There can be many reasons why you might need to cancel a home insurance policy, but just how would you go about extracting yourself from such an agreement with the minimum of fuss and quibble?
Well, the answer is more straightforward than you might otherwise have imagined; that is if you’ve recently taken out the home insurance plan, as opposed to being in the midst of a term. More of the specifics later though, and first let’s understand what can lead us to seek to prematurely terminate our home contents and/or buildings insurance policies…
Habitually they can be anything from the most obvious ‘having second thoughts’ or finding a better deal after the event through to the unpredicted news that you’re having to sell your home due to a relocation abroad to take on a new job, as well as a plethora of alternative reasons and legit excuses…
The cooling-off period is the optimum, expense-free window in which to revise your home insurance policy
First things first though, and if – as hinted above – the policyholder has only recently (and by recently we mean, ‘very recently’) put pen to paper on a new home insurance policy deal then you won’t get a headache in your well starred process of wriggling your way out of it, quick smart. And that’s thanks to the widely-acknowledged ‘cooling off’ period which is offered pretty much everywhere these days when your make a decision to purchase something. Be it a brand new smartphone, a personal loan for a new car or indeed, a home insurance package which you’ve since had your doubts about.
In terms of timescale, ‘recent’ typically refers to 14 days after the date in which your insurance policy kicks in, or when you receive your policy documents, whichever is later. Whilst it’s not written in stone that you’ll recoup your total initial outlay, in most cases the policyholder will receive the lion’s share of it if requested in this well-documented passage of time. Essentially you’ll be handed a refund of any insurance premiums already submitted, less a proportionate amount to take into account the smattering of intervening days in which the policy was in effect. Again, this extends to any additional features the policyholder arranged to bolt-on to said policy. What’s more – although only roughly £15 more – the home insurance policy provider may charge a set-up fee to cover their costs. If you are considering taking this cause of action, then the sooner you do (within that 14-day cooling off period) the better for all parties.
Now for the bit where things aren’t quite as plain sailing, should you choose to cancel your home insurance plan. Although far from impossible, things tend to become a little more laborious if you choose to bring your home insurance policy to an abrupt and untimely end before the renewal date. Although quite how time and money-consuming depends on your insurer, yet rest assured in the majority of cases policyholders can expect to be in receipt of a pro-rata refund, assuming that they haven’t filed any claims during the last policy year.
So in effect, cancellation after 6 months should result in your home insurance provider reimbursing you with 50% of the premium, save charges for administration amongst other potential charges and fees. Invariably this is normally in the region of £35 – £50 and will be flagged up in the policyholder’s original paperwork to avoid any histrionics at a later date. Worth being aware that should you have been entitled to any discounts on a home insurance premium at the outset of the agreement, then the insurer is almost certainly going to terminate that and subtract this amount from any refund due too. And the potential to serve notice of a policy renewal service charge and/or any credit-card handling fees notwithstanding.
Always ensure that home insurance policy coverage is continued, even when in the process of changing providers, or risk compromising possession recall
This is where you really need to do your homework beforehand and brush up on the relevant facts and figures when comparing what you believe to be a more competitively-priced alternate home insurance deal with a rival insurance provider. The policyholder could easily fall into a deficit trap whereby they end up paying more in accumulative termination charges and fees which essentially wipes out any perceived savings they might have made by jumping ship at that particular juncture.
Perhaps it would make more financial sense to ride out the existing policy and then go elsewhere at renewal time? Having said that there are incentives out there aimed at tempting fence-sitting home insurance policyholders into biting the bullet, including numerous insurance providers who will willingly contribute £50 towards your cancellation fee with your present insurer so as to get you on board with them. Maybe that draw would be enough to convince the deliberators to make their move now rather than later.
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Another useful bit of advice would be to steer clear of the increasingly attractive proposition offered by many home insurance providers of auto-renewals. This system (which you have to opt in/out of at the inception of your policy) is a default setting which when instigated means your existing policy will automatically be renewed at the end of its current term; which could result in the policyholder inadvertently missing out on the annual window of opportunity for you to cancel your package free of charge. This manifests itself as your present policy nears its natural 12-month conclusion and buys you a couple of weeks to seek alternate means once the current plan expires.
So, it’s now come to the nitty gritty of the actual cessation of your current home insurance plan. Don’t, whatever else you do, just take it upon yourself to cancel your direct debit because this act alone doesn’t terminate your policy. You’ll remain liable for your monthly payments, which your insurer will hold you to, while they may even take it upon themselves to withhold certain agreement literature such as confirmation of your No Claims Bonus (NCB), until such time as you make full payment.
It may sound old fashioned – yet home insurance providers are a traditional lot in our experience – but the only way they’ll officially recognise and subsequently honour your wishes is when they receive notification of your wishes to cancel your policy in writing. Within this letter you must also clarify the exact date when you want the policy to end. Doing this along with cancelling your direct debit is the desired course of action, yet at the same time remembering to have a new home insurance policy in place to ensure no breaks in continued coverage. If there is, then this poses the very real risk of the policyholder finding themselves temporarily uninsured during this interim period which could mean you’d have no comeback, financially anyway, should your home/possessions within fall prey to loss, theft or damage.
So above everything else, timing is everything when it comes to cancelling your home insurance policy. As a footnote, buildings insurance is mandatory when you have a mortgage.