Car Insurance Cancellation

Ceriap-bryn

Hi,

I've recently got insured third party with an insurance group (Allen and Allen) in November, my car has now been scrapped because it wasn't roadworthy and i need to pay off the policy (over £600.00) to cancel and i don't even have a car anymore. Can they do this?

I did not make any claims at all in the period I had the insurance.

Can somebody please give me some advice

Thanks

dunstonh

Can they do this?

Not quite in the way you put it.

Car insurance is an annual contract. If you cease mid term you pay will expect to pay a cancellation charge and if paying monthly, you will have to bring the payments upto the point of cancellation. It doesnt need to be exact. e.g. if you cancel after 6 months, you may find you are asked for 8 months equivalent premium. The insurer cannot ask for the full years premium though unless you are right at the tail end.

It is one of the risks of paying monthly that you appear to get hit harder on mid term cancellation but you are not. Your monthly payments are often not in sync with the period of cover.

MarkyMarkD

As dunstonh says, you will likely be charged a cancellation fee by the insurer, and possibly the agency (if Allen & Allen is an agency, because they don't sound like an insurer).

But the two fees shouldn't add up to as much as almost a year's premium.

The exception would be if you have claimed. I wonder whether the insurance agency thinks the car was written off under the policy, rather than being scrapped for being an old heap?

Ceriap-bryn

Thank you for your reply. Much appreciated.

I have had the policy for two months and have paid them a deposit of £210 and 3 monthly payments of £119.00 They will not allow me to cancel now unless I give them £600. I don't understand why they are trying to claim back the whole policy costs from me.

The total cost of the policy is £1165.

So I'm in a catch22 situation. Unless I give them the money they are demanding I will have to let the policy run on a car thats been scrapped and pay £119 to them until the end of the policy.
Would the insurance ombudsman be able to help me get this sorted?

dunstonh

I have had the policy for two months and have paid them a deposit of £210 and 3 monthly payments of £119.00 They will not allow me to cancel now unless I give them £600. I don't understand why they are trying to claim back the whole policy costs from me.

So, you paid them £210 and 3 lots of £119 but only had 2 months of insurance need. You would expect them to come in upto 4 months worth you have to pay for as a rough figure. £1165/12*4= £388. So, something in the region of that figure would be what you would expect to pay plus a cancellation charge of up to £50. So, I would give £450 as a rough guide at most.

So I'm in a catch22 situation. Unless I give them the money they are demanding I will have to let the policy run on a car thats been scrapped and pay £119 to them until the end of the policy.

First thing you do is cancel the direct debit. That will stop them getting any more money. It doesnt remove your liability to pay but it stops them getting their money for the moment. Then you put in a written complaint to them. Make sure you mark it as a formal complaint. The basis being that they are charging you unfairly for the period of cover that has been used. You know you wont pay pro-rata exactly but they are not allowed to charge you the full years worth of premium.

Here is how the FOS view it:
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

Would the insurance ombudsman be able to help me get this sorted?

You cannot complain to the FOS until you have first complained to the firm and then received your deadlock letter. However, knowing how the FOS will view the complaint in advance of you making it will put you in a stronger position.

jack_spratt_2

It should be written into the policy schedule what charges will apply at early cancellation!!! it is common that after 2 months = 20% is charged 3 months =30% etc until 10 months =100% of the annual premium but each company will have there own cancellation charges

noh

The terms and conditions for Allen and Allen Group are here http://www.allenandallengroup.com/assets/termsandconditions/theaandagroupltd.pdf
They tell you the scale of deductions for cancelling early.
Is the arrangement to pay by installments a credit agreement? ie did you effectively take out a loan to pay the premiums?
Are they actually asking you to pay back this loan before refunding the premium to you?

Nigel