Cancelled Car Insurance: Prevention and Actions

March 1st, 2024
Cancelled Car Insurance: Prevention and Actions

What situations will result in car insurance being cancelled?

If you are found to have lied on your policy application, your driving licence is suspended, you are diagnosed with a medical disorder that renders you unfit to drive or you fail to pay your premiums, there is a very good chance that your car insurance policy will be cancelled. However, there are a number of other reasons why your car insurance provider would cancel your policy, and these are detailed below.

1. Not reporting an accident. If you are involved in an accident, no matter how minor, you must always report it to your insurance company. Not only will this safeguard you against a potential future claim by a third party, but this clause is written into the terms and conditions of your policy and therefore failure to adhere to it can result in your policy being cancelled.

2. Not notifying your insurer of any modifications to your car. A modification is more than fitting a tow bar or upgrading your vehicle’s suspension system. It can be as simple and minor as adding a roof rack. For this reason, you should always review your insurer’s drop-down box of relevant modifications prior to ticking the "No" button on your application form and ensure that you inform your insurer should you later add a feature that is classed by them as a modification.

3. Not notifying your insurer of a change of address. The risk associated with your new address will likely be different than that posed by your previous address and therefore it is in the terms and conditions to notify them of any change. However, this change may actually be beneficial to you financially if you have moved to a lower-risk area, as you would receive reduced premiums for the remainder of the policy.

4. Not notifying your insurer of a change of job. Some jobs pose a higher risk to the insurance company than others so you must always inform them when you change jobs, particularly if it is to a different industry sector.

5. Fabricating your annual mileage. An insurer will easily be able to tell by comparing your current mileage to that at your last MOT how many miles you have travelled, so it is always best to be honest. When you are a high mileage driver, you will be considered a greater risk due to increased time on the road, but lying about your mileage could result in having your car insurance cancelled so it is not worth the risk.

6. Lending your car to an uninsured driver. If you lend your vehicle to someone who is not a named driver on your policy, and who does not have Driving Other Cars cover under their own fully comprehensive car insurance policy, they will be deemed to be driving uninsured [1]. They are liable to receive both a fine and penalty points on their licence. As the owner of the vehicle, you too will be liable for a fine and penalty points, but you also run the risk of having your insurance cancelled.

7. Adding a named driver to your policy who will be doing the bulk of the driving. Known as fronting [2], the act of adding a named driver to your policy when in fact they should be the main policyholder is regarded as an act of fraud and has serious consequences. If you are discovered to have participated in this activity, your insurance policy will be cancelled, and you could be taken to court by your insurer.

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Does comprehensive insurance allow you to drive someone elses car?

Some comprehensive car insurance policies include Driving Other Cars cover. This allows the policyholder to drive an insured car that does not belong to them in an emergency but with Third Party Only cover rather than the fully comprehensive cover that applies to their own vehicle.

If someone were to drive a vehicle that was not their own on a regular basis, they should ask to be added to the car owner’s insurance policy as a named driver or take out their own temporary insurance instead to ensure that they are fully covered in the event of an accident.

Before getting behind the wheel of a car that does not belong to you, you must ensure that the vehicle is insured. If you do not have access to the insurance policy, then you must ask the owner to check car insurance is valid prior to you driving the vehicle. You also need permission from the vehicle’s owner to drive the car and you must be certain that your own insurance policy will cover you. Where any of these steps cannot be verified, do not drive the car.

How can I take out temporary car insurance?

If you wish to borrow a vehicle from a friend or family member, you may wonder, "Does fully comprehensive cover driving other cars?" As described above, you should only drive a car that does not belong to you if it is insured by its owner who has given you permission to drive the vehicle, and you are either a named driver on the policy or covered by the Driving Other Cars cover attached to your own fully comprehensive car insurance policy.

Not every comprehensive car insurance policy includes Driving Other Cars cover so you should always check your car insurance to make sure that you have the cover, and fully understand what it actually covers you for.

If you are unsatisfied with the level of cover but do wish to drive the vehicle, you would be wise to compare car insurance quotes to seek out the best price for the level of temporary cover that you need. Free Price Compare’s car insurance comparison tool offers a quick and easy way of comparing the policies that are available to you, allowing you to get on the road in the quickest possible time.

I had a minor bump but there is no damage, do I still need to tell my insurance company?

Yes. Even if you and the third party agree at the time that neither vehicle is damaged and therefore neither of you intends to raise a claim, you must still inform your insurer. Failure to do so could have serious implications. For example, if that third party later discovers damage which they believe to be attributed to the accident and raises a claim against you, then you must have previously informed your insurer.

What process does an insurance provider take when cancelling a policy?

The insurance company will write to you and advise you of their intent to cancel your policy. They will explain the reason why they are taking this action and provide contact details so that you can appeal the decision. They may, depending on the severity of the situation, cancel your policy with immediate effect, or provide a grace period to allow you to resolve the issue.

Unless you engage with them and are successful in repealing the cancellation, you will need to cease driving your vehicle from the stated end date of your policy. The only exception to this is if you are able to secure an alternative insurance policy.

I had my car insurance cancelled who will insure me?

There are many insurance companies that will offer cover to drivers who have had a previous policy cancelled. They will assess each individual on a case-by-case basis and consider the reason the previous policy was cancelled and how long ago it occurred in reaching a determination.

They may charge you more for your policy if, for example, they deem you to be high risk. Or they may possibly require that you pay for your policy in a lump sum payment instead of on a monthly basis. You will most likely need to shop around and compare insurance quotes in order to identify a policy that offers the cover that you need at a price that you can afford, and with terms and conditions that you can abide by.

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Must I declare a previously cancelled policy when applying for a new insurance policy?

Yes. Failure to disclose that you have had a previous policy cancelled would be considered non-disclosure and could result in the policy that you are seeking being voided. All insurance companies can access the Claims and Underwriting Exchange database which informs them of your previous incidents and claims and will use this to help them to determine the risk level that you pose to them.

After what length of time can I avoid declaring a previous cancelled policy?

The cancelled insurance policy will stay on your record for life, so unless an insurer specifies a time limit, such as 5 years, then you must declare the cancellation. You may be able to secure a more affordable insurance policy by only applying to companies whose time limit precludes your cancelled policy, as you will not need to declare your cancelled policy if it is out of their stated time period.

Can I contest a cancelled policy?

If you believe that your insurance policy has been cancelled unfairly, you should contact your insurer to discuss the situation. Explain your rationale and await their decision. If, after 8 weeks you have not heard back from them or their response is not satisfactory, you may escalate to the Financial Ombudsman [3] for a determination.

If you are successful and the cancellation is repealed, you must ensure that you keep a written record that confirms this to be the case. This is important to prevent issues from arising in the future.

You must not drive your vehicle while your insurance policy is cancelled unless you have secured cover from an alternative provider.

I’m struggling to afford my premiums, what can I do?

If you are finding it challenging to make the necessary payments to maintain your car insurance policy, you should in the first instance talk to your insurer. They may be able to offer a solution to help you, such as a payment holiday or temporarily reducing your premiums. Failing that, you could use the Free Price Compare car insurance calculator to seek a more affordable price with an alternative insurer.

If you are experiencing money worries and need specialist support, debt support charities such as StepChange [4] or the government-backed Money Helper [5] may be able to offer tailored support for money management. They will engage with your insurance company and other creditors on your behalf.

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How can I protect myself from having an insurance policy cancelled?

You must always be open and honest with your insurance company. You must answer all questions on the application form honestly and to the best of your knowledge. You must act in accordance with UK law at all times and refrain from dangerous or fraudulent behaviour.

If you are awarded penalty points or any other form of conviction, you must inform your insurance company immediately in order that they can re-assess the risk that you pose to them, and where necessary increase the cost of your premiums to compensate.

You must notify your insurer of any changes to your personal circumstances, such as a change of address or career change. You must also notify them of any modifications that you make to your vehicle, such as fitting a towbar or permanently tinting the windows.

You may consider fitting a dashcam which can protect you from false insurance claims by verifying your version of events, should you be involved in an accident or an incident that was not your fault.

You may consider fitting a telematics box to your vehicle to provide your insurance company with real-time stats on your driving in order to prove to them that you are a good driver. However, if you choose to fit a telematics box, you must remember that any poor driving behaviours such as erratic braking or speeding will also be visible to your insurer who may consider cancelling your policy as a result.

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