01 August 2024
Car insurance cancellation laws in the UK: What to know
6 minutes
You can cancel your car insurance at any point in time. Whether you no longer need insurance or have found a better deal, there are steps you can take to walk away from your insurance provider. Before you do, however, it’s worth knowing a little bit about car insurance cancellation laws in the UK, including how they work and what they mean for you.
Here, we’ll familiarise you with the relevant regulations, provide a step-by-step guide on cancelling your insurance, and answer some of your most commonly asked questions.
Let’s get started.
What are the car insurance cancellation laws in the UK?
In the UK, the Financial Conduct Authority (FCA) regulates car insurance. The FCA Handbook has a chapter that deals with cancellation. Here are some of the key points you should know:
- Your contact comes with a 14-day cooling-off period. When you take out a new car insurance policy, you have a 14-day cooling-off period, during which you can cancel with a minimum of fuss. This period starts from the day you receive the policy documents or the start date of the policy, whichever is later. We’ll explore this in a bit more detail in a moment.
- You can still cancel after this cooling-off period. But if you do so, you may not get a full refund on premiums you’ve paid. Most insurers will provide a pro-rata refund for the remaining months of coverage, but they will likely deduct cancellation and administrative fees.
- It’s worth taking a look at your contract and other documentation. Insurers are required to clearly outline their cancellation policies, including any fees and refund calculations, in the policy documents provided to you. If you’re curious about how your insurer handles cancellations (there are often slight differences from one insurer to another), start by looking at your paperwork.
Can I cancel my car insurance at any time (UK)?
Yes, you can cancel your insurance whenever you choose.
You might want to cancel your insurance for any number of reasons. Perhaps you’ve decided to sell your car because you no longer need it or because you’re moving abroad. Maybe you’ve decided to declare it SORN. You might be unhappy with your insurer’s level of service or perhaps you’ve found a better deal elsewhere. Whatever your situation, the law is on your side and you can cancel any time.
The financial ramifications of cancelling your car insurance, as we briefly mentioned above, are largely dictated by when you cancel it. Whether you do so before or after the cooling-off period will make the biggest difference to what you pay and whether you receive a refund.
Cancelling during the cooling-off period
If you’re wondering, “Can I cancel my car insurance within 14 days?”, the answer is yes. The first 14 days after you’ve signed your contract is called the cooling-off period. It’s a two-week period that allows you to change your mind about the policy you’ve bought. Some insurers may offer a longer cooling-off period than the legally required 14 days.
If you cancel your car insurance policy within the first two weeks, you should be entitled to a full refund provided you meet the following two criteria:
- You haven’t made a claim on the insurance policy you’re cancelling
- You don’t have a pending claim on this policy
Some insurers may take off a small amount to cover the days you were protected, and may charge a small administrative fee, too. If they exist, these costs are almost certainly lower in the first 14 days than they are after the cooling-off period.
If you decide you want to cancel your insurance fairly early, don’t wait till the two-week limit. Contact your insurer straight away so that they can start the cancellation process with time to spare.
Cancelling after the cooling-off period
You’re likely to find that insurers have slightly different terms and conditions after the cooling-off period has passed. The only way to know exactly how your insurer handles this process is to check your policy documents or call them to talk it through in person.
Most insurers will charge an administrative fee if you cancel after the cooling-off period. And, while you might receive a refund, this will not be in full. Your insurer will more than likely deduct a certain amount from your refund for the period of time it covered you for.
How much is the cancellation fee for car insurance (UK)?
There’s no fixed amount for the cancellation fee you’re likely to pay when you cancel your car insurance. Your policy documents will detail your cancellation fees in full. But generally speaking, you might pay an administrative fee of between zero and £100 before the cooling-off period, and a standard cancellation fee of between £30 and £125 after the cooling-off period.
If you have black box insurance, you’re likely to pay quite a bit more to cancel your policy. This is because insurers need to cover the cost of installing the black box.
Note: You likely won’t be charged a cancellation fee if your insurer (rather than you) cancels your insurance policy. They might do this if they discover that you haven’t accurately disclosed relevant information or are guilty of insurance fraud. In this case, you probably won’t receive a refund either.
If I cancel my insurance, do I get a refund?
Whether you receive a refund of the insurance you’ve already paid will depend on your policy and, again, on whether you cancel before or after the cooling-off period.
- Refunds before the cooling-off period: While you might receive a full refund if you cancel your policy within the first two weeks, some insurers do charge for the number of days the policy was active. This means that you might not get the full amount back in your hands. And don’t forget, cancellation fees might apply.
- Refunds after the cooling-off period: Some policies might have a minimum retention period. If you cancel within this time, you won’t be entitled to a refund. However, most insurers will provide a pro-rata refund for the unused portion of your policy, minus any cancellation fees.
It’s worth noting that, if you’re nearing the end of your contract, you might only receive a small refund or potentially none at all. You will likely void your no-claims bonus for that year, too. And you probably won’t get a refund if you’ve made a claim within a certain period of time set by your insurer.
And if you have taken out any add-on policies with another insurance provider — policies like European cover or breakdown cover — you will have to contact those companies directly and separately. Your primary insurer won’t be able to cancel those add-ons on your behalf.
How do I cancel car insurance?
Once you decide to cancel your car insurance, the process should be relatively straightforward and painless. While it varies from insurer to insurer, you can expect to follow some or all of the following steps:
- Contact your insurer: Get in touch with your insurance provider through their customer service hotline, email, or online portal. Tell them that you’re interested in cancelling your policy and ask them about their specific cancellation process.
- Provide the necessary information: Your insurer will likely ask you for certain information, including your policy number, personal details, and the reason for your cancellation. You can speed the process up by having your policy documents to hand. If you’ve lost your policy documents, you should be able to find them through your insurer’s online portal, or directly from your insurer. Be careful, they may charge a fee if you ask them to find this information themselves.
- Supply written confirmation: You may need to send through a written confirmation or a signed form to process the cancellation.
- Pay the necessary fees: Be prepared to pay any cancellation or administrative fees that may apply.
- Look out for the cancellation confirmation: You should receive confirmation in writing from your insurer that your insurance has been terminated. When you do, read it through carefully to ensure that it is accurate and that you won’t be charged anything more.
What happens if you cancel car insurance? The final word
In the UK, the FCA oversees car insurance cancellation laws. In terms of these regulations, consumers can cancel their insurance at any time.
If you cancel your insurance before the 14-day cooling-off period comes to an end, you’ll likely pay little to no cancellation fees and might receive a refund in full. If you cancel after this time, you’ll likely pay both cancellation fees and will receive a smaller refund.
If you need help navigating car insurance cancellation and potentially finding a new provider, chat to the team at Howden. Between August 2023 and January 2024, 51% of new car insurance saved an average of £196 when they went through us. We’re here to help.
Also read:
READ MORE OF OUR CAR INSURANCE GUIDES
Cancelling your car insurance: FAQs
Should I wait for my policy to renew before I cancel?
If you want to cancel your insurance because you’ve found a better deal somewhere else, waiting until your policy is due for renewal is a good way to pay lower cancellation fees. If you haven’t claimed that year, you’re also likely to receive your no-claims discount.
That said, if you have found a significantly cheaper or better policy, the savings might outweigh any cancellation fees you could incur by switching straight away. Make sure you run the numbers in full.
If I cancel my direct debit, will that cancel my policy?
Cancelling your direct debit doesn’t cancel your insurance policy. In fact, this is likely to cause a fairly substantial headache, since it simply means that your insurer won’t receive the premiums they’re due. This may cause them to cancel your policy for non-payment, which will reflect on your credit report and can make it more difficult for you to get insurance in the future.
To cancel your insurance, don’t cancel your debit order. Instead, contact your insurer directly.
When should I take out another policy?
Don’t be left uninsured. If you’ve sold your car, or you’re declaring it SORN, you don’t need to have another insurance policy lined up. But if you’re simply switching providers, you should have another policy in place before you cancel your existing policy. Driving without insurance is illegal — make sure there isn’t a gap between cancelling one policy and starting another.