Changing To Cheaper Car Insurance

[chrissa1]

Can I change to a cheaper Insurance Company without incurring a Cancellation Fee? Surely, if I cancel my DD and switch, then that company will not continue to provide cover for me.

[sir.prize]

Your insurance premium is for a complete year and the DD payments are for convenience. Therefore if you cancel your DD you are still liable to pay the full premium.

[SpikeyBush]

Be careful. Are you paying monthly for your insurance? If so, your insurer is probably in bed with a finance house who paid them up front for the full year and it is the finance house that you are paying each month. So if you terminate your insurance mid-term, your insurers may keep an admin fee back out of the sum they reimburse.

It may still work out best for you depending on what you're paying and what deal you have subsequently found, but read all the small print and do your sums before making a final decision.

[Maydup]

Best to wait for the renewal now. Have a good look round in plenty oftime and get ready to switch at that stage. Be sure to cancle you old insurance though becasue even if you do not renew you still have to notify them of your cancellation in order to get a No Claims Bonus statament form them. You'll need this for your new insurer.

[SpikeyBush]

Your new insurer should give you a bit of a grace period to provide proof of NCD, you can then (if it works out beneficial) cancel with your current crowd and take out new insurance with the new crowd. I did this several times when relocating from one country to another as some moves were at rather short notice. I believe the two or three months Eddie51 refers to is when direct debits are returned unpaid as opposed to you asking your insurer in writing to terminate the policy. Eddie51 please do correct me if I am wrong.

But also bear in mind that you will end up losing out on some NCD if you cancel mid-term. If at last renewal you had 3 years NCD, and you cancel your policy after 11 months, you will still only have 3 years NCD whereas by keeping the policy until expiry (as long as you remain claim free) you would then get your 4 years NCD.

So many variables to take into account, make sure you do your homework.

[SpikeyBush]

So cancelling your DD is not the way to go about it. Check the small print and if it works out to be saving you money to cancel, call your insurer and follow the conversation up with a letter. Recorded delivery.

[twix123]

You have entered into a contract to pay for insurance for one year, therefore if you were to cancel the DD you would be breaking the contract.

Study your copy of the terms of business that should have been included with your documentation, you should see a clause something along the following lines (this is from a TOBA that I wrote for a broker):

"Cancellation
Policies vary between insurers but be aware that cancellation refunds are not normally given after a claim and are otherwise calculated on a short period scale weighted in favour of the insurers, as their costs are similar whether a policy has run for one day or a year."

Therefore unless the insurance has a long way to go, do not expect a large refund even had you paid for the full year. In fact you may be asked to pay a substantial amount of the balance due in order to cancel!

[flip_flop]

Eddie - it is not illegal to have two insurance policies on the same car.

If there were two policies and a claim was made, the common law principle of contribution will apply, whereby each insurer will share the loss in proportion to their respective premiums.

[chrissa1]

Thanks for all your answers folks. I'm going to go to the local office today to discuss the policy.
I did some quick quotes over the weekend, even to the company I'm with now and they all came in at £30/month less than I'm paying now.

[chrissa1]

My insurance premium has gone down from £51/month to £22.83/month!!!
When I asked why it was so much less now, I was told that when I took the policy out, premiums were much more expensive then. Yeah Right!!!

The moral of the story is: do a check on your premiums now and again.