Do Car Insurers Charge for Cancelling?
Ever taken out car insurance, only to realise a week later that another quote popped up that's way more appealing? Or maybe you've sold your car and won't need cover for a whilst . So, naturally, you think, "I'll just cancel." But then, there it is: a cancellation fee.
Yes, most car insurers do charge you for cancelling a policy. How much? That depends on when you cancel, why, and who your insurer is. Some fees are small. Others will make you raise an eyebrow and mutter something under your breath.
Why Do Insurers Charge a Cancellation Fee?
It's not just about admin. Though yes, that's part of it. Insurers put time and resources into setting up a policy. If you cancel early, you're a top priorityly cutting that agreement short - and that can trigger costs they want to recoup.
From their side, it's a bit like booking a hotel, checking in, and then walking out after five minutes because you found somewhere with a better view. Technically your call, but don't be surprised by the invoice at the desk.
What Can You Expect to Pay?
- During the 14-day cooling-off period - Most insurers still charge a small cancellation fee, often labelled an "admin fee." You'll also need to pay for any days you were covered.
- After the cooling-off period - You'll likely face a higher cancellation charge, plus the cost of time spent insured up to the point of cancellation.
- Monthly payers - You may need to settle any remaining finance on the credit agreement used to spread the cost, not just the insurance premium itself.
Just imagine: you cancel on day 10 of your policy. You assume, "I've barely used it, I'll get most of the money back." Then you see a breakdown that includes a cancellation fee, 10 days of cover, and a finance settlement on top. Suddenly, switching insurers mid-month doesn't feel quite so clever.
Typical Fees by Scenario
Whilst every insurer is different, here's a rough idea of what some charge:
- Cooling-off cancellation: around 25 to 50
- Standard cancellation after 14 days: 40 to 65
- Mid-term policy changes (not full cancellation): around 25 to 30 admin fee
Of course, these vary massively between providers. Some waive fees altogether. Others apply them quietly in the fine print. That's why it's always worth reading the cancellation terms before buying; even if you're sure you're going to keep the policy.
What About Refunds?
If you cancel partway through your policy, you may get a refund for the unused portion; minus the cancellation fee. But don't count on a full refund if:
- You've made a claim (or even just reported one)
- You're on a non-refundable policy type (some budget insurers offer these)
- You're behind on monthly payments
Also, if you got a multi-product discount (like for combining car and home insurance), cancelling one might affect the price of the other. Sneaky, but not uncommon.
Can You Avoid Paying to Cancel?
It's rare, but possible. A few things might help:
- Look for policies with no cancellation fees (they do exist; just not widely advertised)
- Use the 14-day cooling-off period wisely if you change your mind early on
- Switch at renewal rather than mid-term to skip fees entirely
One driver realised they'd chosen the wrong level of cover within days of buying. Thanks to the cooling-off period, they cancelled and switched with only a minimal admin fee. If they'd waited another week, it would've been a much more expensive rethink.
Think Before You Cancel
Sometimes cancelling makes perfect sense - maybe you've sold your car, moved abroad, or found a quote that saves you a meaningful sum. But weigh up the savings against the cancellation charge. If the numbers don't stack up, it might be better to stick it out until renewal.
Click here to compare new car insurance quotes now - find out if switching mid-policy still makes sense and make sure you're not paying more than you may need to.