Can you cancel car insurance?

Although you buy an annual car insurance policy, you’re not tied in for a year. You can cancel car insurance any time. But to do this, you’ll usually have to pay a fee.

The car insurance cancellation fee varies across insurers, there’s no fixed amount. Some insurers may not charge a fee and others may charge over £100. But as an average, you can expect to pay around £50. You won’t be eligible for any no claims bonuses you’ve accrued if you cancel early. If you took breakdown cover or another add-on as part of your policy, the cost of this may not be refunded.

Do you get a refund of premiums?

If you paid for your policy up-front, the insurer will work out a pro-rata refund. They’ll deduct the premiums for months you were insured for, as well as any cancellation charges. You’ll be entitled to a refund for the remaining amount.

Depending on how long you have left on the policy and the amount of cancellation fees, any charges could cancel out a refund.

If you make monthly payments for your car insurance, you’re unlikely to receive a refund.

Can you cancel car insurance within 14 days?

The good news is that if you change your mind about a car insurance policy within the first 14 days, this qualifies you for a refund with no fee. Insurers have to offer a 14-day cooling-off period when you take out a policy. Although you won’t pay the usual cancellation fee, you may be charged a small admin fee.

Although you won’t have to pay a cancellation fee, insurers can still charge you for the days you were insured (even within the cooling off period), so you may not get your full premium amount back.

Can black box insurance be cancelled?

Black box insurance policies can be cancelled but tend to be more expensive as insurers need to cover the cost of installing the black box equipment. They may also charge an additional fee if you want to remove the black box equipment from your car.

With Admiral car insurance, you don’t need it removing as they can deactivate remotely, but they will charge around £100 if you choose to have the LittleBox (their black box) removed.

Cancelling your policy if you’ve made a claim

You can still cancel car insurance after making a claim, but there may be some different conditions attached when it comes to getting a refund.

If you paid the annual premium in one payment, you won’t usually get a refund. If you pay monthly, the insurer could ask you to pay the rest of the year’s premiums up-front before you can cancel.

Cancelling after selling your car

When you sell your car, you should let your insurer know straight away. You don’t have to cancel your car insurance as you can transfer your policy to your new car. There may be a fee to make the change and it’s also worth checking you can’t find a cheaper policy elsewhere.

If you’re not buying a new car, you still need to let your insurer know so they can cancel your policy.

How to cancel car insurance

The process for cancelling car insurance will be written in the terms and conditions of your policy. It varies depending on your insurer. If you want to cancel car insurance and you pay monthly, always follow the process, don’t just cancel your direct debit. You must contact your insurer to let them know you want to cancel or they could take action to recover outstanding premiums.         

Some insurers will need your cancellation in writing. Others will let you cancel your policy over the phone.

If your insurer cancels or voids your policy

Insurers can cancel or void policies for a number of reasons. It could be because of non-payment of premiums, changes in your situation or not sharing important information with them.

If the insurer does cancel your policy, whether you get a refund of premiums depends on the reason for cancellation. Check your policy documents for the terms of your policy. It can also be more difficult to get car insurance in the future if you’ve had a policy cancelled by the insurer or you may have to pay higher premiums.

If you've ever cancelled your car insurance early, how was your experience? Leave a review and let us know your feedback about car insurers to help others make an informed choice about the policies they’re considering.