Question 1

What happens to an insurance policy when you sell the item or die?

Accepted Answer

Insurance is a **personal contract** between the insurer and a specific policyholder covering a specific **insurable interest**. When that interest ends, the cover generally does — and the details differ by situation.

**When you sell a car.** The policy does **not** transfer to the buyer, and this is unambiguous. Your cover ends at the point you no longer own the vehicle, and the buyer must arrange their own insurance before driving it away.

What happens to your policy:

**Transfer it** to a replacement vehicle, which is usual, with the premium adjusted.

**Cancel it** and receive a pro-rata refund less a cancellation fee, which can be substantial.

**Preserve your no claims discount** — you keep the entitlement, but it generally expires if unused for two or three years.

**Tell the DVLA** and the insurer promptly.

**When you sell a house.** Buildings insurance ends on completion. Note the timing point: **the buyer's insurable interest begins at exchange of contracts**, not completion, because risk passes then — which is why buyers are advised to insure from exchange.

**Selling insured items.** Cover for a specified item ends when you no longer own it, and continuing to pay for it achieves nothing.

**When the policyholder dies.** This is more nuanced:

**The policy does not automatically continue**, but insurers generally provide a period of cover for the estate — commonly 30 days for home insurance — while matters are arranged. **Contact the insurer promptly**; do not assume cover continues indefinitely.

**An unoccupied property** creates a real problem. Most policies restrict cover after 30 to 60 days empty, which is easily exceeded during probate. **Specialist unoccupied property insurance** is usually needed, and failing to arrange it is a common and expensive oversight.

**Motor insurance ends on death**, and driving the vehicle requires separate arrangement.

**Life insurance pays out** — that is its purpose — and paying it into **trust** can avoid probate delay and inheritance tax.

Question 2

What happens if I cancel my insurance policy?

Accepted Answer

Canceling your insurance policy can lead to refunds, coverage gaps, fees, and potential impacts on future premiums. Understand the implications before proceeding.

Question 3

What happens if an uninsured driver hits you?

Accepted Answer

You are not left with nothing, but which route you use depends on your own cover, and the consequences differ. If you have comprehensive insurance. Your own insurer will handle the repair or

Question 4

What is subrogation in insurance?

Accepted Answer

Subrogation is the right of an insurer, having paid your claim, to step into your shoes and pursue whoever caused the loss to recover what it paid. The principle behind it. Insurance operates on

Question 5

What happens if my insurance company goes bust?

Accepted Answer

In the UK, the Financial Services Compensation Scheme (FSCS) exists for exactly this, and insurance is among the better-protected products — but the level of protection depends on the type of cover.

Question 6

What is a no claims discount and is it worth protecting?

Accepted Answer

A no claims discount (NCD), sometimes called a no claims bonus, is a reduction applied to your premium for each consecutive year you insure without making a claim. It builds up — commonly around 30%

Question 7

How do insurers decide how much a claim is worth?

Accepted Answer

By applying the policy's basis of settlement to an assessed loss, then deducting anything the policy allows. The figure is rarely what you paid or what you feel it is worth. The sequence, broadly:

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