How to cancel an insurance policy
The premium for the motor vehicle liability policy is one of the items of expenditure that weighs heavily on family budgets. And unfortunately, customer loyalty over time towards the same insurance company is not always adequately recognized. For some years, however, changing the insurance cancellation of your car has become easier and more immediate.
In fact, since 2013 there has been no more tacit renewal, that is the automatic mechanism that binds the policyholder to continue the car policy with the same company, in the event that he has not sent formal cancellation within the established terms.
The automatic renewal mechanism has for years been a major impediment to development of competition in the RCA sector as, by exploiting this automatism, companies did not risk getting too many customers from competitors who could offer more aggressive offers.
In fact, in order to change insurance, it was necessary to plan the cancellation at least 15 days in advance. And obviously many motorists forgot to do so, also thanks to the sometimes somewhat late expiry notices of many insurance companies. It is no coincidence that for years there has been talk of the existence of a cartel between insurance companies.
Policy expiration: what has changed from 2013 onwards
With the DDL 179/2012, the tacit renewal was abolished for the compulsory Civil Liability policy for cars and motorcycles. This means that from 1 January 2013 the expiry of the policy does not in any way oblige the policyholder to renew of the same for another year. Therefore, it is possible to wait until the last day of validity of the current policy to decide whether to start the relationship with a new company and without having to communicate the cancellation to the previous insurance.
Before 2013, the tacit renewal had in fact already been prevented; but this limitation only concerned the policies contracted online or by telephone. The automatic renewal was therefore fully operational for traditional insurance companies which therefore operated in a sort of protected market.
The breaking of this barrier has led in a few years to a decrease in the insurance premium which is estimated to be on average 18%. With the Decree 124/2017, the abolition of tacit renewal was also extended to the so-called ancillary guarantees such as theft-fire insurance, atmospheric events, vandalism, driver accidents and the kasko policy.
This extension, however, is to be considered valid only if these guarantees have been signed at the same time as the mandatory third-party liability policy. It is also essential to clarify that if an insurance policy in progress still includes a tacit renewal clause, this clause is in effect null and void, as the law always prevails and without any doubt .
How the right of cancellation is exercised upon expiry of the policy
However, a distinction must be made between the abolition of the tacit renewal mechanism and the procedures for cancelling the policy allowed after the approval of the new rules. It is always possible to cancel a car liability policy upon expiry of the same, simply by activating a policy with a new company, which must always be identified as the legal obligation to provide insurance coverage for your vehicle remains intact.
The termination of the expiring contract is exercised automatically by contracting the policy with the new chosen company, without having to communicate anything to the abandoned insurance company. In addition, the electronic risk certificate was introduced in 2015which must therefore no longer be recovered by the customer from the current policy company.
This document can now be acquired electronically by the newly appointed insurance company, simply by accessing the database of the Institute for the Supervision of Insurance (IVASS). In any case, the company of the current policy, within 30 days from the term of validity, must always send the policyholder a reminder indicating the expiration date and make a copy of the risk certificate available (especially useful for compiling online policy estimates).
Many insurance companies also offer their customers the possibility to consult online at any time all the specifications of the current policy and to download the risk certificate at any time. This element of transparency should be duly considered before leaving a company.
How and when can you give notice before the expiry of the policy
It is possible to cancel a policy before the expiration date , in case
- theft, sale, destruction or scrapping of the insured vehicle;
- in the event of the death of the policy holder.
Cancellation of the insurance before its expiry , in the cases provided for by law, obviously requires the presentation of documents proving the event that occurred. To make the cancellation effective, it is therefore necessary to send the certificate of destruction, the report of theft or the death certificate of the holder. The advice is to anticipate the documentation by email and have it followed by a registered letter with return receipt or send everything through a PEC. In the case of the sale or transfer of the vehicle , the policyholder usually has three options:
- cancel the policy and obtain reimbursement of the residual portion of the premium
- transfer the ownership of the policy to the new owner of the vehicle (if interested) who then takes over from the previous one and always obtain reimbursement of the residual portion of the premium.
- transfer the policy to a new vehicle , as long as it is in the name of the same person, in which case, based on the specifications of the new vehicle, it may be necessary to supplement the cost of the premium for ancillary guarantees.
The taxes on the insurance contract and the share of the contribution paid to the national health service are not reimbursed in the event of early termination. However, the SSN fee contributes to the deductions applied during the tax return phase. If desired, it is possible to anticipate the conclusion of the validity of the current policy even when the situations described above do not occur. In this case, however, the insurance has the right to request the recognition of the costs of withdrawal . The insurer is however obliged to provide this information in advance and the related early termination clause must be clearly highlighted in the contract.
What happens in the 15 days after the deadline
One of the points that initially remained controversial after the suppression of the tacit renewal in 2013 concerns the consolidated practice for which the insurance coverage guarantee is also extended in the 15 days following the expiry of the policy.
This right, introduced to protect the distracted customer, originally based its raison d’être in the continuity of the validity of the policy following the triggering of the tacit renewal mechanism. When this automatism failed, there was a doubt about the cases of effective validity of the policy during the 15-day grace period despite the fact that the Law Decree 179/2012 acknowledged the practice.
In February 2013 a circular from the Ministry of the Interior confirmed that the insurance companies are required to guarantee the validity of the policy during the 15 days following its expiry even in the event that the holder were to switch to another company. The same circular also clarified that the circulation of the insured vehicle during the grace period after the expiry of the policy no longer represents a violation of the highway code.
A few recommendations
Although the regulation concerning the cancellation of car and motorcycle liability insurance has been significantly simplified, it is nevertheless essential when signing a new insurance contract to always carefully check all the termination clauses or related to the early conclusion of the policy. The cost of the premium and the coverage provided by the offers must not in fact represent the only criteria for evaluating the convenience of a company. It is also good to consider its reputation and reliability.