Motorists who cancel a car insurance policy before the term of the policy is up could end up paying around £85 in administration fees, according to a study by Defaqto.
Mike Powell, insight analyst for general insurance at the company, advises consumers that there are four different ways people can be charged for stopping a policy, with some that will be more expensive than others. He said: “While the average cancellation fee is £37, some insurers are charging as much as £85. People may simply be asked to pay a pro-rata charge or the insurance provider may ask for this fee as well as a cancellation expense.”
The other two alternatives are a short-period levy and a short period levy with a cancellation charge.
A recent report in The Independent newspaper highlighted how many insurance myths need to be dispelled, such as the idea that red cars are more expensive to cover.