Car Insurance Article Discussion

There's a couple of questions that Martin leaves unanswered. First, he says premiums are cheaper at this time of year. Why's that? And when will they go back up again?

Secondly, in his weekly email he says:

"One MoneySaver e-mailed me to say he'd not realised he had to declare his speeding cam points to his insurer. When he did, it charged him £900 back-dated as a retrospective rise in premium."

This is exactly what has happened to a colleague of mine at work (well nearly so, as it wasn't quite as much as £900.) I wonder what happened, did he pay up or is he taking the insurance company to court?

My colleague's insurance policy had already expired before they realised about the undeclared speeding points. It was a genuine oversight caused by a belief that the DVLA would have told the insurance company about the points. My colleague did not make any claims, so the points had made no difference to the insurance company. And yet they are still asking for a retrospective additional premium. The speeding points did not cost the insurance company a single penny, so what would happen if my colleague refuses to pay?

I was going to post a comment that Martin only advised readers to be honest with their insurer for the practical reason that they might get penalised later. I was then shocked to read another posting saying that insurers were thieves for trying to collecte the correct premium retrospectively.

Sorry, folks, insurance is beased on 'utmost good faith'. It's an essential part of the contract that the proposer declares everything reasonably relevant to the insurance even if not specifically asked. In the case of a speeding conviction, I'm sure the insurer or intermediary (agent) would have specifically asked about any points on the licence. So the person in question lied to secure a cheaper deal. The insurer did not know the risk they were insuring so under charged. The contract could well have been totally invalidated by this. The courts will uphold the insurer trying to collect this money once the situation was revealed.

Insurance is not like buying other goods or services. You pay something aganist the insurer's promise to do something for you in the future if an insured risk occurs. You expect them to honour their promise, why do you think it's OK for you to lie tyo get the deal?

I don't work for an insurer and I know some companies can try to get out of paying a claim that the insured believes is reasonable and honest. But most are ok most of teh time, in my experience.

Hi, just cancelled my elephant car insurance because we are going to SORN the car and they want £45 for the priviledge of cancelling the policy! This is apparantly a charge for 'admin'. Surely £45 is a bit excessive for someone to press a little button on a computer!!! even if there was slightly more admin than that its still excessive isnt it? Or am I just being daft?

I dont know the ins and outs of the reclaim bank charges business but could this be a similar thing? Insurance companies charging unreasonable amounts to cancel a policy?

It makes mad and depressed that these huge profit companies are just take take take from the hard working little man!

selimap wrote: »

Sorry, folks, insurance is beased on 'utmost good faith'. It's an essential part of the contract that the proposer declares everything reasonably relevant to the insurance even if not specifically asked.

This is right up to a point - the contract IS partly based on good faith. However, no insurer is legally entitled to retrospectively claim an additional amount that they MAY have charged had they known the additional information. Given the number of insurers who insure people with penalty points as a matter of course, it's not a foregone conclusion that omitting to mention this to any insurer would invalidate the contract.

And contrary to other views, this would NOT be upheld in any court if the insurer took the matter to court to try to seek enforcement. The only option open to the insurer is to ask for an additional amount for future cover, or to cancel the policy. Demanding retrospective additional amounts IS a variation to the contract, and arguable in court only by the policy holder as breach of contract (not the insurer) and only then IF the insuraqnce company refuse to uphold the existingly priced contract. I doubt that they would want this type of argument to go to court to be tested, as it would open the floodgates to thousands of others if the ruling went against them.

As a debt adviser, I advise people with this type of demand to call the bluff of the company involved (because that is all it is - unenforceable bluff) and contact the company today by fax to enquire whether they are cancelling the contract by invalidating the insurance as a result of the omission, or whether they are attempting to vary the terms and conditions by adding an additional premium (albeit backdated) to the policy.

I would advise anyone on this situation to get a new insurance in place forthwith (if the insurance company do not respond favourably by return the same day, as the existing policy may be invalid from this point - a grey area of law that would have arguable points for both sides should an accident happen from this point on and the validity of the policy was brought into question by the insurer).

You are far better dealing with this situation BEFORE any accident occurs rather than after an accident, as the insurance company involed will almost certainly try to wriggle out of liability and wait for you to challenge them in court (which you COULD lose - the cost of which could be significantly higher if you are ordered to pay the other sides costs as well )
If you just get a new policy from another insurer where you HAVE quoted any penalty points you have, and cancell the existing policy (about a £30 cost usually to cancel) you can safely tell your existing insurer where to put their demand for the extra money. Only then can you start to argue about who owes what to whom (ie if you paid for a years cover in advance, then the value of the existing amount of cover left owing will become a point of contention between you and the company demanding more money, as they almost certainly won't hand back any excess after they taken their admin fee (the £30 or so mentioned above) as they will claim that you owed them this amount retrospectively anyway so they are entitled to reclaim what you owed them from the existing value of your remaining cancelled policy. Your only recourse after this is to either complain to the FSO or take them to court to try to reclaim the remaining value of the cancelled policy.