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Insurance / 1st November 2020

Insurance auto-renewal

is it legal?

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Is this business practice legal?

We’re encouraged to shop around for insurance and not to stay loyal to the same company. However, if you have insurance it will probably automatically renew unless you opt out. Find out about your rights with insurance auto-renewal.

Insurance auto-renewal – what is it?

Auto-renewal means that your insurance policy is automatically renewed at the end of the 12-month contract. If you don’t want to renew your insurance contract with your existing insurer, you have to contact them and tell them.

Auto-renewal used to be confined to car insurance, but these days insurers use it for policies such as pet insurance, home insurance and even car breakdown recovery.

SAVVY TIP: Although the process of automatically renewing insurance was designed to retain customers, there was some logic behind car insurance being automatically renewed. That’s because it’s illegal to drive a car without insurance. However, it’s not illegal to have a home or pet that’s not insured!

Insurance auto-renewal – is it legal?

It is legal for an insurance company to automatically renew your insurance policy but only if they have told you that they will do this. Some insurance companies give you the option of ticking a box to say that you would like the insurance to renew automatically.

Others have a policy of automatically renewing insurance. If they do take this approach, the insurance company must tell you clearly that this is what they’re going to do. They can’t just bury this in the terms and conditions.

The insurance company must also contact you 30 days before your insurance is due to end and tell you that they will renew the contract unless you tell them not to. If you don’t receive this notification, you should be able to cancel your insurance without paying a charge.

SAVVY TIP: If you were told about the auto-renewal and it was made clear in the policy terms and conditions, you can still make use of the standard cooling off period. With most general insurance (such as home, car, travel or pet insurance) you have a 14 day cooling off period. This means you can cancel your policy within 14 days, although you may be charged for cover provided in that 14 days.

How common is insurance auto-renewal?

When you take out an insurance policy, for your car, home, pet or certain travel insurance policies, it’s often a 12-month contract. However, an increasing number of insurance companies use auto-renewal. This means that unless you tell them not to, the company will renew your insurance policy.

What to do if your insurance is automatically renewed

If your insurance is automatically renewed without you having been told beforehand and you don’t want to stay with the same company, here are the steps to take:

Contact them and say you want to cancel. Insurers generally charge a cancellation fee, but you shouldn’t have to pay this if you weren’t told about the auto-renewal clause.
If you’re charged a cancellation fee and the insurer won’t refund it, you should complain to them. Complain by letter or email.
If they still won’t refund money you’ve paid, complain to the Financial Ombudsman Service. You can do this free of charge. They can investigate complaints and, if they agree with you, may state that the insurer should refund you and/or pay (limited) compensation.


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