What happens if I cancel my car insurance?

While self-isolating, you may not be reaching for the car keys as much as you used to. Your wallet might even be thanking you for saving money on petrol and parking.

You may now be asking whether you could be saving more. Like, should you be paying for insurance when your car has just been sitting in the garage? But before you cancel your car insurance, there’s a few things worth considering.

What happens if I cancel my insurance?

There are only a few circumstances where you can cancel CTP Insurance, like total loss of the vehicle or an unused Green Slip. The only other way to cancel your CTP Insurance is to de-register the vehicle. Without registration, you won’t be able to legally drive your car so you may want to explore other transport options first.  

You may also want to consider what you’re not covered for if you choose to cancel your car insurance. For example, if you had GIO Comprehensive cover before, and now only have Green Slip/CTP insurance, you would no longer have cover for damage to your own or another person’s vehicle in an accident. You could also be left out of pocket for damage from events such as hail, storms (including cyclones), fire and theft.

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What to consider before cancelling your car insurance

Will you need to repurchase insurance soon?

We don’t know exactly when the coronavirus situation is going to end in Australia, but with restrictions easing, you may be back on the road sooner than you think. It’s important to consider whether cancelling your insurance is worth it. How much money will you save? And what risks are you exposing yourself to?

It’s also worth recognising that insurance costs are not fixed. If you cancel your car insurance today and want a new policy in six months, the premium for a new policy may not be the same as you’re paying now. It could end up costing you more, or it may simply be not worth the hassle.

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Consider adjusting your premium

Perhaps you’d prefer to keep your insurance but see it as an unnecessary cost at the moment. If that’s the case, you might consider temporarily lowering your premiums.

Of course, that could mean paying a higher excess if you make a claim. You may want to ensure that the excess is not more than you could potentially afford.

Make other changes to your policy

There may be other changes you could consider to lower the cost of your policy, such as:

  • Adjusting your level of cover
  • Reviewing optional covers (eg, hire car after an event), or
  • Lowering the total amount covered or if you have Comprehensive Car Insurance choosing the option ‘market value cover’, if we agree.

Doing any of these could mean you end up paying more if you were to be involved in a collision. It could also mean loss of cover for events such as hail, storms (including cyclones), fire and theft. Whether these risks make sense is up to you. If you’re unsure, you can contact GIO on 13 10 10 – our specialists will be able to help run a health check on your policy.

Cooling off period

At GIO, the cooling off period for car insurance is 21 days. So, if you took out car insurance with us less than three weeks ago, you can cancel (so long as you didn’t make a claim) and we will refund the money you paid for the policy. If you’re not a GIO customer, you’ll need to check your cooling off period.

Do I lose my Claims free savings if I cancel?

Yes. GIO rewards customers for every consecutive year they don’t make a claim with credit on next year’s premium. The longer you keep your policy with us, the greater the credit – from 5% after one year to 20% after 15 years. It needs to be continuous years of GIO Platinum or Comprehensive Car Insurance. So, cancelling your policy would mean you would lose any Claims free savings discount you have accumulated.

If you’ve considered all of that and still want to cancel your GIO policy, give us a call on 13 10 10 and we’ll help you out. You can cancel at any time.

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Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement  before buying this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.