Motorists pay £71.5m a year in car insurance cancellation fees

Drivers in the UK cancel 1.3 million car insurance policies each year, paying an average fee of £55 to do so

Motorists in the UK are paying a total of £71.5 million a year in car insurance cancellation fees, new data has revealed.

Drivers in the UK cancel around 1.3 million car insurance policies each year, according to data and technology provider LexisNexis Risk Solutions, while short-term insurance provider Cuvva says insurers charge an average cancellation fee of £55.

This fee can rise to as much as £155 if the driver is on a telematics policy and has to have a black box removed from their car. Charges usually apply when a policy is cancelled outside the 14-day cooling off window, but cancellations within this period can also be subject to penalties. A number of insurers offer a £25 cancellation fee inside the period, before increasing it to £50 outside the window.

Insurer

Fee within 14-day cooling-off period

Fee outside 14-day cooling-off period

Cuvva

£0

£0

NFU Mutual

£0

£0

Hastings

£0

£45

Direct Line

£0

£48.16 

AXA

£0

£52.50

Aviva

£25

£50

More Than

£25

£50

Saga

£25

£50

Admiral

£25

£55

RAC

£25

£55 

Elephant

£25

£55

Esure

£26

£60

Sheila’s Wheels

£26

£60

AA

£28

£58

LV=

£0

£40

Cuvva claims that many drivers aren’t aware of the cost of cancelling or adjusting a car insurance policy mid-term, accusing major insurers of hiding fees in the policy wording and catching drivers out.

Drivers are advised to ask insurance providers for a list of all additional costs and fees associated with a policy before taking it out. It’s also worth bearing in mind that more flexible monthly policies can make it easier to adjust terms, but annual policies may be cheaper overall.

Freddy Macnamara, CEO of Cuvva, said: “Insurance needs a radical overhaul. Insurers need to be transparent about the fees they charge and products need to meet customers' needs.

“Millions of UK drivers are between a rock and hard place. They’re locked into annual car insurance contracts because there aren't viable alternatives and are then penalised if their circumstances change and they end a policy early."

Find out why BMW, Tesla and Mercedes owners are at risk of higher insurance premiums...

Recommended

Why is electric car insurance so expensive? EV vs ICE cost analysis
BMW iX3
News

Why is electric car insurance so expensive? EV vs ICE cost analysis

We look into claims that electric cars face higher insurance premiums than ICE equivalents
22 Nov 2023
Cheapest cars to insure in the UK 2023
Cheapest cars to insure - header image
Best cars & vans

Cheapest cars to insure in the UK 2023

Looking for a car that’s cheap to insure? We’ve listed the cars with the cheapest insurance group ratings on sale in the UK today
9 Nov 2023
‘It’s about time car insurance prices were lowered’
Opinion - car insurance
Opinion

‘It’s about time car insurance prices were lowered’

Editor-in-chief Steve Fowler was shocked to find his car insurance premium had risen 44 per cent at renewal time
8 Nov 2023
'High Insurance premiums are forcing owners to scrap their cars'
Opinion - scrap
Opinion

'High Insurance premiums are forcing owners to scrap their cars'

Mike Rutherford is stunned that car insurance premiums have risen by an average 61 per cent in the past 12 months
5 Nov 2023

Most Popular

New Renault 5: price, specs, launch and on sale dates
Renault 5 EV concept at 2022 Goodwood Festival of Speed
News

New Renault 5: price, specs, launch and on sale dates

Renault’s reborn Renault 5 will start from €25,000 in Europe, suggesting a circa-£30k price in the UK. It's due on sale in the summer of 2024. Here's …
1 Dec 2023
New BMW X3 replacement to grow in size and feature a minimalist dash
BMW Neue Klasse SUV exclusive image - front
News

New BMW X3 replacement to grow in size and feature a minimalist dash

BMW’s first Neue Klasse electric SUV could carry the iX3 nameplate and our exclusive images preview how it might look
30 Nov 2023
New 2024 Dacia Duster: third generation of Europe’s best-selling SUV revealed
Dacia Duster - front
News

New 2024 Dacia Duster: third generation of Europe’s best-selling SUV revealed

Dacia has taken the wraps off the latest Duster, which arrives with a new look and fresh technology
29 Nov 2023