Can a car insurance company drop you?

Car insurance companies can cancel or refuse to renew your contract, find out why and what to do next.

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You can’t drive without car insurance, so finding out your insurer has refused to renew or has cancelled your policy can be a devastating blow. Find out why insurance companies decide to drop customers, and what you can do to avoid these pitfalls.

When is an insurer allowed to drop you?

There are a few reasons a car insurance company might drop you. Broadly, it will probably be one of the following four reasons.

Non-payment

If you’ve been failing to pay your monthly insurance instalments or don’t have the funds to pay for your annual premium, get in touch with your insurer. See if you can work out an arrangement.

If not, your provider has every right to cancel as long as it gives you due notice.

Non-disclosure

You’ve got to be completely honest when it comes to declaring any past claims or motoring incidents when you sign up for a new insurance policy. After all, your insurance and driving record plays a large part in deciding how much your premium will cost. So insurers won’t take kindly to exemptions. Even if you get the insurance in the first place, the provider may discover by using the central insurance database, CUE. It may then cancel your policy for failing to declare relevant information.

Unfortunately, even if it’s a simple case of forgetting or miscommunication, the insurer still has grounds for taking away your insurance.

Fraud

It goes without saying that fraud is pretty serious and depending on the offence, may be illegal too. Here are a few of the common types people commit in the name of car insurance.

Fronting

This is where an experienced driver states on the policy that they’re the main user of a car, but in reality a higher risk driver is the main user. A parent might put their son or daughter who has recently passed their driving test as an additional driver, for instance, when they’re the one actually using the car most. People do this to try to get lower premiums.

Crash for cash

This is when someone deliberately causes a collision. A driver might flash their lights to someone at a junction telling them to pull out then crash into them. Or they may slam on their brakes without warning so an unsuspecting person goes into the back of them.

Vehicle dumping

This type of fraud is when someone claims their vehicle has been stolen, but they’ve actually disposed of it or burned it themselves.

Other

There are other less criminally blatant types of fraud, so be sure to read your agreement and stick to it.

Telematics violation

In recent years insurance companies have begun offering telematics, or “black box” insurance. Drivers can really benefit from this, where you put a black box or use a telematics app which measures how fast you’re going, how far, and what time of day or night it is.

If you drive responsibly it can lower your premiums. Drive recklessly though, and your insurer may decide to cancel your policy.

How much notice do insurers have to give you?

The financial ombudsman, an organisation set up by parliament to sort out complaints between businesses and customers, says that you should be given at least seven days notice.

However in reality you might get less than this and it could vary, depending on who you’re insured with. Check your policy’s Terms and Conditions. How and why your policy has been cancelled will be included there.

What should I do if my policy is cancelled?

Firstly, get in touch with your insurer right away. You might find you were dropped due to a genuine administrative error or oversight.

If it stands by its decision, then you can get in touch with the financial ombudsmen if you think your policy was unfairly cancelled. It might decide you have a case and the insurer was too strict.

Maybe it was only one payment you missed? Or the information you failed to disclose wouldn’t have changed your premium in the first place. While this is processing, you need to try and get a new car insurance policy, as it’s illegal to drive without a basic level of cover.

How to avoid being dropped by an insurer

There are several ways you can make sure not to get dropped by your car insurance provider. Don’t commit fraud, make payments on time, and disclose every single detail about your driving and claims history.

Making sure your renewal is accepted can be more difficult. Where possible, try to:

    • Only make claims when you need to.
    • Drive carefully.
    • Follow the road rules.
    • Drive a sensible car.
    • Keep up with premium payments.

Frequently asked questions


*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (March '21). 51% of car insurance customers could save £228.60.
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