Cancelling an insurance policy: the cooling-off period and auto-renewal rules
Published · 3 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
Most consumer insurance in the UK comes with a cooling-off right, and policies that renew automatically must be easy to stop renewing. This guide explains the FCA rules on cancelling, what an insurer may charge and when refunds are due.
What the cooling-off right is
The Financial Conduct Authority (FCA) sets rules for how insurers deal with consumers. Under its rules, a consumer can cancel a new insurance contract without penalty and without giving a reason during a set period. The rules apply across the whole UK.
- 14 days for most insurance, such as home, motor and pet cover, and for contracts made at a distance, for example online or by phone.
- 30 days for pure protection insurance, such as life insurance, and for payment protection insurance.
When the clock starts
Generally the period starts on the day the contract is made. If you receive the policy terms and other required information later than that, the period starts when you receive them. For pure protection policies the period starts when you are told the contract has been made.
To use the right, you need to tell the insurer before the period ends and follow the practical instructions it has given you. If you cancel in writing or on a durable medium such as email, sending the notice before the deadline is enough.
What does not have the right
The FCA rules list some exceptions. These include travel and baggage policies, and similar short-term policies, where the cover lasts less than one month. They also include policies that both sides have already fully carried out at your express request before you cancel. Some pure protection contracts of six months or less, and some contracts sold by unauthorised intermediaries, are also excluded. The full list is in the FCA Handbook.
What an insurer may charge
If you cancel within the cooling-off period, the insurer may only ask for payment for the service it has actually provided. The FCA rules say the amount must be proportionate to the cover you have had and must not be a penalty. Guidance says it can include costs reasonably incurred in setting up the contract, but without any profit, and a charge for the time you were covered.
The insurer cannot require a payment unless it can show you were properly told about the amount. For pure protection contracts, such as life insurance, a consumer cannot be required to pay anything when using the right to cancel.
Refunds: the insurer must return any money it has received under the contract without undue delay, and no later than 30 days after it receives your cancellation notice.
Automatic renewal
Many general insurance policies renew automatically. The FCA requires firms to offer easy and accessible ways to cancel the automatic renewal. These must include at least every method you could use to buy a new policy from that firm, and cancelling renewal must be free of charge. You must be able to do this when you buy the policy and at any time during it.
This rule covers consumer general insurance with an automatic renewal feature. Private health insurance and pet insurance are excluded from it.
Stopping a renewal is not the same as cancelling a policy part-way through the year. Cancelling mid-term is governed by the policy terms, so it can be worth reading them for any notice period or fees.
If something goes wrong
If an insurer refuses a refund or you feel you have been charged unfairly, you can complain to the firm first. If you are not happy with the answer, many people can take the complaint to the Financial Ombudsman Service, which is a free service set up by Parliament and covers home, travel, motor and other types of insurance.
Check before you act
Rules and policy terms can change, and your own policy may set out extra rights. Confirm the details on the official pages linked below and in your policy documents before relying on anything here.
Sources
For information only. See our disclaimer and editorial standards. Spotted an error? Tell us.
