With the ever-so rising COE prices, you might be just considering selling your car for perhaps some profit or that your car is nearing it’s 10-year mark and you will have to scrap it soon. With most vehicle insurance validity being on a yearly basis, chances are when you sell your car, you might find yourself in a position where can actually cancel your vehicle insurance early and you now have an unused portion of your insurance remaining. Today we are here to help you find out what you should do and how you can get money back when cancelling your vehicle insurance.
In general, vehicle insurance is renewed on a yearly basis. For illustration purposes, assuming that you purchased your vehicle insurance on 1 Jan 2022 which costs $2,000, you will have to renew it again on the following year, 1 January 2023. However, if you decided to sell your car, on 30 June 2022, there is an unused portion of insurance from 1 July 2022 to 31 December 2022. This unused portion is what is calculated when you cancel your vehicle insurance early and you will be able to receive a refund.
|Insurer||Refund of remaining premium|
To calculate the unused portion of the insurance or the remaining premium, most insurers will count the remaining number of days after cancellation. Using our example above by calculating the remaining days unused, you will have a total of 184 days of unused insurance premium that you have previously paid.
In this example, you will have a remaining insurance premium of $1008.22 (184/365 x $2,000) and will be entitled to a refund of 80% to 95% which varies depending on insurers. Depending on which company you are insured, you would receive a sizeable amount of $806.58 to $957.79. We understand that there are many different insurers and to make things easier, we have collated several popular insurance companies with their refund of the remaining premium in the table below. You can to whichever corresponds to your current insurer.
*FWD will not give a refund if the amount is less than $25.
**There is a charge of a minimum premium of $26.75. Additionally, refund of remaining premium is increased to 90% if you take up another vehicle insurance with NTUC Income.
Sources for premium refund:
In general, to get this refund for cancelling your insurance early, you will be required to inform your insurer, often 7 days in advance that you will be cancelling your vehicle insurance and you may need to return the certificate of insurance. Do note that this refund is mostly not applicable if you have made a claim within the year of purchase or have any ongoing claims.
All in all, we hope that this article helps you to understand how you are able to get a refund for your vehicle insurance and to calculate for how much you will receive when you do so when selling your car or scrap before the insurance expiry date.