Car insurance Monthly Payments

[nam]

Hi All,
i have a car which is leased and goes back in August or September. The Insurance currently expires in July. I don't want to commit to paying annually if i can't get the pro-rata back from the insurance. Anyone know what the penalties are if you cancel take-out a monthly policy after 30 days ? Anyone done something similar ?

 

[Kenai]

Generally with insurance policies, if they're 'monthly payments' then it's just an annual policy being paid off via finance - it's rare that they're actually 'monthly policies'.

Most companies will pro-rata refund a year long policy though, subject to cancellation fees etc. which is what you need to pay attention to up front really.

 

[StevieP]

Make sure you ask the question regards cancellation - some insurers will charge on whats called "short period rates" which can be as much as 30% for your first month and then 10-15% per month thereafter (and zero refund if you a) have a claim and b) go past 8 months of cover!)

 

[Avalon]

You’ve asked a question we simply we can’t answer based on the information you provided and even then you’d still be better off checking your specific policy. Monthly policies are very, very unusual, what you are doing when you ‘pay monthly’ is taking a loan out to pay for an annual policy. Insurers generally use different underwriters, each insurer will usually charge an admin fee, each underwriter may have different cancellation terms/fees, also as you’re financing it monthly, the finance provider may have another set of terms/fees.

Ask your insurer when you take out the policy what the short notice cancellation/admin fees are, also consider if it would make more sense to move cover over to your next vehicle.

 

[danlightbulb]

Is there a 14 day cooling off period with insurance? If so you could run concurrent policies, cancelling each within 14 days.

 

[Semple]

Hi All,
i have a car which is leased and goes back in August or September. The Insurance currently expires in July. I don't want to commit to paying annually if i can't get the pro-rata back from the insurance. Anyone know what the penalties are if you cancel take-out a monthly policy after 30 days ? Anyone done something similar ?

What do you plan to do after August/September? Have you got another car lined up?

Did the insurance not start at the same time as the lease?

As others have said, you really need to pay special attention to cancellation costs.

 

[stoofa]

Just to go a step further with regards the monthly insurance - it's actually a legal requirement that insurance is paid for in advance. So if you're buying a 12 month policy and are paying monthly, you've paid for the insurance upfront on finance and it's the finance you're paying back each month, not the insurance.
Sorry - know that has more or less been said above, but just wanted to say it isn't insurance companies being difficult, rather a legal requirement.