Using the 21 days insurance trick

Student_debt_Hype

HI guys.

I recently just bought my first car! A banger, but its my banger none the less!

My insurance quotes have been fairly reasonable for someone who just passed their test last month. (I'm a 25 year old male). The insurance costs £930 a year for the insurance I got to drive my car away, which is fairly reasonable, most quotes my friends got with their first cars were £1400+. The insurance quote for 21 days in advance is £630.

My question is:

1. can I pay for this months insurance,
2. Get another insurance package that starts next month,
3. Cancel my current insurance (£40 cancellation) when the new one comes into affect?

Am I being naughty or even fraudelent?

Thanks for the advice!

AndyMc.....

Student_debt_Hype wrote: »

HI guys.

I recently just bought my first car! A banger, but its my banger none the less!

My insurance quotes have been fairly reasonable for someone who just passed their test last month. (I'm a 25 year old male). The insurance costs £930 a year for the insurance I got to drive my car away, which is fairly reasonable, most quotes my friends got with their first cars were £1400+. The insurance quote for 21 days in advance is £630.

My question is:

1. can I pay for this months insurance,
2. Get another insurance package that starts next month,
3. Cancel my current insurance (£40 cancellation) when the new one comes into affect?

Am I being naughty or even fraudelent?

Thanks for the advice!

Unless you've bought short term insurance you've bought a years policy not a month.

Aretnap

If the terms of your current policy allow you to cancel it, then there's absolutely nothing naughty about cancelling it, still less anything fraudulent.

Points to bear in mind:
(1) You only get No Claims Bonus awarded if you complete a full year's policy; you get no credit for a partial year. Though if you cancel after a few weeks that's not really a major consideration, but if you were cancelling after 11 months it might be worth finishing the policy to get a year's NCD rather than missing out for the sake of a month.
(2) You will have to pay the cancellation fee - so check the cancellation terms carefully and factor that into your sums
(3) If you make a claim (or have an accident which might result in a claim from a third party) while your current policy is live then you won't get any refund if you cancel it - or if you are paying monthly you will still owe the remaining payments (as above it's still an annual contract even if you're paying monthly). So make sure you drive carefully for the next three weeks.

As you've discovered it is quite common for car insurance quotes to be cheaper a few weeks before you want the policy to start than if you want the policy to start immediately, so it pays to sort it out well in advance - remember that when your renewal is due.

Herzlos

You'll lose £40 plus a pro-rata for the days you had the policy. Unless you're getting a huge reduction in premium it'll cost you a lot more, especially in the long run as you won't accumulate a no claims discount.

Cash-Strapped.T32

Can't see anything wrong with that tbh - it's usually cheaper to buy a policy that begins in a few weeks from the date of purchase, in this case 21 days (3 weeks) seem to be the sweet spot...

As long as the costs to cancel your existing policy doesn't outweigh the savings that the new one will save you, then go for it imo.
Be sure - you paid for the £900 policy upfront, right? Not monthly... Because those payments are actually a loan.

The op says he just got his first car, so we can be pretty sure he has only had it a day or two - I'm guessing he went to view the car, and had to buy insurance on the spot to drive it home. Now he's home, he can spend the time to get a decent price...

*edit* cross-post with a couple of posters above me

EdGasketTheSecond

You will lose a big chunk of that £930 as they don't refund pro-rata in case of cancellation. Find out how much you'd actually be refunded first.

Aretnap

Herzlos wrote: »

You'll lose £40 plus a pro-rata for the days you had the policy. Unless you're getting a huge reduction in premium it'll cost you a lot more, especially in the long run as you won't accumulate a no claims discount.

£630 vs £930 is a fairly significant reduction in premium.
He doesn't "lose" the days he had on the policy; he was insured for them, and just paid slightly over the odds for that insurance. Better than paying over the odds for a full year.
True he doesn't get any NCD for the partial year. That means he has to wait twelve and a bit months before he gets his first NCD, rather than twelve months - not really a major loss.


This assumes that, as he suggests, he's only just bought and insured the car. If he'd had his policy for many months the calculation would be different.

Student_debt_Hype

Hey guys! Thanks for the replies!

I am paying monthly. The insurance is £900 split over 12 months (so monthly payments of like £80). The cancellation fee is £40. I'm assuming the only fee I'm incurring is the £40 cancellation and any other admin fees that come with signing up with a new insurer?

In which case I'm likely saving £260 odd by switching. After the first month. I just want to make sure I'm not breaking any rules, and getting the best deal possible. I'm new at this, I have no idea Seems like such a scam that I can even do this and save so much!

Cash-Strapped.T32

Student_debt_Hype wrote: »

Hey guys! Thanks for the replies!

I am paying monthly. The insurance is £900 split over 12 months (so monthly payments of like £80). The cancellation fee is £40. I'm assuming the only fee I'm incurring is the £40 cancellation and any other admin fees that come with signing up with a new insurer?

There won't be any "admin" fees for signing up with a new insurer - generally insurers don't like there to be more than one company insuring a car at any one time (it's not illegal or anything, they just don't like it), but your plan is for the new insurance policy to begin as the old one ends, so that's not a problem...

But don't assume anything when it comes to what you'll pay the outgoing insurer.
You've said that you're currently paying monthly - what that means is you've actually bought a full year's insurance, and you've taken out a loan to cover the full amount... That's how pay monthly insurance works. Check very carefully & diligently with the company exactly how much you'll pay if you cancel the credit agreement - it's separate from the insurance policy.

Student_debt_Hype

I'm with 'Peoples Insurance' managed by Hastings.

The credit agreement part of the doc says

"If you or we cancel the policy at any other time, we’ll refund the part of the premium on a pro-rata basis for the period of cover that hasn’t been used minus our after 14-day cancellation fee and any other non-refundable fees".

This says to me I get a refund on whatever I haven't used to the day. So If I've used a month of my coverage, I get a refund for the remaining policy amount which would be roughly 10 and a half months (minus the 14-day period). Right?

You'd think someone somewhere would make a really simple arrangement and wording for people like me who are hopeless! :P

loskie

you need to realise that you DO NOT pay your insurance monthly. What you do do is make monthly repayments to the loan given to you which paid your annual policy off in one.