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 legal firm LexisNexis, while short-term insurance provider Cuvva says insurers charge an average cancellation fee of £55.
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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.
For example, LV= charges a £40 cancellation fee both within and outside the 14-day window. A number of other insurers offer a £25 cancellation fee inside the period, before doubling it to £50 outside the window.
Fee within 14-day cooling-off period
Fee outside 14-day cooling-off period
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."
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