Car insurance customers have been warned that cancelling a policy mid-term can prove costly.

Writing for MSN Money, Omotola Akerele observed that many customers wrongly expect to get back the proportion of the premium that applies to the remaining period.

Unfortunately, however, many car insurance providers will calculate the refund based on a system of short-term rates , MS Akerele noted.

“Therefore, if you cancel in the third month, you might only be refunded 50 per cent of your annual premium,” she warned.

“If you cancel in the sixth month, just 20 per cent and in the ninth, tenth or 11th month you may get nothing at all.”

Meanwhile, Will Thomas, head of motor insurance at confused.com, has told moneynews.com that many Britons may end up paying more for their car insurance policies if new European Union rules are introduced.

He warned that any regulations preventing providers from using gender as a factor could have a negative impact.

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