Temp cover - 12 months policy then cancel?

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Ant555
Ant555 Posts: 1,569 Forumite
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in Insurance & life assurance
I am looking for temporary (occasional use) car insurance for my daughter for around 7 weeks over christmas and it might be that the cheapest option is to take out a policy in her own name on my car and cancel just before 2 months is up.

Does anyone know if cancelling a policy will have any future implications for her - or even me if its against the car? and if I decide to go down this route then I guess paying monthly is the better option rather than upfront and claim back?

Any advice on any pitfalls to avoid are welcome.

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  • wongataa
    wongataa Posts: 2,634 Forumite
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    There are no issues if the person who takes the policy out cancels it. The problems happen if the insurance company cancels it.
  • mgfvvc
    mgfvvc Posts: 1,185 Forumite
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    Ant555 wrote: »
    I am looking for temporary (occasional use) car insurance for my daughter for around 7 weeks over christmas and it might be that the cheapest option is to take out a policy in her own name on my car and cancel just before 2 months is up.

    That seems unlikely to be cheap. Even if your daughter has substantial NCD, she won't be able to use it both on her own car and on your car.

    Cancellation costs from insurers can be quite high. You are unlikely to be able to simply cancel a policy after 2 months and only be charged 1/6 of the annual cost.
    Ant555 wrote: »
    if I decide to go down this route then I guess paying monthly is the better option rather than upfront and claim back?

    This approach will not allow you to just cancel the policy and stop paying. There is a strong probability that there would be a significant bill from the insurers at this point.
    Ant555 wrote: »
    Any advice on any pitfalls to avoid are welcome.

    I believe that the approach to cancellation would be that the insurers would work out what they would have charged for a short term policy and refund/bill the difference. This is precisely to avoid people using annual policies plus cancellation as a cheap alternative to a short term policy. The risk of this approach is that you won't know what the total cost will be until you come to cancel.

    Have you discussed with your insurer whether they could add your daughter temporarily for a reasonable cost? The last time I added a temporary driver it was shockingly cheap, something like £1.50, but that was for a single day.
  • Ant555
    Ant555 Posts: 1,569 Forumite
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    edited 5 December 2017 at 4:15PM
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    mgfvvc wrote: »
    This approach will not allow you to just cancel the policy and stop paying. There is a strong probability that there would be a significant bill from the insurers at this point.

    Have you discussed with your insurer whether they could add your daughter temporarily for a reasonable cost? The last time I added a temporary driver it was shockingly cheap, something like £1.50, but that was for a single day.

    She does not have own car and is home from Uni

    Tried to add as a named driver and eSure told me that young driver under 25 cannot be added within the first 6 months of a policy start date - which is not what they said when I took it out in September (I specifically asked the question when I took it out so I am slightly peeved at this!)

    I'll check cancellation costs but an annual policy for her with zero NCD is averaging at £1200/year so at £100/month + cancellation fees this is a reasonable cost. Temporary insurance seems to be averaging around £50/week for someone of her age and limited driving experience.

    It might be cheaper for me to fund her Uber account for the duration.

    Thanks for the advice
  • Aretnap
    Aretnap Posts: 5,222 Forumite
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    Ant555 wrote: »
    and if I decide to go down this route then I guess paying monthly is the better option rather than upfront and claim back?
    It will make no difference - assuming you have the cash to pay up front. With rare exceptions "paying monthly" doesn't mean that you have a rolling monthly contract - it means that you have an annual contract and you take out a loan to enable you to pay the annual premium up front. If you cancel the policy the loan still needs repaying. Some of the repayment will come from the refund (if there is one), but you may still have more to pay to cancel. Generally speaking paying monthly doesn't mean that you can cancel on better terms than paying annually.

    One thing to be aware of is that if she makes a claim on the policy she won't get any refund on cancellation (or if she's paying monthly, the whole year's premium will be due on cancellation), so if you go down this route make sure she drives carefully!
  • forgotmyname
    forgotmyname Posts: 32,569 Forumite
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    £1200 was that declaring she is not the owner or registered keeper of the vehicle? sounds cheap.

    Paying monthly is probably not better because your paying the full premium say £1200 + interest for the loan you took to pay the £1200.

    Sometimes the interest rate is around the 30% mark to pay monthly.
    Censorship Reigns Supreme in Troll City...

  • Blibble
    Blibble Posts: 503 Forumite
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    As above, if you pay monthly you'll still be liable for the charges which would have been made for the interest for the remaining 10 months. You would also be liable for the cancellation charge, if applicable.

    It's a case of whether:

    2 months premium + cancellation charge (+ interest, if monthly) > short term cover for 7 weeks.
  • mgfvvc
    mgfvvc Posts: 1,185 Forumite
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    Ant555 wrote: »
    (I specifically asked the question when I took it out so I am slightly peeved at this!)

    A formal complaint might persuade them to honour whatever they told you at the start?

    I'm not sure how likely that is, but it might be worth trying?
  • Ant555
    Ant555 Posts: 1,569 Forumite
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    Thanks to all that replied - to complete this thread incase anyone ever searches on it in the future...

    I decided to keep it simple and purchase 28 days cover from Marmalade (we had learner driver cover with them so they offered a discount)

    My original thoughts about paying monthly/upfront was not to avoid paying what I owed but if I were to cancel then insurance Co would say 'you owe us £x' and I would send it to them rather than me trying to claim money back which might have taken time. However, in my case, the savings for 1 or 2 months insurance were not sufficient to outweigh the potential hassle in the event of a claim.
  • Ant555
    Ant555 Posts: 1,569 Forumite
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    forgotmyname wrote: »
    £1200 was that declaring she is not the owner or registered keeper of the vehicle? sounds cheap.
    .

    Yes, all questions answered properly and it was so cheap for this cover that I ran the same comparison with a different email address on a different lap top and it came up the same.
    As my Sept 17 renewal invitation/confirmation of NCB has her listed as a named driver, the Insurance Co in question were prepared to accept this as proof of one years NCB.
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