What are my rights if my insurer goes bankrupt?

If an authorised motor insurer fails, the policy and outstanding claims are dealt with through the insolvency process and, where eligible, the Financial Services Compensation Scheme. Do not assume cover has ended or continues: follow the administrator’s formal notice and arrange replacement insurance before driving if it ends.

What happens to your policy if your insurer goes under?

• You'll usually get a letter or email explaining what's going on.
• So don't ignore it.
• This isn't just another promo for breakdown cover.

• The policy may continue temporarily if the administrator confirms that cover remains in force.
• The policy is transferred. Another insurance provider could take over your policy entirely.
• The policy may be cancelled. If so, arrange replacement cover before using or keeping the vehicle in circumstances where insurance is required.

Can you still make a claim?

For example, getting rear-ended a day before the news breaks about your insurance provider going under. That sort of timing would make anyone sweat.

• But there's a silver lining. The Financial Services Compensation Scheme (FSCS).
• This scheme is designed to protect consumers when financial firms fail.
• If your insurer goes bust, FSCS might step in to cover:
• FSCS protection depends on the type of claim and the eligibility rules. Compulsory claims are generally protected in full, while other protected general-claims may be subject to a percentage limit. Check the current FSCS guidance for the particular claim.

yes, that includes third-party claims too.

• Claims you're already in the middle of
• New claims arising from incidents during your cover period
• Refunds for any unused portion of your policy if it's cancelled

How can you protect your position going forward?

while it's hard to predict which companies may hit financial difficulties, a little vigilance can go a long way. Look for insurers authorised by the Financial Conduct Authority and covered by FSCS.

• You may check this online before you buy.
• And if a deal seems too good to be true – well, you know how that story usually ends.
• A rock-bottom quote is no good if there's no one at the end of the phone when you might need them most.

What protection do you have if your insurer collapses?

For example, You've just paid for a 12-month car insurance policy. You're feeling rather pleased with yourself.

• And when they do, you're not left completely in the lurch.
• It's a jarring thought, but insurance provider insolvencies do happen.

What about your legal obligations?

Your car is no longer insured – even if you still have months left on the paperwork if your policy is cancelled because of insolvency. That means it's illegal to drive it until you've arranged a new policy.

• Do not delay if you are told the policy will end.
• If you suspect your insurance provider is in trouble – or get official notice – get quotes and switch to a new provider.
• Ask the administrator or insurer for evidence of your claims history or no-claims discount. A new insurer will decide what evidence and number of years it accepts.
• You've earned those years.

Don't wait until it's too late