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Ask an expert: ‘Can I avoid paying car insurance cancellation fees?’

Find out how to switch your switch your car insurance provider

Every week, Which?’s money experts answer your financial queries. You can submit your questions to money-letters@which.co.uk, or via our Facebook or Twitter pages.

Q: I took out a car insurance policy from Esure in November 2016. When I got my renewal letter in November 2017, I phoned Esure to find out whether I would be charged a cancellation fee if I decided not to stay with it for another year.

It told me that I would be charged a £55 cancellation fee if I didn’t renew the policy and moved to a different insurer. Is this correct?

Submitted via Which? Money magazine.

A: Many car insurance providers charge a cancellation fee if you decide to opt out of your policy before the full year is up – but choosing not to renew your policy is not the same as cancelling, so you should not be charged a cancellation fee.

Which? explains how to avoid fees when switching car insurers, and what happens if you cancel your policy early.


Can I be charged for renewing my car insurance?

Insurers cannot charge you a cancellation fee if you choose not to renew an expired policy. So, you can generally avoid fees by waiting until the end of your policy, and then switching to another insurer.

But be aware that some car insurance policies do include a renewal fee – especially those from online brokers. For instance, Hastings Direct and Saga both charge a £20 renewal fee, and Swinton charges £25.

These terms can vary depending on whether you pay monthly or in one lump sum, so check which fees and charges are included in the contract before signing.

The best time to start looking for a new deal is 11 months into your policy. Once you’ve found a deal you’re happy with, you can either take out a new policy or use it to haggle down the premium charged by your current provider.

Will I be charged a cancellation fee for switching providers?

Cancellation fees are charged when you decide to end your policy before its official end date. This fee is routinely around £50, though it varies by insurer.

As cancellation fees are part of the policy contract that you agreed to, you are obliged to pay it. However, if the new provider you’ve chosen is offering a policy that beats your current deal – even factoring in your cancellation fee – then it may still worth making the switch in the long run.

There are, however, some insurers who don’t charge any cancellation fees – meaning you’ll be able to cancel at any time without incurring charges. Age UK and NFU Mutual don’t charge for cancellation, renewal or cooling-off cancellation fees.

See the table below for the cancellation fees, cooling off cancellation fees and renewal fees of the 10 Which? highest-rated car insurance policies.

If you cancel an annual policy, you might be entitled to a refund on the premiums for months you haven’t used. This is generally worked out on a pro-rata basis. So, for example, if you cancel in July, but your annual policy lasts until December, you may be entitled to a five-month refund.

If you’re thinking of opting out of your policy early, bear in mind that February is the cheapest month to renew your car insurance. 

Do I have a cooling-off period for car insurance?

Initially, when you take out a new car insurance premium, or after it’s just been renewed for another year, you’ll have a two week ‘cooling-off’ period, giving you the opportunity to change your mind about it.

If you cancel during the cooling off period, your insurer can charge you an administration fee, as well as a pro-rata charge for the days you were covered.

Of the insurers who charge a cooling-off administration fee, most are much less than the full cancellation fee. LV, however, charges £40 both for cancelling during and after the cooling-off period.

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