insurance - automatic renewal

roz67

Can someone advise me where I stand with my bike insurance company.
I received a renewal letter but decided not to continue with the same company.
I cancelled the direct debit as it stated on the letter that 'if we cannot take payment we will be unable to renew your policy and you will no longer be insured with ****** from your renewal date'.

I took this to mean that if I cancelled the payment they would not renew but I have now been told that it was renewed and that if I now cancell there is a £50 charge to pay.

I argued this with them only to be told that I should have contacted them to cancell.

Nowhere on the letter does it state that I must contact them if I did not wish to renew.

Where do I stand with this?

Thanks
Roz

Quentin

The letter does sound quite clear that your policy is cancelled if the direct debit is cancelled (normally cancelling a direct debit only means you are no longer paying by that method).

Keep the letter, but write to them (refcorded delivery) with a copy pointing out the part you are relying on, and ask them to confirm that your policy is cancelled from renewal in line with their statement and that there are no further charges to pay, and take it from there.

dunstonh

Normally cancellation of the direct debit doesnt cancel the contract and you remain liable for the ongoing cost. However, as Quentin says, your letter is worded in a way that would be easy to get that impression.

Where do I stand with this?

Tell them that you dont feel the letter is worded in the way they are telling you and that if they continue to demand payment that you will make a formal complaint and will take it to the FOS if required.

ijgreer

Depends on how long it took you to cancel your direct debit.

It can take you bank up to 5 working days to notify a company of this, so this company could have renewed your policy and THEN received information relating to your cancellation.

If thats the case, there is nothing you can do, the best and only way to cancel in my opinion, is a phone call AND a follow up letter sent recorded delivery confirming the cancellation.

If you cancelled long before the week before renewal, make a complaint in writing, they have to acknowledge it within 5 working days, failing a satisfactory response, you can make a complaint to the FOS (Financal Ombudsman Service).

The company involved will get notification of this and it costs them £350 to enter into the case in which to defend themselves. 9 times out of 10, they will refund your money as its cheaper to pay out £50 than £350.

Hope this helps, but remember, its only if you cancelled your direct debit giving them plenty and fair warning, failing that, I wouldnt pursue it as you don't have a leg to stand on legally, as they have upheld their part of the contract that you originally entered into.

I

Quentin

That advice isn't too helpful.

In this particular case, the letter said that should a dd fail, then the contract was cancelled from the renewal date.

No mention of giving "plenty and fair warning" at all.

The OP should certainly pursue this in line with the previous advice and ignore this latest contradictory advice.

ijgreer

I disagree with previous posting, the insurance companies are only made aware of a cancelled direct debit on the day it is finalised, if a bank delays it the full five days and the policy has been renewed in the interim period, then the banks delay has caused it.

Its common practice for most banks to operate in this way as they need to adjust mandates and notify the insurance companies direct debit department.
If the company has renewed the policy as they have been made aware of this cancelled direct debit, then they will charge a fee for services provided.

Which is why I did say that if plenty of time has been allowed for the cancellation to leave the bank and reach the company, then it shouldnt have been renewed and he can pursue it further.

Quentin

From the letter wording we have been given it doesn't matter what the circs of the failed dd are. It says if the money isn't taken, the contract is cancelled.

Thus even if the dd wasn't cancelled, but the OP was over his limit and the bank merely refused to pay the dd, according to the letter, then the contract would have been cancelled.

ijgreer

No, if the policy was renewed and a failed payment resulted in this, then the company in question would have had a default payment to register against the customer as they would not have been made aware of the cancellation.

I understand and agree with what you are saying with respect to the renewal details provided on the OP's letter, but the point that we are discussing is the direct debit mandate, if the company is not aware of the cancellation as the bank has not informed them of it, and they renew it (chances are a payment wouldnt be made for another month anyway as most companies lift a pre renewal deposit which covers the following years policy deposit), then the company will assume that the policy is to be renewed.

It is not FSA practice to let a policy on direct debit to just lapse without advice from the customer.
This protects the customer from remaining uninsured in case they are for example unaware of their renewal.

ijgreer

Also with an auto renewal, some companies require a copy of alternative insurance from the renewal date in order to backdate the cancellation as it does state in the terms of business that the insurer will charge you for the services that they have provided.

Although, it is still at the brokers discretion to waive the cancellation fee in this case, even if the insurance allow a full return premium.

Rolandtheroadie

roz67 wrote: »

Nowhere on the letter does it state that I must contact them if I did not wish to renew.

Does it say anywhere on the letter that you need do nothing and the insurance will renew automatically?