Car insurance cancellation fees Robbery!

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  • Tozer
    Tozer Posts: 3,518 Forumite
    Steve1981 wrote: »
    Something I forgot - you cant continue to run insurance on a vehicle you no longer own - you have no insurable interest

    True but as you won't be making a claim, there is no loss to anyone.
  • lisyloo
    lisyloo Posts: 29,583
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    True but as you won't be making a claim, there is no loss to anyone.

    Go careful here.
    I did read (may well have been on these boards) that someone had an accident and had no insurance, so it came back to the previous owner as they had insurance in place.

    Might be a very small risk, but it still exists.
  • dunstonh
    dunstonh Posts: 116,044
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    For the record I also think the FSA are wrong to think that anything over £10 is fair when it comes to a simple admin change. It'll probably take the operative about 5 minutes to complete.

    As lisyloo points out, the transaction itself maybe cheap but the costs involved in allowing that transaction to be done are not.

    The FOS publication made it clear that the company bases their premiums on 12 months of cover and that premium covers their costs and gives a profit. If the insurance doesnt last 12 months then the insurer may not cover costs and make a profit and is therefore justified in making a charge to offset that.

    Its not just the costs at point of cancellation but the setting up costs as well.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Tozer
    Tozer Posts: 3,518 Forumite
    lisyloo wrote: »
    Go careful here.
    I did read (may well have been on these boards) that someone had an accident and had no insurance, so it came back to the previous owner as they had insurance in place.

    Might be a very small risk, but it still exists.

    Can't see how this would work as if the previous owner had not been negligent then there would be blame for a claim to attach to. Insurance only indemnifies the policyholder and does not run with the car - hence if I sold you my car, you would not have my insurance policy as well.
  • lisyloo
    lisyloo Posts: 29,583
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    I will see if I can find the post for you but I'm sure I didn't dream it.

    EDIT: Sorry I can't find the post but what raskazz is saying below is ringing a bell.
  • raskazz
    raskazz Posts: 2,877 Forumite
    Tozer wrote: »
    Can't see how this would work as if the previous owner had not been negligent then there would be blame for a claim to attach to. Insurance only indemnifies the policyholder and does not run with the car - hence if I sold you my car, you would not have my insurance policy as well.

    This is incorrect. Whilst a certificate of insurance is out there for the car, if the new owner does not insure the car then the insurer is still exposed to Road Traffic Act liabilities or 'Article 75' liabilities. So if the insurer is forced to pay out under either, it is within its rights to recover any costs from the policyholder - who has been negligent and breached the policy conditions by not informing the insurer of the sale - or the driver responsible.

    The car will also be showing as correctly insured on the Motor Insurance Database, when it may not actually be insured by the new owner.
  • raskazz wrote: »
    This is incorrect. Whilst a certificate of insurance is out there for the car, if the new owner does not insure the car then the insurer is still exposed to Road Traffic Act liabilities or 'Article 75' liabilities. So if the insurer is forced to pay out under either, it is within its rights to recover any costs from the policyholder - who has been negligent and breached the policy conditions by not informing the insurer of the sale - or the driver responsible.

    The car will also be showing as correctly insured on the Motor Insurance Database, when it may not actually be insured by the new owner.

    also take in to consideration that most insuers when giving you a policy number state "it is your responsibility to inform us of any changes that may affect the policy" the vehicle being kept at a different address= different risk, so its possible they may try and get out of paying out under non-disclosure, if this happens you could get stumped with the bill.

    if its not cut & dried then obviously some insurers will do their best to avoid paying out.
  • Tozer
    Tozer Posts: 3,518 Forumite
    raskazz wrote: »
    This is incorrect. Whilst a certificate of insurance is out there for the car, if the new owner does not insure the car then the insurer is still exposed to Road Traffic Act liabilities or 'Article 75' liabilities. So if the insurer is forced to pay out under either, it is within its rights to recover any costs from the policyholder - who has been negligent and breached the policy conditions by not informing the insurer of the sale - or the driver responsible.

    The car will also be showing as correctly insured on the Motor Insurance Database, when it may not actually be insured by the new owner.

    Sorry but that isn't right. Section (not article) 75 of the RTA is a method by which the insurer cannot decline third party cover on the basis of a vitiating element in the contract of insurance. If the policy holder has not been negligent then there is no liability for the policy to attach to.
  • raskazz
    raskazz Posts: 2,877 Forumite
    Tozer wrote: »
    Sorry but that isn't right. Section (not article) 75 of the RTA is a method by which the insurer cannot decline third party cover on the basis of a vitiating element in the contract of insurance. If the policy holder has not been negligent then there is no liability for the policy to attach to.

    Erm, it is right and unfortunately you have totally misunderstood my post in a way that belies your lack of understanding.

    Article 75 is not a section of the Road Traffic Act (hence why I wrote Article 75 not Section 75), it is one of the Motor Insurers' Bureau's Articles of Association.

    The relevant parts of the Road Traffic Act are s. 147, 148, 151 and 152 IIRC. I suggest you read them and digest them before you reply.
  • Tozer
    Tozer Posts: 3,518 Forumite
    raskazz wrote: »
    Erm, it is right and unfortunately you have totally misunderstood my post in a way that belies your lack of understanding.

    Article 75 is not a section of the Road Traffic Act (hence why I wrote Article 75 not Section 75), it is one of the Motor Insurers' Bureau's Articles of Association.

    The relevant parts of the Road Traffic Act are s. 147, 148, 151 and 152 IIRC. I suggest you read them and digest them before you reply.


    Erm. MIB is for uninsured drivers or where a personal injury occurs and the driver cannot be traced. What does that have to do with the issue?

    Thanks for the references - I haven't done RTA litigation for about 12 years so forgive me if my memory is a little cloudy...
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