Can a Car Insurer Cancel My Policy If I don’t Pay?

Jan 18, 2018

What is the Problem?

This one comes from Dawn in Shropshire, and her question is:

“Can my insurer cancel my policy if I don’t pay?”

This goes a lot deeper than simply not paying, because Dawn had been paying monthly instalmens to spread the cost over the year. In the video you’ll find out how Dawn had her problem solved and what you may want to do in similar circumstances.

Your Due Diligence

Make sure you have all your receipts for payments made, the policy documents and so on. Keep the originals and only ever handover copies, no matter how much they plead.

The Outline Solution

  • If You pay in one lump sum each year.

Clearly the Policy cannot be cancelled for non payment if you have already paid it. However the Insurer can decide not to accept your business the next year if, for example, you have an argument and insult a member of staff. So long as something like that hasn’t happened then "no", they cannot cancel it.

  • If you Pay by Monthly payments.

The vast majority of car insurance, where paid monthly, is actually financed by a 12 month credit agreement. This means that you, the insured party, took out a loan to pay the premium in one lump sum (see above), and you repay the loan company capital plus interest to service the loan. So, while you may still owe the finance company for the loan – the insurance premium has been paid in full and where that is the case – you are insured.

Possible Arguments Against You

  • Monthly payments where no loan is involved.

In this case "yes", the insurer can cancel your policy in line with the contract in much the same that you can: usually by giving 30 days notice.

The Almost Legal Info

Returning the Insurance Certificate
Not many people will be aware of this, but so long as you are in possession of the Certificate of Insurance you are still insured. You can check this out with the Motor Insurance Bureau.

Need More Help?

Ultimately, it starts with you. If you’ve had enough and want to start making your point, or your insurance company simply will not listen to you, don’t think you are alone.

We’ve put together some examples of successful complaints, including letters, responses, and the strategies employed to get the point across. So, if you want a more detailed guide together with examples of letters you can send, please go to the ToolBox and check out the presentation:"How to Hold Corporations to Account".

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