Car Insurance Cancellation 101
Car insurance cancellation is a situation that many people have to come across. It is quite a simple process that should not be very complicated, however lack of information makes many people anxious about the process of car insurance cancellation.
In this article therefore we are going to look over some common questions that people face while cancelling their car insurance.
Can a car insurance policy be cancelled?
Absolutely yes. You can cancel your car insurance at any point. It does not matter what the maturity period of the policy is or how much you have paid already. It is always possible to cancel your car insurance.
How can car insurance be cancelled?
In order to initiate the process of cancellation of your car insurance policy, simply contact your insurance provider. You can do this in writing, on phone or through any other means of communication specified by your insurance provider.
If you are cancelling your insurance policy over the phone, make sure that you follow this by a written request as well and while on the phone, make sure you know who you are talking to.
Cancellation during cooling off period.
Cooling off period is a period of some days between 14 to 30 days during which the policy holder can cancel the insurance policy for any reason whatsoever. If a car insurance is cancelled during the cooling off period then the insurance provider will be required by law to accept the cancellation and provide a refund to the policy holder.
Depending on the terms and conditions, the policyholder may be charged for the time during which the policy was active. In addition to this the policyholder may also be charged for administration and processing costs related to the cancellation of the policy.
Cancellation after the cooling off period.
If an insurance policy is cancelled off after the cooling off period then firstly the policyholder will need to have a valid reason for the cancellation. Valid reasons may include declaring the car as SORN, selling off the car covered under the policy, or any other reason deemed valid under the terms and conditions of the policy.
Cancelling after the cooling off period also requires the insurance agency to refund the policy holder. Based on the terms and conditions of the policy, the refund may be given on pro rata basis minus any administrative and processing costs.
In general, cancelling the policy once the cooling off period is over, is not advisable because doing so will result in a considerable amount of cash outflow in terms of administration and processing costs. In addition to this you will also not get refunded for any additional coverage you may have applied for.
Cancellation after making an insurance claim
It is possible to cancel the insurance policy after an insurance claim has been made. Your refund may get significantly reduced, as the insurance provider will deduct the outstanding amount for the claim.
Cancellation cost dispute
While it is legally possible to initiate a dispute over the cancellation costs, it is advised to be very careful before doing so. Why? Simply because insurance companies are large corporations with access to qualified lawyers who help them draft their policies. Therefore it is highly likely that the costs they have calculated have been mentioned in the terms and conditions,
Therefore before raising any dispute, go through the policy documents, any communication between you and the insurance agency and the terms and conditions. If you feel that you are being unjustly charged then by all means you should first approach your insurance provider.
If the issue can be dealt with amicably by negotiating with the insurance provider, then it will be good for both parties. If this does not work out then you can file a complaint with the Financial Ombudsman.
New car and insurance woes
One major issue that car owners and policyholders come across is the question about what will happen to car insurance policy if the policy holder buys a new car and replaces the old one that was covered by the policy?
The answer to this question depends once again to a large extent on the terms and conditions offered by your existing insurance provider. Most insurance providers allow policy holders to transfer their policies from their old car to a new or replacement car, without any hassle. However the insurance premium may increase or decrease, depending upon the change in risk profile. If the new car is safer and cheaper, then the premium may go down. If however it is expensive and/or risky in terms of road safety then the premium may go up.
Cancellation of policy in case of disposing off the insured vehicle.
If you are selling your car and do not intend to buy another car, then it is strongly advised to immediately contact your insurance provider and cancel the insurance. There is no point in not cancelling it because you may be liable to pay for a claim if the person who buys your car gets into an accident.
Insurance provider has cancelled the insurance policy.
Normally insurance providers do not cancel insurance policies, as this is how they earn their revenue. However in the unlikely scenario where an insurance provider cancels the insurance, instantly look out for another insurance provider to get your car insured as it is too risky to leave a car uninsured, even if it is parked and not being used.
No claim credit
If you cancel your insurance policy, then you will lose your no claim credit. There is no way to get it refunded.
Many car owners make the mistake of auto renewing their car insurance each year as soon as it ends. This is not a very wise thing to do, simply because insurance rates keep changing and therefore it is better to look for better rates before continuing with your current insurance provider.
The questions we have discussed in this article are some of the most frequently asked questions when it comes to cancellation of car insurance. Hopefully this article will leave you better informed and in a position to take better decisions when it comes to your car insurance. If you have any questions that we have not covered then please let us know.