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All you need to know about home insurance cancellation and refunds

All you need to know about home insurance cancellation and refunds

A home insurance policy gives you the peace of mind that your expenses would be reasonably covered if your home suffered unforeseen damages or theft. However, there are certain situations when you may want to cancel your existing home insurance policy. Whether it’s so you can switch to a new, more competitive policy, you’re downsizing or moving to a new city. In any case, you can cancel your home insurance policy at any time without having to wait for your renewal notice. Some insurers may charge a small home insurance cancellation fee, but you don’t need to explain why you want to cancel, just ask. You’re also likely to get a refund for any unused part of your premiums.

How to cancel a home insurance policy?

Suppose you plan to switch your home and contents insurance policy to another insurer. In that case, all you have to do is get in touch with your current insurer to let them know. You can do this either by sending an email or calling your insurer. Even if you call, consider following it up with an email or fax to the insurer, explaining that you wish to cancel your home insurance policy. No matter whether you call or email, your insurer will likely ask for the following details:

  • Your (policyholder’s) name
  • Date of birth
  • Contact number
  • Your postal address
  • Your signature

Home insurance cancellation and refund

Getting a refund when you cancel your policy will depend on how you pay your premiums, monthly or yearly, and whether you’re still in your cooling off period. There can be three possible scenarios:

If you pay your premiums monthly: 

  • Your home insurance policy will be cancelled at the end of the month you've paid for.
  • You may have to pay a nominal cancellation fee of $30-$40 depending upon your insurer.
  • You won’t receive any refund as your policy gets cancelled at the end of the period you’ve paid for.

If you pay your premiums annually:

  • You can cancel your home insurance policy at any time during the year, but it won’t apply until the end of the month.
  • You may have to pay an early cancellation fee of about $30-$40. Your insurer may also deduct any discounts you might have received for paying your premium annually.
  • Provided you haven’t made any claims during the year, you’ll receive a home insurance cancellation refund on a pro-rata basis for any unused months. This means you’ll receive a partial refund of your premium that’s equal to the number of months before your policy would renew for the year.

If you are still in the cooling-off period:

  • Most home insurance policies come with a cooling-off period in case you change your mind or circumstances change. The cooling-off period is usually for 14 - 21 days after you purchase or finalise your policy.
  • If you cancel your home insurance policy while it’s still in the cooling-off period without having made a claim. In that case, you’ll receive a full refund of the home insurance premium that you’ve already paid. Some insurers may deduct a proportionate amount from your refund to cover the number of days your policy was in place.
  • You won’t be charged any cancellation fee for cancelling the policy during the cooling-off period.

Is there any situation when I won’t be able to cancel my home insurance policy?

No, there is no foreseeable situation in which you can’t cancel your home insurance policy and get any possible refund. You can even cancel your policy after making a claim. You only need to inform your insurer and pay any home insurance cancellation fees. In some cases, you may also have to pay the applicable government taxes in addition to the cancellation fees. Taxes may vary depending upon whether you are paying your premiums monthly or annually.

Can the insurer cancel my home insurance policy?

Yes, if permitted by law, the insurer can cancel your home insurance policy under certain conditions. These conditions may include when your premium payments are overdue, when you fail to disclose some information, or when you misrepresent certain facts. Make sure to read the Product Disclosure Statement (PDS) of your insurer carefully to understand the conditions your home insurance policy could be cancelled by the insurer.

Make sure you keep your home protected

Regardless of whether you decide to cancel your home insurance policy yourself or it’s terminated by the insurer, it’s recommended you get a new policy as soon as possible. You don’t want to be left without home and contents insurance if an unexpected incident happens. You can compare multiple home insurance policies and check that they provide coverage for incidents most likely to occur in your area. This includes things like theft, vandalism or natural disasters, to ensure maximum protection.

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