Chances are that you took out your existing insurance policy with your car insurance company a while ago and haven’t put a second thought to your cover since. That shouldn’t overly surprise, given that nearly all car insurance policies are automatically renewed on a yearly basis.
In other words, as your first year with that policy elapses, the insurance will be automatically extended for another year – unless, in advance, you tell the insurer that you will be leaving it. There are various means of notifying your insurer in such a way, but which would be the best for you?
Reassuringly, your insurer will send you a notice of renewal – typically by post – before it further postpones your current policy’s expiration date. This notice will thoroughly detail the renewed policy, including the premium that you will pay for it.
As you scrutinise the details in the notice, you might get cold feet about continuing with the policy. Perhaps the company has increased your premium for, in your view, insufficiently good reason. Fortunately, you do have the option of switching to a different insurer that might charge less.
The process of lapsing your existing policy might be obvious – especially if, as is probable, the steps are detailed in the notice itself. The Which? website says that most companies allow a period of at least 21 days in which you can leave before the date of automatic renewal.
During that 21-day period, you should be able to relinquish the policy while incurring no financial charge for doing so. As detailed in a separate Which? article, one policyholder revealed that their insurer was set to impose a cancellation fee if the policy was not renewed. However, such instances are uncommon, as leaving a policy to expire is not the same as cancelling it.
It would be more typical to be charged a cancellation fee if you were exiting a policy before the current year of coverage had fully passed. Hence, if you are currently aghast at what you see in your renewal notice, going down the expiry route would be better than cancelling the policy immediately.
If you do cancel it, you can’t escape paying a cancellation fee that was included in the policy contract to which you agreed when you took out the policy. However, you might be eyeing another insurer offering a premium so low that, even if you pay the cancellation charge, you could save money.
When exactly should you start considering whether to switch? According to the Which? site, 11 months into your existing policy would be the sweet spot. However, if you are currently paying monthly for your insurance, you might benefit from planning even further ahead.
This is because some insurers will, a month before your policy’s renewal date, automatically take a particular amount – typically a month’s premium – from your account. This pre-renewal deposit, as it is called, effectively collects the first month of your renewed policy before you actually renew it.
This strategy is intended to encourage pay monthly customers to stay with the insurer for another year. Indeed, if you do stay, the amount of the pre-renewal deposit will be subtracted from the following year’s premium. It’s clear, then, that pay monthly customers can save money and avoid getting caught off-guard if they start assessing their options more than a month in advance.
If you allow your policy’s validity to roll over for another year but then quickly change your mind, maybe you could benefit from a 14-day cooling-off period? During this period, all insurers will enable you to cancel while escaping the usual cancellation fee, leaving you to pay just for what cover you have actually used. The cooling-off period is legally enforceable on any annual contract, so don’t allow any business to take advantage of your loyalty.
We have explained various ways of abandoning an existing policy, but this is only the first half of the switch-over equation. You would need to take up a new policy, too – and you can do that by applying for a new quote through our company, Call Wiser. We should place a strong emphasis on the fact that we are not an insurer, but instead an insurance broker. When you phone our team on 0333 003 3270 in your search for good-value car insurance, we will discuss what car you want to have insured and how the vehicle will be driven.
The questions that we ask at this point are intended to aid our perusal of quotes from the more than 30 leading insurers with which we work. We will aim to find a quote for a policy covering all of the right things while remaining as attractive as possible in price. Overall, from the point that we initially say “hello” on the phone, a competitive quote can be with you in a mere 10 minutes.
Nonetheless, as you make the transition from one car insurance provider to another, don’t forget to transfer your no claims bonus, as the Money Advice Service urges. A no claims bonus – otherwise called a no claims discount (NCD) – is something you may have built up over years of safe driving.
After every year in which you don’t make any claims, your no claims discount grows. Even after just one year, the premium price is slashed by an average of 30%, while 40% is the average trimmed off after the second year. After five years, the price reduction can reach 65%, making an NCD well worth preserving in your jump to a different insurer.
Even if you currently lack any NCD, we can still assist you in finding a financially rewarding policy. We would warmly welcome you calling us to apply for a Call Wiser insurance quote.