Woman Driving Car

The Pros and Cons of Cancelling Your Car Insurance

Before cancelling your car insurance policy, think about the risks.

If you’ve gone to all the trouble of searching for the right car insurance quote, choosing a policy that suits you, and paying your premiums on time, then if you’re considering cancelling your policy, take a few moments to consider the risks and disadvantages of such a decision.

The Pros and Cons of Cancelling your Car Insurance

Typically, when you’re experiencing more month at the end of your money, you’ll start looking for ways to decrease or eliminate expenses. This ranges from cutting down on entertainment expenses, like takeaways and going to the cinema. But it can also extend to more serious expenses, like car insurance.

Before you cancel your policy, look at each of the risks in detail.

If your car is financed, you’ll be in breach of contract.
Generally speaking, a car financing agreement in this country requires you (the owner) to hold a comprehensive car insurance policy for the duration of the payment period. Once you’ve paid your loan off and your agreement is complete with the financial institution, you can cancel your policy.

Until then, if you cancel your car insurance, you’ll be violating the terms of your financing agreement. The consequences differ between financial institutions, but you could risk losing your car altogether.

Accidents just happen.

There’s a misconception that car insurance is more necessary for those more likely to have an accident, whether it’s because they live in a heavily congested area or simply aren’t the best drivers. But accidents are defined as incidents that happen unexpectedly and unintentionally.

Funnily enough, the quality of the driving behaviour doesn’t come into it. Yes, you can increase the likelihood of having an accident by driving badly, but a bad driver could go the whole of their driving life without ever causing or getting into accident.

The bottom line is that an accident, theft, fire, and hijacking are all events that can happen to anyone at any time. You could affect your future cover.

Some people believe that if they’re good drivers, they don’t need cover. However, if you keep your policy active and rarely claim, you’ll build up a low insurance risk profile. Over the years, you could very likely be rewarded with better premiums as a result.

Cancelling your cover regularly could put you in a higher risk category, which might mean higher premiums. In fact, some insurers may even reject your application.

Driving Car

The reality of paying out of your own pocket.

Driving an uninsured car and getting into an accident (whether it’s your fault or not) could end up costing you hundreds of thousands in damage claims. If you drive into someone accidentally, you’re liable for the cost of repairing or replacing that other car. Oh, and of course, your own. Added to this, the accident could also result in costly lawsuits being brought against you by the other driver or their insurer.

The final fee could easily come to six figures and you’ll have to foot the bill.

So, what can you do?

If you’re considering cancelling your car insurance to ease the pain and suffering of your budget, then it’s worth noting that you don’t need to cancel your policy to save money.

Make things more affordable:

  • Downgrade from comprehensive to third party only or third party, fire and theft policy if your car is older old and paid off.
  • Chat to your insurer about increasing your excess amount, which will reduce your premium, but keep in mind that you’ll have to pay the excess if you claim and need to be able to afford this amount.
  •  Consider moving your household and car insurance to the same company, who may offer you a discount for doing so.

As you continue your journey of cutting costs and searching for affordable car insurance, keep in mind that shopping around for and comparing quotes will help. During your search, you’ll find that top car insurance companies, like King Price Insurance, have done their best to give you a clear shot at getting and keeping comprehensive car insurance. King Price, for instance, is the first insurer to offer you premiums that start out affordable, and decrease every month in price, in line with the depreciating value of your car.

Contact King Price for car insurance quotes

 

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6 comments

  1. Thank you for the very informative article! I just hate insurance, PERIOD!. My hubby is quite busy so i have to deal with the insurance for now. It is time consuming and you never know if you are choosing the correct one. You start off with a good deal but then you get this huge surprise with and enormous increase. They always try to justify their reasons for increasing the policy. The sad thing is that you just cannot go without insurance! It is very expensive but it is a necessity. Just cancelling your policy alone is a huge risk that you”re taking. You really can’t jump from one broker to the next broker just to save a few rand. Rather try to negotiate with the broker to give you a better price because at the end of the day they don’t want to lose you as a customer. So if you do get a better price by a different insurer tell your current insurer about it and try to negotiate. What most people don’t know is that your car depreciates with value and your monthly payments just increase. That is not right for you as the client. You need to have your car valued again because they will still have the old value of your car and increase your payments according to the old value of the car. So do yourself a favour and have your car valuated again and let them give you a better insurance quote. It is better for you and it saves you a lot of time instead of just running off to a different insurer. If you do go to a new insurer, just remember the premiums will also increase just like your previous insurer. I will definitely have a look at King Price. Thank you!

  2. Thanks for a great and informative article.

    We are driving a very old Fiat Uno which my Dad gifted to us.

    I would definitely consider getting third party insurance, because I don’t think this car is of much rand value. But you have to be prepared if something unexpected happens.

  3. I read that you should cancel your insurance and then rejoin because the premiums will come down because your car is older. I would think there would be penalties or something involved in doing this. My husband just bought a new bike so insurance is a must there. We cancelled our car insurance many years ago but been considering third party at least. Shopping for best premiums is a must.

  4. This article was very informative for me.
    We currently have our car insured for 3rd party claim, we have yet to be in an accident and had our car at brand new 6 years ago, when comes to vehicle finance we were informes that we had to have full cover car insurance which was just over quarter of the monthly premium for the car itself!!!
    I felt it to be over priced. Once the car was paid up from the bank we changed over to 3rd party claim which is now like 15% of our old insurance cover. We have saved alot.

  5. I am weighing up this very thing at the moment. Car is paid off. My biggest gripe is that insurance is just out to get you. If you put the money away in an investment rather, than you would have “accident cover”. Why? Because the insurance will give you a long story how not to pay out. Everyone I know who has been in an accident in the last year had issues with their insurance. Even if they have a police statement that the other driver was in the wrong. We were robbed and this is our experience. The danger is having an accident when you are still building up your investment. Your article gave all the pros of insurance but none of the cons.

  6. My husband and I know all about what happens when you do not have car insurance and an involved in an accident. We had an accident in my car – luckily I am fully insured due to my car still being financed. My insurance paid for the claims including recovering my excess payment the from third-party who banged into my car.

    In December before I went on annual leave we had an accident in my husbands car, his car is not insured due to it being a private cash-up front sale several years ago. Now due to our financial situation when are unable to get his car fixed. The third-party that hit into us has got insurance but his insurance refuses to cover our claim due to discrepancies in the statements made.

    I would never recommend canceling any form of insurance as it is something we need to survive in today’s world. I would rather cut out something else than cut out my insurance.

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