Legal requirement to cancel car policy for car no longer owned?

Boberts44

Hi,

Are you legally required to cancel a car insurance policy when you sell?
I have not bought a new car so do not want to transfer policy to another vehicle and it costs more to cancel the policy than let it run out.
My insurance company is telling me I have to cancel it but won't provide a legal reason why.

Cheers ~ Bob

dalesrider

Well the danger is that the new owner does not insure it and you end up getting caught out for any claims.

Buzby

Not at all. If you want to pay for cover that you cannot use (because it would cost you more to cancel) go for it. The new owner will not have any benefit of the insurance in event of a claim, only that the vehicle will show up as insured on a police check IF they neglected to get cover, Neil your policy expires naturally.

Do make sure they will not auto renew it, bough!

InsideInsurance

Not only would your insurers potentially have to deal with it as Dalesrider says (as the RTA insurers of the vehicle) but they have a legal and contractual right to recover that outlay from you as the policyholder who has allowed someone not named on the policy to use the vehicle

lisyloo

Insurers have some responsibility to pay out under the RTA (Road Traffic Act) in certain scenarios. I believe this may also include if the car is stolen.

I am not aware of anything saying you HAVE to cancel, but you are clearly exposed to some risks if you don't.
The risks of something happening are small but the consequences are potentially devasting e.g. you could be sued for a 5 figure sum.

Enterprise_1701C

Will they not allow you to just suspend your policy?

mikey72

InsideInsurance wrote: »

Not only would your insurers potentially have to deal with it as Dalesrider says (as the RTA insurers of the vehicle) but they have a legal and contractual right to recover that outlay from you as the policyholder who has allowed someone not named on the policy to use the vehicle

OP has no authority to allow anyone to use the car, or not, as he is no longer the owner, so the insurer has no comeback.
The op has also informed them he no longer owns the car.
What the insurer won't do is allow a reasonable cancellation, of what would be the remainder of the policy, and are trying to charge more.
It would be more sensible for them to accept this lower payment, and mitigate their losses this way, rather than keep it on cover and expect to possibly pay out millions.

lisyloo

OP has no authority to allow anyone to use the car, or not

Agreed, but that won't stop theives taking it and the insurer being liable.

so the insurer has no comeback

So are you categorically stating that the insurer cannot sue the OP for not cancelling the policy and leaving them with a big payout.
Any source for that legal info?

What the insurer won't do is allow a reasonable cancellation

We don't know what the fee is, but the fee could potentially be reasonable in terms of the work they have to do and STILL more than the remainder of the policy.

and mitigate their losses

Why should an insurer face a loss because someone wants to renage on a contract?

InsideInsurance

By the mechanism of selling the car but not cancelling the insurance they have "allowed" others to drive it not covered by their insurance - allowed may not be the best word.

Most insurers, from my experience, do allow you to cancel early in these sorts of circumstances because of the RTA risks etc with a pragmatic view to cancellation charges -v- outstanding premiums

lisyloo

Perhaps armed with this information Bob can put this to the insurer?
i.e. if they don't allow him to cancel for free then they potentially face claims under the Road Traffic Act.

I personally don't see why they should face the costs for Bob deciding the sell his car, but in his shoes I'd give it a go.

mikey72

lisyloo wrote: »

........So are you categorically stating that the insurer cannot sue the OP for not cancelling the policy and leaving them with a big payout...............

He's already tried to cancel.
They refused to accept his cancellation, despite telling him had to, but being unable to quote any legal requirement. So they are aiding him to keep the policy running, and equally guilty.
Also as they know the risk, and the op doesn't, I doubt they could surprise him later. Actually make them 100%, as they haven't advised him of the risk they've decided to take.

And if they wanted to mitigate their losses, they should cancel, then sue for the oustanding fee, rather than leave open the possibility of a large payout.