I’m changing my motor… How do I change my car insurance?

If you’re replacing your car with a new model, it’s important to make sure you keep your insurer up to speed.

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Trading in your existing car for a new set of wheels is exciting, but before you hit the road, you’ll need to let your insurer know you need car insurance for a different vehicle.

Informing your insurer will help to make sure you don’t end up uninsured, which is illegal and will leave you high and dry should you need to make a claim.

The government cracked down on uninsured drivers in 2011 with the introduction of Continuous Insurance Enforcement which states that every car, whether on or off the road, has to be covered.

The only exception to this is if the car is declared off the road with a Statutory Off Road Notification (SORN).

Anyone driving without insurance can expect to be hit with steep penalties, including a fine, points and even the seizure of their car.

So let’s take a closer look at what you need to do when changing cars…

I’m buying a new car. Do I need to cancel my insurance policy and take out a new one?

When buying a new car, it’s not usually necessary to apply for a new insurance policy, as almost all insurers will allow you to transfer your current cover to your new wheels.

But it’s really important that you inform your insurer when you need the terms of the cover to change.

If you don’t, your policy could be invalidated, and any future claims could be rejected, or at the very least paid at a reduced level.

Will there be a charge?

Yes, you will generally have to pay an administration charge to amend the terms of your cover. This should be stated in the terms and conditions of your policy.

Expect to pay at least £25. If you are buying a more powerful or expensive car, you may also have to pay an extra premium due to the extra risk the insurer is taking on.

And bear in mind the general point – if there are any material changes affecting your insurance, you need to tell your insurer straight away, not at renewal.

So if you, for example, change address, modify your vehicle in any way or get a driving conviction, notify your insurer.

Top tip: If you think the charges you face for amending your policy are unfairly high, you can always complain to your insurer.

And if you are unhappy with its response, you can also take your case to the Financial Ombudsman Service.

How do I transfer my policy to a new car?

To transfer an existing insurance policy to a new vehicle, all you need to do is call your insurer.

The standard amendment fee should be set out in your policy terms and conditions, but your insurer should also be able to inform you of this over the phone.

Once you have given the company the details of your new car, you should be told the total cost of changing your cover.

If you are happy with this, you can then make the extra payment and wait for your insurer to send out your new policy documents either online or in the post.

Do I have to stick with the same insurer?

No. But in most cases, the cheapest option when buying a car will be to stick with your existing insurer and pay the administration charge to transfer your policy to the new vehicle.

This is because the cost of cancelling a policy to start a new one elsewhere will usually outweigh the admin fee.

There are exceptions, though. If, for example, your current policy is about to run out, it may make sense to simply take out a new one with a rival insurer rather than paying the administration fee.

This is particularly true if your insurer wants to up your premium significantly due to the type of car you are buying.

Once it comes to renewal time, it’s always best to shop around and see if you can get a cheaper deal.

Top tip: MoneySuperMarket is the ideal place to work out which option will be cheaper for you. You can run quotes here.

When do I need to arrange cover?

If you are buying a used vehicle, it is important to arrange insurance that starts on the day you pick it up.

Without insurance, you won’t be covered should anything go wrong on the journey home and could face a £300 fine, six penalty points and even the loss of your car.

If you’re buying a new car from a dealership, however, you might receive free insurance for the first few days.

Dealerships such as Peugeot and Hyundai, for example, offer free seven-day insurance to allow buyers the chance to arrange cover of their own.

But don’t forget to check you are protected before driving away!

What if I am offered free insurance with my new car?

Many dealerships offer incentives such as one year's free car insurance or breakdown cover.

If you already have cover in place, you therefore need to ask yourself if it is worth taking the free insurance or not.

The answer will depend on how long your current policy has to run – and how much extra your current insurer wants to charge you to cover your new car, or to cancel it if you decide to go elsewhere. Give your insurer a ring to find out before making your decision.

Top tip: If you don’t need the cover, you may be able to negotiate a discount of the price instead.

Getting a new car with a new ‘15’ plates? Grabbing a secondhand bargain from the increased selection at this time of year?

The standard amendment free should be set out in your policy terms and conditions, but your insurer should also be able to inform you of this over the phone.

Once you have given the company the details of your new car, you should be told the total cost of changing your cover.

If you are happy with this, you can then make the extra payment and wait for your insurer to send out your new policy documents either online or in the post.

Do I have to stick with the same insurer?

No. But in most cases, the cheapest option when buying a car will be to stick with your existing insurer and pay the administration charge to transfer your policy to the new vehicle.

This is because the cost of cancelling a policy to start a new one elsewhere will usually outweigh the admin fee.

There are exceptions, though. If, for example, your current policy is about to run out, it may make sense to simply take out a new one with a rival insurer rather than paying the administration fee.

This is particularly true if your insurer wants to up your premium significantly due to the type of car you are buying.

Top tip: MoneySuperMarket is the ideal place to work out which option will be cheaper for you. You can run quotes here.

 

When do I need to arrange cover?

If you are buying a used vehicle, it is important to arrange insurance that starts on the day you pick it up.

Otherwise, you won’t be covered should anything go wrong on the journey home. With a new car from a dealership, however, you might receive free insurance for the first few days.

Dealerships such as Peugeot and Hyundai, for example, offer free seven-day insurance to allow buyers the chance to arrange cover of their own.

BUT don’t forget to check you are protected before driving away!

What if I am offered free insurance with my new car?

Many dealerships offer incentives such as one year's free car insurance or breakdown cover.

If you already have cover in place, you therefore need to ask yourself if it is worth taking the free insurance or not.

The answer will depend on how long your current policy has to run – and how much extra your insurer wants to charge you to cover your new car, or to cancel it if you decide to go elsewhere.

Top tip: If you don’t need the cover, you may be able to negotiate a discount of the price instead.

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