Car Insurance Admin Fee for cancelling Policy

CarlyF

Good Afternoon all,

Not sure if anyone can help or not.

I recently took out Car insurance with E INsurance and then had to cancel after 8 days, i asked for a refund for what i was owed (I paid approx £47 deposit and obviously understand that the days i used the policy for will still be charged) and they have said that there will be no refund even in the cooling off period as thiS covers the Admin fee's. i looked online and it does state this:

"The cooling off period is 14 days from the date you buy the insurance or the date you receive the policy documents, whicever is later. If you decide to cancel the policy once it has started, you will have to pay for the number of days you have been on the cover plus an administration charge to cover our costs."

I clearly didnt read this section when i bought the insurance and obviously didnt think i would be cancelling it! £50 though - for an Admin charge! I emailed to ask for a breakdown of these costs (reminiscent of the bank charges i received back!) and this was the response:

"I can advise that the £50.00 cancellation fee is one fixed price and is applied to all policies.

We are unable to provide you with a breakdown on how this is calculated, I can advise in general that this does cover the costs of setting up and cancelling the policy , notifying the Motor Insurance Data base that you are covered for insurance, notifying the Legal Team that you require legal assistance.

Policy and Administration charges can be viewed within our Terms Of Business and can be located on our home page www.ecarinsurance.co.uk."

Is there anything i can do about this (Like with the bank charges charging an extorionate maount for admin fee's) or have i lost my cash :-(

Any help would be much appreciated,
Thank you
Carly

lisyloo

Sorry, you are stuck with it. Admin charges are legal and are not the same as penalty charges. The fee you have been quoted fits within the guidelines.

These are the sorts of things it might cover

staff time
their pension
their tax & NI
time off e.g. sick, holidays
their training
their manager
their desk & chair
hardware
software
rent
electricity
employers NI
employers liability insurance
paper, stamps, ink & printers
costs of storage of paper, stamps, ink & printers
costs or ordering paper, stamps, ink & printers
share of costs of daily royal mail collection
their share of payroll costs
their share of office cleaning costs
their share of kitchen equipment costs
their share of health & safety costs e.g. provision of fire extinguishers
their share of training for fire marshals and first aiders
their share of hygiene provsision e.g. paper towels, loo roll, sanitary disposal
admin costs for processing your payment
fees e.g. visa for your payment
time off for company meetings
time off for fire drills
share of business rates
etc.

mlightbu

I agree that something has to be done about the fees for cancelling or amending an insurance policy. I've been charged £25 for cancelling my insurance policy with M&S. When I ask why, the person said that its an automatic charge generated by the computer for the amendments to the policy. I said there is no way it costs you £25 in admin fees when its generated by a computer, just to print out a letter!!!! its ridiculous and makes me very angry that I paying £25 for a piece of paper generated by a computer. They are making money for nothing. They said there is nothing they can do about it. I want to complain to someone but I'm not sure who I need to complain to. This is a totally unjust charge and the insurance industry should be pulled up on this as there is no way on earth it costs them £25 for an admin charge. So if anyone can help please do so!

lisyloo

I said there is no way it costs you £25 in admin fees when its generated by a computer, just to print out a letter!!!!

Well I think you need to look at my list above.
Someone has to pay for the printer, someone has to be employed to order the paper.

Furthermore they spent money getting you a quote and setting up the policy.
That cost them money and they are entitled to claw back some of the costs that you have inurred them through changing your decision.

They are making money for nothing.

I doubt it very much.
They answered your questions, gave you a quote, set up the call center and computers to do all that for free and probably on a free phone line too.
It does cost money you know.
Why should someone else pay if your circumstances change?

This is a totally unjust charge

I don't agree (not very important).
The law does not agree with you (fairly fundamental).

EDIT - oh and by the way - you almost certainly did agree to it up front.
So if you object so much then why did you agree??

Oscar_The_Grouch

Agree with Lisyloo - the costs of running insurance brokers and companies is astronomical. Every time you take out a policy through an aggregator site, such as Confused, they get at least £40. That charge stands even if you cancel the policy after 8 days.

If you didn't like the terms of business, you shouldn't have taken out the policy in the first place.

lisyloo

Just to add - I don't work in insurance, but I do object to subsidising other people.

If you think of the cheap airline model, you pay for the basis.
If you want to eat - you PAY
If you want to take a bag - you PAY
If you want to make an amendment - you PAY

Insurance is going that way too.
Premium prices only cover the basic.
Expect to pay for anything else.

Personally I think it's fairer that the people who change car, partner, house or who ameks mistakes or are disorganised or whatever reason cover their own costs, rather than putting the costs on other motorists.

This is the business model that we are all stuck with these days whether we like it or not but as Oscar says you DO get the chance to read the terms and conditions and decline a particialr company UP FRONT if you don't like the way they operate.
You won't get a lot of sympathy here if you simply haven't bothered to read important points in a contract.

mlightbu

Lisyloo, maybe you work for an insurance company??? I used to and I also work for IT so know full well how much a printer costs!! Much as I understand some of your points, firstly you know nothing of my circumstances, the reason I'm changing the policy, the quote that they have given me and why they are so much more expensive than about 15 other insurers. The £25 is unjust for what I was asking of them. They were unable to be cooperative whereas another company I have switched to was, hence the reason for changing! Insurance companies make a profit on what they are charging for your premium already and this will take into consideration all of the points that you have made above. They don't need to charge over the odds for printing out a piece of paper!

mlightbu

I don't expect anyone to subsidise me at all and I'm not putting the cost on other motorists, as I have no choice but to pay it. Sometimes needs must if you have to make a change to a policy. Be a little more understanding and not so judgemental. If you are happy to pay over the odds for admin then good for you! I'm not and neither is CarlyF. All I'm asking for is a fair cost which £25 isn't. If you ask the insurance companies to justify the cost they can't!! Give me a breakdown of where the charges are and explain the reasons. Maybe then people will be more willing to agree to it.

lisyloo

Lisyloo, maybe you work for an insurance company???

No I don't (as I said in post 4).

I can jsut see the logic to the business model as I explained in post 4.

Perhaps you would like to justify to me (as another motorist) why I should cover the cost of your cancellation?

I don't want to cover the cost of other people eating or caring bags on an aeroplane so why should others pay for your change or mind or circumstances?

so know full well how much a printer costs

Agreed, there are other factors that are much more expensive, like staff time.
Paper and printers are not expensive.
I was just trying to demonstrate that there are more costs to running a business that just the cost of the piece of paper.

firstly you know nothing of my circumstances, the reason I'm changing the policy

Agreed.
But why is that relvant.
The change has incurred costs, so who should pay?
The insurer (which uiltimately means other customers like me) or you?
If there is a 3rd party to blame then ask them to pay and if you have a good case then take them to the small claims court for the costs.

the quote that they have given me and why they are so much more expensive than about 15 other insurers

I'm not following here.
If you organised your quotes in advanced and asked them not to renew then there should be NO cost.
The cost only comes in once you cancel a policy that's already running.

Insurance companies make a profit on what they are charging for your premium

The margins aren't huge, but the profits are based on people keeping a policy for year. It's an annual contract.

They don't need to charge over the odds for printing out a piece of paper!

It's not just for printing a piece of paper.
Let me run you an example.
Let's say the cost of your policy is £500 and their admin fees are £50 just for arguments sake.
If you cancel half way then they will STILL have incurred the whole £50 costs because all of their costs are up front.
So I would say that they are entitled to claim back half of £50 to coverr their costs for this ANNUAL contract because all of their costs are up front.

I don't knwo your circumstances but if you had cancelled BEFORE renewal there would have been no charge.
Perhaps you could clarify but it sounds like you have let the policy been renewed and then cancelled AFTER inception.

If you are happy to pay over the odds for admin then good for you!

Actually I've never had to, but I shop round BEFORE renewal so I've never had to cancel a policy.

custardy

you already agreed though
why wasnt it an issue before you sgned up? thats the time to query

Oscar_The_Grouch

mlightbu wrote: »

Lisyloo, maybe you work for an insurance company???

Errm... No. Read the post above yours and you'll see that Lisyloo does not work for an insurance company.

I work for an insurance company. The company I work for does not impose any admin charges, but the brokers that use them do. This is because they tend to give back their commission to reduce the price of the cover so they get more customers. They then "farm out" any non-fault motor accident claims to ambulance chasers for a fee and charge the customer money every time they want to change anything. It's the new way of making money.

Let's face it; the broker advertises their fees in their terms and conditions, which are freely available before you buy the product. If you cannot be bothered to read their terms and conditions, don't complain when they charge you their fees.