'Insurance paid monthly is effectively a 12-month loan'
Bill Wilkinson-Hoy, Which? money expert, says…If your car has suffered a lot of damage or requires repairs that almost outweigh the value of the car, it won’t be repairable and will be deemed a total loss or write-off. Once the claim is settled, the policy usually ends.
However, from the point of view of the insurer, you still paid for a year of car insurance, by borrowing the upfront annual payment, to be repaid over 12 months. A total loss claim doesn’t cancel this debt.
Usually, the money you owe would be deducted from the claim, rather than you needing to repay it directly.
Find out more:Which? Money 1-to-1 guidance
Our team of money experts can answer your questions big and small, on topics from pensions to tax and savings to scams.
Which? Money members and their immediate family get unlimited access to 1-to-1 guidance sessions.
source https://www.which.co.uk/news/article/my-cars-been-written-off-so-why-am-i-still-paying-for-the-insurance-arNW29z57oOS