Monthly or Annual car insurance payment if I will potentially be cancelling part-way through?

chrish2

Renewal due to start 14th Feb. It is £810 annual with Hastings or I believe around £930 total for monthly. £45 cancellation fee regardless of which I choose. I am looking to buy a new car this year but not sure when, could be 4 months or maybe 6 months into my policy.

Of course I will look at the cost of simply changing the vehicle on my current policy but realistically it wouldn't surprise me if it's cheaper elsewhere even including cancellation fee with how much insurance quotes fluctuate and how much they differ by company for the same vehicle. Loss of a NCD doesn't bother me as it's currently zero and I believe would be zero again even after the next year because I registered a claim in Dec 2019 and even though I didn't make a claim and the TP didn't they still keep it open for 6 months so it runs into my new policy.

Apparently they refund on a pro-rata basis for annual payments, is there any difficult in getting this refund back? Should I not risk it and just go for the monthly payments so I'm not chasing money and only have to sort the cancellation fee?

csgohan4

bare in mind monthly payments will cost you more overall, than paying one lump sum,

Even paying monthly and cancelling during the term, you may owe them money as pro rate is based on the full amount

forgotmyname

Unless its a short term policy its a yearly policy, your just borrowing the money to pay for it.

Paying monthly maybe adding 20%+ to the total price.

Have an incident or claim and the full premium maybe payable. But you may well find 60 days cover with a short term policy costs more than a yearly one anyway.

Zorillo

If you go for monthly payments you will owe them money when you cancel, rather than them refunding you. If you've got the money available to pay up front then there is no value in paying the monthly installments because you will have to pay interest. It's not a monthly premium that you're paying, it's the annual premium paid in monthly installments.

chrish2

Zorillo wrote: »

If you go for monthly payments you will owe them money when you cancel, rather than them refunding you. If you've got the money available to pay up front then there is no value in paying the monthly installments because you will have to pay interest. It's not a monthly premium that you're paying, it's the annual premium paid in monthly installments.

So I wouldn't get a refund if I cancelled after paying annually? I thought that's how pro-rata worked. E.g. cancel with 8 months left they would refund 810/12 x 8

I get that monthly payments are more but that's a given for paying in installments like with anything. Would I still owe them all the payments if I cancelled whilst paying monthly? Because if so why is there even an option to cancel?

Zorillo

No that's not what I said at all. If you pay annually, you will get a refund. If you pay monthly, you will not get a refund because you won't have paid the full premium.

chrish2

Zorillo wrote: »

If you go for monthly payments you will owe them money when you cancel, rather than them refunding you. If you've got the money available to pay up front then there is no value in paying the monthly installments because you will have to pay interest. It's not a monthly premium that you're paying, it's the annual premium paid in monthly installments.

Zorillo wrote: »

No that's not what I said at all. If you pay annually, you will get a refund. If you pay monthly, you will not get a refund because you won't have paid the full premium.

The total for monthly payments is about £120 more than annual, so £10 more per month on average across the year. Let's say I want to cancel in 6 months, I'll have paid an extra of about £60 more, would you do this for peace of mind in terms of not chasing Hastings for a refund of half of an annual payment?

Zorillo

I'd pay the annual upfront. The refund should be straightforward to obtain.

daveyjp

End calculation will be the same. Pay annually in full they may owe you something, pay annually via a loan from them which you repay monthly you may owe them.

However you are running before walking. Change the car then do the maths. I have never changed insurance when changing car. Sometimes there has been a small increase, sometimes I have had a refund.

kuratowski

This question is asked often. Very rarely does mention AvivaPlus, which is a monthly insurance, despite the fanfare when it was introduced. Ho-hum.