Do I cancel car insurance or not

arsenalboy

I have just given our second car to a relative because it is not being used anymore. Proper V5C transfer has been done and relative has insured car.
Because it is an old car our insurance was very cheap at 137 per annum. However, the breakdown of the premium is stacked in insurers favour because it included an arrangement fee as well as NCD protection and legal cover. Because the premium was paid upfront there technically is a 3 month refund due but that is only £17.
Now here is the problem as they charge a £55 cancellation fee which would mean I would end up paying £38 i.e., 55 less 17.
So the obvious thing to do is just let the policy run down and obviously not renew.
But what is the legal implication of having insurance on a car you no longer have and is there a chance this could be picked up by APNR which would show 2 policies on the car?

GrumpyDil

General advice is to cancel the insurance. Have you checked if there is any way to do this online as some companies allow on line updates FOC.
If not have you asked if they would waive the fee and just cancel it down and use the refund as their fee? 

Sandtree

The implication is that they remain the RTA insurer of the vehicle meaning if your relative were to have a fault accident your insurer would still have to pay out to any third party. This would mean you have two breach of contracts:
1) Non-disclosure - you haven't informed them of the change of ownership, registered keeper, where the vehicle is kept etc
2) Permitting a non-insured driver

As such the insurer would be likely to void the policy for fraud and then pursue you personally for the monies it has had to pay out to the third party. You'd have to declare the fact you've had a policy cancelled to all future insurers for the rest of your life. According to another poster on the Insurance part of the forum, their cancelled insurance has resulted in their car insurance to go from £300 to £5,000... they're yet to see the impact on their Home cover.

Obviously this is an outside chance but this is the risk you are running to save £38. Alternatively, don't do the transfer/gift until the day your insurance runs out (though imagine the extra road tax paid will be more than that

AdrianC

arsenalboy said:

I have just given our second car to a relative because it is not being used anymore. Proper V5C transfer has been done and relative has insured car.
Because it is an old car our insurance was very cheap at 137 per annum. However, the breakdown of the premium is stacked in insurers favour because it included an arrangement fee as well as NCD protection and legal cover. Because the premium was paid upfront there technically is a 3 month refund due but that is only £17.
Now here is the problem as they charge a £55 cancellation fee which would mean I would end up paying £38 i.e., 55 less 17.
So the obvious thing to do is just let the policy run down and obviously not renew.
But what is the legal implication of having insurance on a car you no longer have and is there a chance this could be picked up by APNR which would show 2 policies on the car?

ANPR will only show one policy - because the MID database only has one policy-of-record, and that's the first one.

If your relative does a runner from an accident, or doesn't insure the car, your policy will be the one that gets the claim.
Even if your relative does do everything by the book, you would still need to declare an accident on a car insured under your policy - and there is the likelihood that the two insurers would split the payout.

https://www.visordown.com/news/general/biker-may-be-forced-pay-thousands-after-banned-new-owner-has-fatal-crash

jimjames

It may be possible to leave the policy to end but without cancelling it and remove the vehicle. I did this in a similar situation when the cancellation was more than the refund.