When cancelling car insurance, a cooling-off period is a specific duration of time after you accept a policy during which you can cancel it. There can be many reasons why you might cancel an insurance policy. It might not be right for you anymore, or you may sell your car. Whatever the reason, you can generally cancel your insurance policy within this cooling-off period and not incur any additional charges. This can, however, depend on the insurance provider, so it can be a good idea to read their PDS and FSG before committing to a policy. 

In this article, we define the cooling-off period, explain what it is, discuss what happens if you miss this period and detail the relevant cancellation fees you might incur. 

What’s a car insurance cooling-off period?

A car insurance policy cooling-off period is a duration of time immediately after you accept an insurance policy. This duration might vary between insurance providers, but it’s usually 21 days. So, what can happen in these 21 days? You can cancel your car insurance policy for starters. If you cancel your policy within the cooling-off period, you don’t usually incur any cancellation fees. During this time, insurance providers might also fully refund your premium and admin fees. 

It can be important to note that this period doesn’t apply if you’ve made a claim within those 21 days. Another important thing to note is that the cooling-off period usually also applies to car insurance policy renewals. So, every time you renew your policy, you may receive a cooling-off period. Some insurance providers might not actually offer a cooling-off period at all, so that’s something to consider when shortlisting providers.

What happens if you cancel after the cooling-off period?

Several things might occur if you cancel car insurance after the cooling-off period. The consequences can depend on the insurance provider you choose. Some providers are far more generous than others. Usually, you pay the driving premium and administration fees up to the date of your cancellation. If you’ve paid in advance, you might receive a refund for the premium paid past your cancellation date. Depending on the insurer, though, you might also incur a cancellation fee. Not all providers issue a cancellation fee, so it can be worth viewing their product disclosure statement before cancelling your car insurance.

If you cancel your car insurance policy after the cooling-off period, the insurer usually calculates the remaining credits and debits regarding your customer account. Your provider should notify you of your account balance. If you require a refund from payments made in advance, the provider should also notify you of the refund amount and date of payment. It can be important to remember that cancellation fees can be affected by whether you’ve claimed during your time as a policyholder. If you’ve made a claim, you might not receive a refund on premiums and administration fees, for example.

When can you cancel car insurance?

You can cancel your policy whenever you want unless your policy is compulsory third party insurance (CTP). CTP insurance, as the name suggests, is compulsory. In most situations, your cancellation date is when the company receives your cancellation request. Some insurance providers might charge you up to a specific date. For example, if you cancel in the middle of a month, the insurer may charge you until the end of that month.

If you’ve paid for your insurance in advance, don’t worry! It doesn’t usually matter when you cancel your policy. You typically receive a refund for the unused portion of your policy. For example, if you pay for an entire year’s premium but cancel after one month, you can generally receive a refund for the remaining 11 months worth of premiums and admin fees. This is usually a standard policy for insurance providers but check the product disclosure statement of any providers to find out their specific stance.

Can an insurance provider cancel a car insurance policy?

In some situations, an insurer can cancel your policy. If this happens, it’s usually because you’re liable for a policy breach or illegal activity. In this event, you might not receive any refunds, even if they cancel your policy during the cooling-off period. Below, you can discover the typical situations when an insurance provider might cancel your policy:

• breaching the insurance policy
• failing to make premium payments
• activating your policy outside of an agreed timeframe
• failing to keep your policy activated within an agreed timeframe
• making a fraudulent claim
• including false information when changing, renewing or entering an insurance policy

Why choose KOBA Insurance?

If you’re looking for an insurance provider with a flexible cancellation policy, KOBA Insurance could be an option. We offer a cooling-off period, no cancellation fees and full refunds for premiums and admin fees paid in advance. While we’ll be sad to see you go, we understand the importance of streamlined services and easy cancellation processes. If you’re looking for an insurance provider with great cancellation policies and competitive comprehensive car insurance, KOBA Insurance could be a great option. With the use of advanced tracking technology, we can identify the distances you travel and factor that into your premiums, along with an upfront fixed cost for coverage while parked. So, the less you drive, the less you pay.

Contact us today to see how we can help you. 

Any advice provided on this site is general advice only and does not take into account your individual needs, objectives or financial situation. Terms, limits, conditions and exclusions apply. Before making a decision, you should carefully read the Product Disclosure Statement & Financial Services Guide (PDS & FSG), and the Target Market Determination (TMD), which are available at KOBAinsurance.com.au to help you decide if the product is right for you. If you purchase a policy, KOBA receives a commission, which is a percentage of your premium, and may be entitled to a profit share if certain thresholds are met in agreed periods. Please ask us for more details.