Car insurance - Suspension VS Cancellation

speakman

Hi All,

Since I no longer have a car, I called churchill today to cancel my car insurance policy which 8 months left on it, and even with the £50 cancellation fee, I'll get just over £200 back.

Churchill suggested that rather than cancelling the policy I suspend it. They explained that in 8 months time I should call them just before the renewal date to either request a refund or take out another policy. Apparently this way I will avoid the cancellation fee and accrue a no-claims bonus. The only disadvantage appears to be that I have to wait 8 months to get the money back, and remember to get it before the renewal date, which is not currently a big issue for me.

I suppose in this climate it's possible they could go bust and I'd lose my money, but on the other side I don't think I'd make £50 interest on just over £200.

I'm still sceptical about this though, has anyone suspended instead of cancelled? Is there a catch?

cogito

I don't know if it's still current practise with insurers but there used to be provision for a policy to be suspended and an amount held to credit against future insurance. This only worked if there was an intention to replace the car at some future point.

I doubt there's a catch and you just need to make up your mind which is the most advantageous way of dealing with it. Make sure you return your cover note so they can't say that they weren't notified when you sold the car.

speakman

Thank you for your reply cogito.

I have a gut feeling that it it probably still current practise for a suspended policy just to be held as credit against future insurance.

I have received the suspension document in the post and there is no mention of a possible refund at the end of the period of cover. I think what the agent on the phone meant, but maybe didn't fully understand themselves is that I can cancel the policy at any time before its expiry date and receive a refund minus the cancellation fee and the used policy upto the date of suspension.

I'm going to call Churchill tomorrow to see if I can find out more, but it's likely I'll just cancel and forfeit the cancellation fee to keep things simple and close it off. I'll report back.