Car Insurance Query

ayers

Hello,

I have a hypothetical question. It's regarding if I took out a car insurance policy for the year and was paying the premium monthly. If I cancelled the insurance policy after the three months and had made three monthly payments, apart from cancellation charges, will there be anything else I would need to pay? Or will there still be an expectation that I will need to pay the outstanding premium cost?

Thanks in Advance

MattMattMattUK

ayers said:

Hello,

I have a hypothetical question. It's regarding if I took out a car insurance policy for the year and was paying the premium monthly. If I cancelled the insurance policy after the three months and had made three monthly payments, apart from cancellation charges, will there be anything else I would need to pay? Or will there still be an expectation that I will need to pay the outstanding premium cost?

Thanks in Advance

There would, but how much depends on the insurer and the contract. Some pro-rata refund monthly premiums based on full months, less a cancellation fee, some require the full amount to be paid, others do something in between. 

born_again

Many pay monthly on ins policies are actually a loan, so you have extra charges interest etc to pay.
Should be clear when you take out the policy if it is a loan as it will cite a interest amount for paying monthly.

DullGreyGuy

ayers said:

I have a hypothetical question. It's regarding if I took out a car insurance policy for the year and was paying the premium monthly. If I cancelled the insurance policy after the three months and had made three monthly payments, apart from cancellation charges, will there be anything else I would need to pay? Or will there still be an expectation that I will need to pay the outstanding premium cost?

Thanks in Advance

It depends....

1) Some optional extras generate no refund on cancellation and so you would need to pay the remaining 9 instalments of those

2) For a very short policy some will reprice the contract based on short term rates rather than annual

3) There can be multiple cancellation charges, especially if it's a broker and they are using a third party finance house to provide the loan

As you seem to be aware, unlike others, even if paying monthly its still an annual policy just you've been given a loan for the premium. It hopefully goes without saying but if a claim has been made on the policy then you will have to pay the full premium and can't cancel it mid term without paying the rest

ayers

Thank you MattMattMattUK, born_again and DullGreyGuy for your replies. It's greatly appreciated!