Cancelling an insurance policy

What it means

Cancellation of an insurance policy is the unilateral termination of insurance by notice from one party. The Civil Code and the policy terms determine when it is possible: most often at the end of the insurance period with a notice period, within two months of taking out the policy, or within a set time after an insured event is reported.

For cancellation at the end of the insurance period, the notice must reach the insurer at least the statutory period before it ends, usually six weeks. If the deadline is missed, the policy renews for another period. After an insured event, cover ends when the notice period expires.

Besides cancellation, an insurance contract can end in other ways: by agreement, through non-payment of the premium, loss of the insured property or expiry of a fixed term. Special rules apply to compulsory motor insurance, for example on a change of vehicle owner.

How it works in practice

When reviewing clients’ insurance, we keep track of policy anniversaries and notice deadlines. Comparing offers should start early enough to leave time for a decision and for delivering notice. If it is forgotten, the company is bound for another year even if it has found a better deal.

When switching insurer, we recommend starting the new cover exactly when the old one ends. A gap in cover, even of one day, can be costly if a loss occurs at that moment. For property with an assignment to a bank, the bank must be informed in advance and a new assignment arranged.

For more complex company insurance with several policies, working with an insurance broker who tracks deadlines and prepares notices is worthwhile. Even so, the company should keep its own record of which policies it has and when they expire.

What to watch out for

The most common mistake is sending notice late or in a way that cannot be proven. Send it by registered mail or through a channel the insurer accepts, and keep proof of delivery. What counts is receipt by the insurer, not the date sent.

For comprehensive motor insurance on leased company vehicles, cancellation may be restricted by the lease agreement. The company often cannot change insurer without the lessor’s consent, so check the lease before cancelling.