How to Modify and Cancel Insurance
Whether you want to modify, cancel or switch insurance provider, find out what you can legally do and when.
Check for mistakes in your policy
If your insurance company finds out that your details aren’t correct, they could unilaterally cancel your contract. Additionally they may not refund the premium. Examples include failing to inform about pre-existing health issues for life insurance.
If you realise you made a mistake, let your insurance company know as soon as possible. They have one month to decide whether to modify the existing policy or cancel it. If the company decides to cancel, you’re entitled to a prorated refund of the premium.
Ensure that your insurance company confirms any notifications you provide regarding your policy. Visit your local office with two copies in writing and ask them to stamp a copy. For email ask for an official notification that they’ve received the message.
Do you want to make a change that will affect the premium?
Some changes may reduce your premium, such as installing a burglar alarm for home insurance. Others may increase the cost, such as extending your car insurance to include a young driver.
However the change in price may not be what you expect. If you think you’ll get a reduction, it could be that none is offered. Make sure to check similar policies beforehand to know what price point is acceptable for you.
When an insured object no longer exists, such as when you sell your house or car, you should be able to get a prorated refund.
Have you changed your mind?
When taking out insurance online or by phone, a 14-day cooling off period applies. Ensure you make reference to the dates when cancelling to demonstrate that you are within the 14-days.
Find out more here: The 14-day Cooling-Off Period
Has there been an excessive increase in the cost?
Insurance contracts usually include annual increases, such as those related to the cost of living. In all cases the insurance company must inform the policy holder of any change in cost at least two months before it is implemented.
If this is not done by the company, the policy holder has the right to request that the annual premium cost continues at the same level as before, or to cancel it.
What if you’ve decided not to renew your policy?
You only need to inform your insurance company in writing one month in advance regarding your decision not to renew a policy.
Companies have to inform of any unilateral cancellation two months in advance.
If you don’t pay on time, does a grace period exist?
You may have heard that in Spain car insurance policies have an obligatory grace period which lasts for one month after your policy has expired. But watch out, this doesn’t mean you get a free month’s insurance every year!
The grace period is for clients who may have problems paying their premium. Once their finances are sorted, the premium would continue from the date that the previous policy expired (not from the date it was paid).
During the grace period you will normally only be entitled to basic cover. If you have an accident during that time you’d have to pay for the repairs. Additionally if you pay late most companies will want to check your car again to ensure that no damage has been sustained during the days/weeks after the policy expired.
Clients that habitually take advantage of the grace period may find that their insurance company ends up cancelling their policy.
In depth insurance tips and how-tos
Take a look at our dedicated guides:
If you have a mortgage in Spain, check whether the interest rate is tied to any insurance products. Changing insurance company to save money could mean an increase in your monthly mortgage payments, so do the maths first.
If you cancel/amend a policy, make a note to check the direct debit when it goes through. Some companies may “accidentally” charge you the previous higher amount or put through the payment even if you’ve cancelled. If this happens, notify the company immediately in writing.
If you have an issue with your insurance company, don’t use the 56-day direct debit return service. If you’re haggling over price and in the meantime cancel the direct debit you could end up on a debtor’s list.