much money you’re due to receive and/or pay, wait to get the amount due transferred to your bank account and adjust your direct debit accordingly. Remember, if you cancel your direct debit for the insurance policy, it doesn’t mean that your insurance policy is cancelled too. You’ll still owe the insurance provider the premium, so it’s best to contact the provider at the earliest and cancel the policy directly with them.

What happens to car insurance when I sell my car?

Once you cancel your car insurance, your insurance provider will tell you whether you’re eligible for a refund or not.
The size of your refund will depend on factors like your insurance policy, how much time is left on your policy, your payment plan, if you’ve ever made a claim and the cancellation fees.

Time left on your insurance policy

You may be able get a full refund on your car insurance if you cancel your policy within the 14-day cooling off period. Some insurance providers may ask you to pay for the days when the cover was active. If you cancel your car insurance after the cooling-off period, you may be able to get a partial refund.

Your car insurance payment plan

If you're on a monthly payment plan, the company may not refund the remaining month's payment. Some companies may require you to pay more if they believe you owe money, especially when premiums are calculated on a scale, like charging 20% in the first month rather than prorating it. If you paid for the whole year up front, you may be able to get a refund for the remaining months. Again, the amount of refund will depend on whether you’re charged premium on a pro-rata basis or using a scale. You should check your insurance documents or contact your provider to find out how your premium is calculated.

If you’ve made a claim against your insurance policy

Your insurance company will also factor in whether you’ve made a claim against your policy. If you’ve made a claim against your policy and you cancel it after the 14-day cooling off period, your chances of getting a refund are low.

Cancellation fees

Almost all companies charge a can cancellation fee to cover their admin costs. It costs £55 on average to cancel your car insurance according to NimbleFins, but it will vary depending on your policy type, insurance provider, and when you cancel your insurance. The cancellation fees are usually lower if you cancel within 14-days of your insurance policy. Some companies may also include the Insurance Premium Tax (IPT) which is the tax payable on general insurance premiums in their cancellation fees – if that’s the case, it’ll be indicated in your policy documents.

If you’ve bought a new car to replace the one you’ve sold, you can transfer your car insurance from the old car to the new instead of cancelling the insurance policy. This can help you avoid paying the cancellation fees.

How to transfer insurance to a new car

You need to have the proper insurance in place to drive your new car, so it’s best to contact your insurance provider before you pick up the car from the dealership. Your provider should be able to give you a new quote based on details like the new car’s make, model, registration year, fuel type and mileage. You should also let them know when you intend to sell the old car and buy the new one so that they make the required adjustments to your policy. Most insurance companies charge you an admin fee to make these changes. Remember: if you’re unhappy with the new quote, you can cancel your insurance policy and get a new quote with other providers to find the best deal. Find and compare the cheapest insurance quotes today on Auto Trader.