Can I Cancel My Car Insurance If I Pay Monthly?
Table of Contents
Yes, you can cancel your car insurance even if you pay monthly, but you might still owe money. Monthly payments are not “pay-as-you-go”, they’re usually part of a credit agreement to spread the annual cost. So, cancelling mid-policy often means paying off the balance or a cancellation fee.
It’s always best to check the terms before you cancel.
Key points
How Monthly Car Insurance Works
When you pay monthly, you’re usually entering into two agreements:
- An insurance contract with the insurer
- A credit agreement with a finance provider to pay the full premium in instalments
This means if you cancel your policy halfway through, you may still owe money to the finance company, even if you’re not receiving cover anymore.
What Happens When You Cancel?
If you cancel mid-policy:
- You’ll be charged for the time you were covered
- A cancellation fee may apply (usually £25–£55)
- If you haven’t paid enough monthly instalments to cover what you owe, you may be billed the difference
If you’re within the 14-day cooling-off period, you can still cancel, but you’ll pay for the days insured and any admin fees.
What If You’ve Made a Claim?
If you’ve already made a claim (or someone has claimed against you):
- You’ll usually need to pay the full year’s premium
- You likely won’t get a refund, even if you cancel early
Alternatives to Cancelling
If cost is the issue, consider:
- Adjusting your policy (e.g. increasing your voluntary excess)
- Removing non-essential add-ons
- Switching to annual payment next time to avoid interest charges
Will cancelling affect my credit score?
If you fall behind on monthly payments after cancelling, it could. But cancelling itself won’t automatically impact your score.
Do I still have to pay the remaining balance after I cancel?
Yes, unless your refund (if applicable) covers the cost. Your finance provider may bill you directly.
Can I switch providers if I pay monthly?
Yes, but cancel your old policy properly and settle any remaining balance first to avoid penalties.
Will I lose my no-claims bonus?
If you cancel before completing a full year of cover, you won’t earn a no-claims bonus for that period.
In Summary
- You can cancel monthly car insurance, but it’s not the same as cancelling a pay-as-you-go service
- You may still owe a balance or fees after cancelling
- Making a claim usually means no refund and paying the full premium
- Always check your agreement and compare prices before switching
Thinking of Cancelling Early? Compare Car Insurance Quotes
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