Don't get stung. Find out how to do it the right way.
Have things been on the rocks for a while? Is it time to break up with your car insurer? Here’s what you need to know before doing so.
You can cancel your policy at any time.
All you have to do is contact your insurer and tell them you want to cancel your policy. You'll usually have to serve out the rest of the month and pay a fee of $30-$40. But it's still better than sticking with an insurer that you're not a fan of.
Fed up with your current insurer? It might be time to switch
Are there any cancellation fees?
It depends on the insurer. There may be some cancellation fees, however there may also be cancellation refunds for unused portions of your premium.
If you cancel within the cooling-off period (typically within 14 days of taking out a policy) and have not made any claims, you should be able to get a full refund minus various processing fees.
Look below for a list of cancellation fees and refunds that are available with different Australian insurers.
| Brand | Cancellation fee | More info |
|---|---|---|
| 1300 Car Insurance | If you cancel the policy, a pro rata proportion of the premium may be deducted. If a claim was made under this policy, no return of premium will be made for any unused portion of the premium. | More info |
| 1st for Women | Cancellation fee of $40 | More info |
| AAMI | Cancellation fee of $30 for each car insured on the policy, plus FSL, GST and stamp duty if applicable. | More info |
| Allianz | If you cancel the policy, you may receive a refund of the unused premiums, minus reasonable administration costs. | More info |
| Australia Post | Cancellation fee of $40 | More info |
| Budget Direct | Cancellation fee of $40 | More info |
| CGU | No cancellation fee. If you cancel your policy before it ends, CGU will refund a portion of the unused premiums. | More info |
| Dodo | Cancellation fee of $40 | More info |
| GIO | Cancellation fee of $30, plus FSL plus GST plus stamp duty for each car insured on the policy. | More info |
| ibuyeco | Cancellation fee of $40.00 | More info |
| NRMA | Cancellation fee of $30, plus GST and any other government charges that apply. | More info |
| Ozicare | Cancellation fee of $40 | More info |
| QBE | If you've paid your premiums in advance, QBE will refund you the proportion of the premiums for the remaining period of insurance, less any administration fees. | More info |
| RACQ | If you cancel your policy, a portion of premium may be retained. A refund of the residual for the unexpired period, less the cancellation fee of $20 plus GST, the agency fee of $50 plus GST and any non-refundable government taxes or charges, provided that: no event has occurred where liability arises under the policy; and the residual amount is over $20. |
More info |
| Real | The cancellation fee is specified in your Certificate of Insurance. | More info |
| Virgin | Cancellation fee of $40 | More info |
| Woolworths | Cancellation fee is specified in the Certificate of Insurance | More info |
| Youi | Cancellation fee of $33, inclusive of GST. | More info |
| Huddle | Cancellation fee is specified in the Certificate of Insurance | More info |
When will I not be able to cancel my policy?
There are no situations where you cannot cancel your policy. If you want to cancel your cover, an insurer cannot say no.
However, cancelling your policy doesn’t necessarily get you off the hook for any payments you owe to an insurer, and will not necessarily entitle you to any refund.
What are the consequences of cancelling a policy early?
The main downside of cancelling a policy early, other than losing your cover, is that you may not be getting everything you paid for and may need to pay additional cancellation fees.
But there are still valid reasons for doing so. You may consider canceling your cover if:
- You only want short term car insurance (cover for less than a year).
- You’re switching car insurance.
- You’re selling or gifting the car, trading it in, moving overseas or for any reason don’t want to maintain your current car insurance.
Can I transfer car insurance policies to someone else?
Generally no. A new person will need to take out their own policy, so they can get their own pricing based on risk.
The exception is CTP insurance which can typically be transferred along with car registration in most states. For example, if you sell a car then you may be able to transfer over its current CTP insurance as well.
Can I transfer my policy to another car?
Yes. Many insurers will let you transfer your current policy to another car, although this may vary between insurers, and insurers are free to decline to cover your new car at their sole discretion.
If you do transfer your policy to another car you can expect your prices to change accordingly.
Generally insurers want to keep customers, so transferring your policy to another car can be done easily. Simply contact your insurer and ask.
Can I just wait for my policy to lapse?
Yes. Sometimes this may be the better option in order to avoid paying cancellation fees. But if you’re doing this you need to know whether or not your policy will automatically renew.
If it does then you may try asking your insurer to simply not renew it, or can remember to cancel your policy immediately before the renewal date.
Typically the cooling-off period also applies after renewals, as well as after taking out a new policy, so if you were caught by surprise with an automatic renewal you have a couple of weeks to cancel your policy for a full (minus administrative costs) refund.
What are the alternatives to cancelling my coverage?
If you want to switch car insurance, change your type of cover or otherwise discontinue your policy then cancelling is probably the way to go.
However, if you’re looking to reduce the cost of your current cover, or want to make adjustments, then you will not necessarily need to cancel it first. But depending on what you want to change, an insurer may tell you to cancel your current policy and then take out a new one with different terms.
Some of the things you may be able to change without cancelling your policy include:
- Your cover options and extras
- Your excess
- Your sum insured
- Your covered modifications and accessories
Other times, an insurer may be willing to waive your cancellation fee if you’re changing policies but not insurers. For example, if you want to upgrade from third party car insurance to comprehensive car insurance, an insurer may be happy to cancel your current policy and give you a new one without charging any fees.
Picture: Shutterstock
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