IF3 - Chapter 4: Renewals and Cancellation

What is a renewal date?

The date the existing policy expires and the insurer and policyholder can reconsider whether to continue the insurance and on what terms.

Are the insurer or insured normally obliged to renew a policy?

No. Generally, neither party is obliged to renew.

What is a renewal notice?

A notice sent before expiry showing the renewal premium and any proposed changes to the terms and conditions.

Why do insurers want customers to renew?

It helps maintain more reliable portfolio statistics and is generally cheaper than acquiring new business.

What must consumers do regarding information at renewal?

Check that the information previously provided is still accurate and disclose relevant changes when required. Renewal creates another insurance contract.

What is auto-renewal?

When a policy automatically renews, commonly where the customer has an ongoing payment arrangement such as direct debit.

What is a cancellation condition?

A policy condition explaining how the insurance contract can be cancelled during the policy period.

How much notice will an insurer usually have to give when cancelling?

At least 7 days' written notice may be specified, although longer periods of up to 30 days are common.

What cooling-off period applies to consumers for general insurance?

14 days from inception or renewal.

What is a pro-rata refund?

A proportionate return of premium for the unused period of insurance.

What is a short-period premium?

A charge that can result in the customer receiving less than a proportionate refund when cancelling mid-term, reflecting costs incurred by the insurer.