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

Car insurance firms must waive fees and allow delayed payments, says watchdog 
Shopping around for car insurance
News

Car insurance firms must waive fees and allow delayed payments, says watchdog 

The Financial Conduct Authority instructs car insurers to try and save customers money and allow deferred payments
15 May 2020
Average car insurance premium increases to £809
Car insurance policy laptop
News

Average car insurance premium increases to £809

The average cost of a car insurance premium has increased six per cent over the past 12 months, to £809
19 Apr 2020
Cat D and Cat C write-offs
Saab crash, insurance, smash
Tips & advice

Cat D and Cat C write-offs

A new write-off system has been introduced, but Cat C and D cars are still on the used market. We explain all.
11 Mar 2021
BMW, Mercedes and Tesla owners could be at risk of higher insurance premiums
bmw x5 m50d tracking front
News

BMW, Mercedes and Tesla owners could be at risk of higher insurance premiums

Raw, uncapped insurance group rating data could be used by insurers to increase premiums on various high-end cars
19 Jan 2021

Most Popular

New Volkswagen Touareg R 2021 review
Volkswagen Touareg R - front
Volkswagen Touareg

New Volkswagen Touareg R 2021 review

Our verdict as the Volkswagen Touareg R performance SUV gets plug-in hybrid tech
16 Apr 2021
New 2021 SEAT Ibiza facelift arrives with styling and tech updates
SEAT Ibiza facelift - front
SEAT Ibiza Hatchback

New 2021 SEAT Ibiza facelift arrives with styling and tech updates

The SEAT Ibiza supermini has been tweaked for 2021, with a new interior the star of the show
15 Apr 2021
New 2021 Audi Q4 e-tron on sale now, priced from £40,750
Audi Q4 e-tron - front
Audi Q4 e-tron

New 2021 Audi Q4 e-tron on sale now, priced from £40,750

Two body styles, three powertrains and four trim-levels confirmed for Audi’s compact Q4 EV, including a 295bhp quattro option
15 Apr 2021