Can I Cancel My Car Insurance Early?

Written by
Bruce Pitchers's profile picture
Bruce Pitchers
Content Manager NZ
Source: Tiko Aramyan/Shutterstock.com
Source: Tiko Aramyan/Shutterstock.com

If you've a car insurance policy you no longer want or need, can you cancel it early? And what happens if you do?

Key Points

  • You can cancel any insurance policy at any time.
  • If you have only recently purchased your insurance, your provider could provide a cooling-off period.
  • If you've paid for your insurance up-front, you should be refunded for the cancelled portion of your policy, although insurers can charge a cancellation fee.

Can I cancel my car insurance early?

Yes. Whether it be for your car or your cat, you can cancel any insurance policy at any time. However, some insurers may charge a fee for processing this cancellation.

If you've only just signed up for your insurance, and have quickly changed your mind, you cancel without any penalty and receive a full refund. Initial cooling-off periods are typically during the first 14-21 days of a policy.

What if I paid for the whole year upfront?

If you paid upfront you should be reimbursed any unused premiums. For example, if you paid for twelve months upfront, but are cancelling after just four, you should get eight months' worth of premiums back (less any fees). However, be sure to clarify this with your insurer.

Note that if you've already made a claim on your insurance the amount you get back may be impacted.

What happens to my car insurance if I sell my car (or home)?

Car insurance doesn't automatically stop if you sell your car. So, if you do sell your car either:

  • Contact your insurer and cancel your car insurance policy
  • Notify your insurer that you want to transfer your insurance policy to a new vehicle

The rule to remember here is that car insurance follows the car, not the driver. So if you buy a new car your old policy doesn't jump to the new car with you. It stays with the old car.

It's for this reason that your car is (typically) still covered under your policy even if your friend is driving it.

The same logic tends to apply to other insurable assets, such as a home. So if you're moving house, be sure to update your insurance policies. 

→Related article: Can You Sell a Car With Finance Owing?

How to cancel insurance

It should be pretty quick and easy to cancel any insurance policy.

Particulars on how to do so will vary between insurers but, typically, you can cancel your policy by visiting your insurer's website, signing into your account and following the necessary steps. Otherwise, be sure to contact your insurer for assistance.

→Related article: Car Insurance Renewal: What You Need to Know

Remember to organise any new insurance policies before you cancel!

If you're cancelling your insurance because you've found a better deal elsewhere, it's important you time things carefully. You don't want to find your car is completely uninsured for a time between policies.

A safe bet is to set the new policy to start one day before your old one ends. This way there will be no confusion about whether your car is covered.


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Bruce Pitchers's profile picture
Bruce PitchersContent Manager NZ

Bruce Pitchers is Canstar NZ's Content Manager. An experienced finance reporter, he has three decades’ experience as a journalist and has worked for major media companies in Australia, the UK and NZ, including ACP, Are Media, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. As a freelancer, he has worked for The Australian Financial Review, the NZ Financial Markets Authority and major banks and investment companies on both sides of the Tasman.
In his role at Canstar, he has been a regular commentator in the NZ media, including on the DrivenStuff and One Roof websites, the NZ Herald, Radio NZ, and Newstalk ZB.
Away from Canstar, Bruce creates puzzles for magazines including Woman’s Day and New Idea. He is also the co-author of the murder-mystery puzzle book 5 Minute Murder.

Important Information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.