Car clinic: Is automatic "tacit renewal" of car insurance legal?

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Q. I was away when my car insurance came up for renewal. My insurer renewed my policy and charged the premium to my credit card without my consent. It said this process was known as “tacit renewal”, but it seems to me to be a ruse to stop me shopping around for cheaper insurance. Is this practice legal? I’ve now taken out a cheaper policy with a rival company, but my original insurer refuses to refund the entire sum.
KS, Birmingham

A. The system of tacit renewal was introduced in the 1990s as a way of ensuring motorists did not inadvertently drive without insurance.

The key is to check your insurance policy when you first sign up to it: the document will state whether your insurer uses a tacit renewal scheme. Most do. Government guidance to insurers states that the policy of tacit renewal should be made clear to customers and that, when it is possible, application forms (including online ones) should include a tick box to ensure individuals understand and agree.

According to further government guidelines — and these are recommendations rather than legally binding terms — your insurer should have informed you of the imminent renewal 28 days before it was due.

The guidance, issued by the Information Commissioner’s Office, also states that there should be a 14-day cooling-off period after the date of renewal, during which you are entitled to cancel the new policy without penalty.

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In addition to this, it is a fundamental principle of contract law that terms should be written in a clear and understandable way.

Check to see what steps your original insurer took when you signed up and before the automatic renewal took place. If it failed to adopt any of the steps set out here, you could consider taking your case to the financial ombudsman (for information go to


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Nick Freeman is a solicitor who runs a legal practice in Manchester specialising in road traffic law – read more from Nick here.

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