Car insurance companies often feign surprise when customers complain about the wide range of costs and fees which are enforced should anyone wish to change or cancel a policy mid-term.
Insurers will refund some of your premium payment on a pro-rata basis (you only pay for the time the policy has been in force) if they are not prepared to insure your new vehicle, but if you cancel the policy mid-term because you have sold the car, or simply want to switch to another insurer, they will impose cancellation charges to cover administration.
Costs can vary enormously and although one would think that the insurance representative simply needs to press a button and the rest is done automatically. This task should take a matter of seconds yet insurers charge anything up to £50 for pressing this button!
It is not always easy to establish this element of the cancellation charges so you may need to ask your insurance company’s customer service representative when cancelling the policy.
Whilst most insurers do include reference to administration fees being charged in the event of cancellation, not all do. As an example, Elephant.co.uk do not mention that you will be required to pay an administration fee on cancellation of their policy.
It is always worth asking the insurer to provide you with a full breakdown of any cancellation charges including any administration fee charged. If the fee seems excessive and unjustifiable, then contact their complaints department and if you are unable to resolve the matter to your satisfaction, consider taking the matter further.