Selling my car or home: what happens to the policy?

What almost everyone assumes

Intuition says that selling a car or a home cancels the policy automatically, or that a phone call is enough. The law works the other way round: by default the policy follows the asset and passes to whoever buys it.

That is useful — it avoids a gap in cover during the handover — but it leaves the seller with a specific duty and a short deadline that almost nobody meets.

What the law says

On transfer of the insured object, the buyer is subrogated at the moment of the sale into the rights and obligations of the previous holder. Named policies for non-compulsory risks are an exception where the policy wording says otherwise.

The seller has two duties, and they are the seller’s: to notify the buyer in writing that the asset is insured, and to notify the insurer of the transfer in writing within fifteen days. In addition, buyer and seller are jointly and severally liable for premiums due at the time of transfer.

From there, either side can undo it. The insurer may cancel within fifteen days of learning of the transfer, and once it notifies the buyer it remains bound for one month. The buyer may also cancel by written notice within fifteen days, counted from when they learned the contract existed — which is why the seller’s notice is what starts their clock.

An example

Someone sells their car on 5 May. The policy stays alive and passes to the buyer at that moment. The seller hands over the policy details in writing and, within fifteen days, notifies the insurer of the sale.

The buyer, who already had another policy in mind, gives written notice on 12 May that they are cancelling: they are in time, because they learned of the contract on the 5th.

Had the seller told nobody, the policy would have carried on attached to an asset that is no longer theirs, with premiums running and the buyer unaware they could even cancel.

Why “just calling to cancel” is not enough

Simply cancelling is not what the law provides for, and in practice it leaves loose ends: premiums still being collected, an asset potentially uncovered during the handover, and joint liability for premiums already due that does not go away.

The orderly route is the one in the rule: notify the buyer in writing, notify the insurer within fifteen days and, from there, decide whether to cancel or let the contract continue with the new owner.