On occasion, car owners have to cancel their car insurance policy, be it as a result of a medical condition, convictions leading to a disqualification, or simply because the car is no longer a viable proposition and is no longer roadworthy.
Within the small print of every car insurance policy is a series of conditions surrounding the cancellation of a policy.
The condition normally lays down the amount of the annual premium the insured can expect to receive back if the policy is cancelled before it’s year end. As an example, you may only receive the equivalent of say 3 months of the annual policy premium back if you cancelled your policy after only 6 months.
Running alongside any charges imposed by the insurance company, customers cancelling a policy can also expect to feel the additional burden of an administration fee imposed by the insurance broker, intermediary or administrator.
Generally, these additional administration fees are not clearly documented in either policy and/or covering letter and can vary from around £25 to as high as £55.
Insurers and intermediaries may however waive these costs in exceptional circumstances. For example, if an insurance company will not insure the replacement vehicle that has been purchased for whatever reason, they will usually offer a pro rata refund of the annual premium; namely, if your policy has been running for 6 months, you will receive 6 months of the annual premium back.
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