Home insurance is one of the most important safeguards someone can take as it protects what is probably their most valuable asset. But what if they find a better policy halfway through a contract—can they cancel their home insurance policy at any time? The answer is yes—but home insurance companies have different terms and while it is usually always possible to switch, there may be some penalties to consider.
Can I cancel my home insurance?
A policyholder can cancel their home insurance policy at any time—but they may have to pay a cancellation fee to do so. Sometimes this is waived if the cancellation happens within the cooling off period at the beginning of a contract.
The cooling off period is 14 days and starts from when the policy begins or when the customer receives their documents, whichever is later, according to the Citizens Advice Bureau. Some home insurance companies do still charge a cancellation fee during the cooling off period but it is usually lower than after this time. This is to cover the small number of days the policy was active and may also include an administration fee. The length of the cooling off period is explained when agreeing the policy or when documents arrive, but it should also be in the terms and conditions.
Cancelling after the cooling off period should be just as straightforward but may be more expensive. If the customer has made a claim during their policy year they may be expected to pay the full premium for the entire year, even if the policy is cancelled. That means a policyholder might be expected to continue making monthly payments even though they're not covered anymore; or policyholders who paid upfront are unlikely to get a refund if a claim has been made.
If no claims have been made, the customer should be able to get a refund for the time left on their policy but an administration fee and cancellation fee may be charged. This is usually between £25 and £50. If the policy was bought at a discount price, the provider may even cancel the discount and deduct that from the refund as well. For this reason it may be more cost effective to hold on until the end of the policy then switch.
There are many reasons why a customer wants to cancel their home insurance policy. It is not just when they have found a cheaper deal or are unhappy with the provider, but also if moving house or selling the home. If it is the case that the customer is simply moving house but is happy with the service, they may be able to transfer the policy to their new property. There may still be an administration fee to pay and the premium may rise depending on the area they are moving to and type of home.
The no claims bonus stays in tact if a policy is cancelled, but if they have cancelled before the year is up, the time the policy was active won’t go towards a no claims history as a full year was not completed.
How to cancel home insurance?
Cancelling a home insurance policy starts with contacting the insurance provider, either by phone or online. They will inform the customer of how much time is left on the policy, what refund they can offer, plus any cancellation and administration fees that need to be paid.
Top tip: Cancelling a direct debit does not mean the policy has been cancelled. The contract will still be in place and the customer will instead be racking up a bill that will need paying. It is also worth checking that the policy is not on auto-renewal. If changing providers, customers should look at when the policy ends to ensure it is not renewed. There is usually a window of opportunity to cancel an auto-renewal deal around the anniversary of the policy. It’s important to contact the insurer during this period as if the deadline is missed the customer may still be charged a cancellation and administration fee.
Regardless of whether the customer is on an auto-renewal contract, it is worth keeping a note of the policy anniversary and start comparing deals a few weeks ahead of its expiration.
A customer is wise to have a new policy in place before cancelling the old one so they are not left uninsured.
Once the customer has contacted their provider, they may be asked to make the cancellation request in writing. Only the policyholder can cancel the cover. Once the policy has been cancelled the customer should then cancel their direct debit, if they have one.
An insurance provider can cancel a customer's policy themselves. This is rare but happens if the customer hasn't kept to the terms of the policy, or circumstances mean it is more likely they will make a claim. This is usually only done when it comes to renewing the policy, rather than part way through a contract. However, if a customer is concerned they are being treated unfairly, they can contact the Financial Ombudsman.