Cancelling Car Insurance

D_Walker

My daughter and husband are first time car owners and have today replaced their car, they had to sell the last one due to being ripped off and high insurance premiums.

They bought the insurance through 'YES' on the internet and have been paying £60+ each month for a car with a group 6 insurance. Today they have bought a car with group 3 but the insurance has only dropped by £10 each month. They were told if they cancelled, they would have to pay the remainder of the premium which has about 9 months to run.

Is this the norm? They have found they could get it much cheaper with other companies but will have such a lot to pay to end the current insurance.

Any advice would be welcome.

olly300

Wrong board.

However the answer is that car insurance is a 12 month contract.

What happens when you pay monthly is that a credit company lends you the money to buy the yearly insurance from the insurance company, and you pay them back. However as you are borrowing money you pay interest on the money lend to you which can be as high as 30% APR.

It seems from YES cancellation conditions that if you pay monthly and cancel your policy they charge the insurance you had at short term premium rates, which costs more.

Therefore the best advice is to always amend your policy with your current insurer so the new car is insured on it, and let the policy run to termination.

In future when your daughter and husband buy insurance tell them to read the terms and conditions in full before buying as policy documentation is available on the internet. Or if they telephone the insurance company they should ask these 3 questions plus any others:
1. How much does it cost to terminate the policy early?
2. How much is the administration fee if I change my car?
3. How much is the administration fee if I change my address?

That way they can work out if they are likely to do any of the above which policy is really the cheapest.

BTW if it's the first car they own then insurance will be more expensive. And ideally you want to pay for the insurance in one go or see if you can find a cheaper way of getting the money loaned to you.

In addition if you buy new insurance now it's cheaper than buying it in the summer as less people insure cars and houses as you get closer to Christmas.

terryya

You'll have to check the terms and conditions. I think most companies will let you cancel but usually charge for the privilege. However, although they let you pay in instalments you will have bought 12 months cover on credit, so I suppose they could chose not to refund

720 a year doesn't sound too excessive for new drivers, and there will probably be a cost for paying monthly included in that.

Also most of the risk is the damage you can do to other people/vehicles and a move from group 6-3 isn't that huge - so I think an approx 18% discount is ok.

I know hindsight is always 20/20 but you really need to do your comparing before you buy something.

Quentin

If they have made a claim during the insurance year then they must pay for the whole year.

Otherwise you can normally cancel mid term, subject to cancellation charges. Check the policy documents which will detail what is involved should you want to cancel.

If they do cancel, and haven't made a claim, then they won't get any NCD for the part year the policy has run.