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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 8535
Experience:  I have been practising for 30 years.
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I recently broke my leg quite badly and so will not be able

Customer Question

Good Morning,
I recently broke my leg quite badly and so will not be able to drive for a minimum of 2 months, I consequently decided to cancel my car insurance which I have been paying for monthly and was told I would need to pay £600 to cancel?
I had already looked at the insurance ts and cs to work out whether it would be cost effective and would like a more educated opinion.
If I had the policy for the full term I would have paid a total of £1739.40 for the year, this is including interest charged for paying by direct debit.
I have so far paid a £400 deposit plus three instalments, one for £155.24 and two for £155.27 and the policy is 112 days old.
the ts and cs read:
GENERAL CONDITIONS
(Applicable to all Sections)
1. a) The Company or the Company’s duly authorised agent may cancel this Insurance by
giving not less than seven days notice from the date of the despatch of a letter to the
Insured at the last known address. The Company will refund a proportionate amount
based on short period rates as shown below of the premium for the unexpired Period of
Insurance. When such cancellation follows the failure of the Insured to pay the full
premium the amount returned to the Insured will be after deduction of premium at the
Company’s Short Period Rates for the time the Insurance has been in force.
(NOTE - no return of premium will be allowed where the Policy is cancelled by the
Company following the payment or potential payment of a claim under this Insurance. In
the event of the driver being deleted from the policy there will be no return of premium)
OR
b) The Insured or the Insured’s duly authorised agent may cancel this Insurance on the
date the request is received. Provided that there has not been a loss or accident likely to
give rise to a claim during the Period of Insurance, the Insured shall be entitled to a
return of premium at the Company’s Short Period Rates as shown below for the time the
Insurance has been in force.
Period not exceeding: 1 month 2 months 3 months 4 months
Amount payable: 25% 40% 55% 75%
Period exceeding: 4 months
Amount payable: FULL PREMIUM
You may cancel this Insurance within 14 days of:
a) The inception or renewal date
b) The date from which you received the contractual terms and conditions.
Cancellation will be effective from the date the request is received by us or our duly authorised
agent.
Provided there has been no loss or incident likely to give rise to claim you will be entitled to a pro
rata return of premium subject to a minimum charge of £50.00 plus Insurance Premium Tax.
Having the information provided what would you believe was outstanding?
thanks
Matthew
Submitted: 1 month ago.
Category: Law
Expert:  F E Smith replied 1 month ago.

You are not buying monthly car insurance, you are buying annual car insurance paid monthly and hence, if you cancel partway through the year, you still owe the balance of the year’s premium less what would actually be a very small discount for the period cancelled. Generally speaking, the amount you get back from cancelled insurance policy makes it not worth cancelling.

The policy is over 3 and less than 4 months old. That therefore is a period not exceeding 4 months

You have paid £710 of a £1739 policy leaving a balance of £1029 outstanding. You are obliged to pay 75% of the total premium which would be £1304 give or take some p which I have not bothered calculating.

So, on my calculations, you owe £303 or thereabouts.

If you had had the policy for another week, it would actually not be worth cancelling it because she would get nothing back.

Can I clarify anything for you?

Please rate the service positive so that I get paid. We can still exchange emails afterwards.

Best wishes.

FES.

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