Is it possible to cancel the compulsory vehicle insurance policy?

When a person offers his insured vehicle for sale, and another person buys it, the insured who owns the vehicle must apply to the insurance company to cancel the insurance policy on the sold vehicle. In order to recover the value of the remaining subscription from the insurance premium, in accordance with the terms and conditions of the policy. How is the value of the refunded subscription calculated, and when can the vehicle owner cancel the compulsory insurance policy?!

Compulsory insurance coverage

The insurance company is obligated to compensate third parties for physical or material damage to him or his property and the expenses resulting from the traffic accident caused by the insured’s vehicle inside the Kingdom, with a maximum of 10,000,000 Saudi riyals during the policy period, except for the damages excluded from coverage according to the terms and conditions of the policy. This is in return for the insured paying the value of the agreed subscription to the insurance company.

When can the compulsory vehicle insurance policy be canceled?

The insurance company or the insured can cancel the insurance policy after its issuance in only three cases, according to  which is next:

  1. Cancellation of vehicle registration, for whatever reason.
  2. Transfer of vehicle ownership to another owner; Like selling it to someone else.
  3. Purchasing a new insurance policy that covers the remainder of the policy to be canceled.

Is it possible to recover part of the subscription amount for the compulsory insurance policy?

If one of the previous cases is realized, the insurance company is obligated to return the amount due for the remaining period of the policy, where the process of refunding the amount is as follows:

  1. The company may not charge more than 25 Saudi riyals in administrative fees in return for refunding the amount to the customer.
  2. The process of calculating the remaining amount due to the insured for the remaining period of the insurance coverage period is as follows:
    – The number of days remaining (the number of days elapsed is subtracted from the days of insurance coverage), then divide the result by the number of days of complete insurance coverage, then multiply the result by subscription, minus the administrative fees
    Remaining amount to be refunded to the customer = 365 -days consumed / 365 x subscription after deducting the administrative fee.
  3. Deposit the remaining amount of the insurance subscription in the customer’s bank account by transferring to the International Bank Account Number (IBAN).
  4. The deposit shall be made within three working days from the date the company received the notice of cancellation of the policy.
  5. The company, the insured and the driver remain bound by the provisions of the insurance policy regarding the obligations arising before its cancellation.

In the event of canceling the insurance policy due to the availability of one of the cases that enables the insured or the insurance company to cancel the insurance policy, the insurance company is obligated to return the amount due for the remaining period of the policy, but it is not obligated to return this amount, if there is a claim related to the policy and the vehicle itself exceeds Its value is less than the value of the amount supposed to be returned according to the above calculation method.

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