Prematurely cancelling your car insurance policy may incur negative consequences, so it is worthwhile to ask yourself the following questions.
Do I have to cancel my insurance when purchasing a new car?
No, you are not under obligation to cancel your existing insurance when buying a new car, as most insurance companies allow you to update your policy with your new vehicle’s details.
In most cases there are no additional charges for doing so except the premium may increase or decrease depending on the risk score of your new car. If you are unhappy with paying a higher premium it might be worthwhile to obtain quotations from other insurance companies.
How long is the “cooling-off” period?
According to the National Consumer Protection Act, insurance companies in South Africa are obligated to offer you a 7-day “cooling-off” period, which allows you to cancel your policy for whatever reason. For example, you may have found a cheaper quote from a different insurance company or you may have unforeseen circumstances and you can no longer afford the premium.
Are you considering cancelling your insurance policy?
The cost of cancelling your insurance policy once the “cooling-off” period has passed, may increase exponentially. You will more than likely be charged a cancellation fee and there could be a limit on any refund of premiums you may or may not get.
What are the consequences of cancelling your insurance policy?
There are possible consequences to cancelling your car insurance policy early. For example, you may miss out on a no-claim bonus. Therefore, it is crucial that you research as much as possible the term and conditions of your insurance policy before agreeing or deciding to cancel.
By Wanita Wallace