When taking out a car insurance policy, under law, drivers have a minimum 14-day cooling-off period, during which time they can cancel the policy f
When taking out a car insurance policy, under law, drivers have a minimum 14-day cooling-off period, during which time they can cancel the policy for any reason. However, some motorists are unaware that if they choose to cancel their direct-debit it does not in turn cancel their insurance policy and as a result they still owe the remaining premium. “Cancelling a direct debit does not cancel your insurance policy,” Citizens Advice say on their website. “If you do this you will still owe your insurer the premiums.
“You must contact your insurer to cancel the policy.”
Many people decide to change insurers because they have found a better deal online, but it is worth considering the additional costs of coming out of your current policy and whether you will actually save money after these extra administration fees have been paid.
And Citizens Advice warn that the best option before switching is sometimes to wait until your current policy is due for renewal.
“If you are thinking of cancelling your policy because you’ve found a better deal with another insurer it may be easier and cheaper to wait until your policy is due for renewal and then switch,” Citizens Advice say.
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“Some policies are automatically renewed each year. It’s important to check when your policy is due for renewal so you can make sure that it is not renewed when you don’t want it to be.
“It’s a good idea to make sure you have a new policy in place before cancelling the old one so that you’re not left uninsured.”
The latest figures for car insurance suggest the average price was £472 for April to June this year, according to MoneySupermarket.com.
And according to GoCompare the average charge for cancelling a policy costs £60.85, however the comparison website found that prices for doing so have increased by 49 per cent over the last seven years.
If a motorists cancels within the 14-day cooling-off period they will be be eligible for a full refund, but Lee Griffin, founder and chief executive of GoCompare is unhappy about many insurers increasing their costs for carrying out an administrative task.
“The car insurance market is highly competitive, so rather than incorporating the costs of certain admin tasks into the basic premium, some insurers make other charges,” Griffin said.
“Our analysis shows that since 2012, the cost of some admin jobs has soared. And, the enormous range in costs between policies for the same tasks is inexplicable.
“Insurers should be upfront about any admin fees they charge.
“These should be clearly set-out in their terms and conditions, so drivers are aware of the full costs before signing-up to a policy.”