Car Insurance Cancellation Rip Off

RodForte

Hi

After loosing my job I decided to sell my car as i needed the money and I didn't really use my car much.

I rang my insurance company, (Direct Line), to cancel my policy and direct debit at their end, only to be told that, I could cancel the policy today which would cost me 1 months insurance and I would also have to pay for the remaining 4 months for my breakdown coverage, but they could not give me an exact figure of how my the final cost would be over the phone

or

I could 'suspend' my policy and continue to pay the remaining 4 months left on the policy which would be returned to me after that in November (it's now August!!!)

So, I have the option to continue to pay for something that I don't own and don't need or get penalised for canceling for a service that I don't need !!

I get absolutely fed up with how these large corporations treat the general public as nothing more that cash cows.

It's almost as if your money is not yours and your bank account is only their so they can access your cash one way or another.

Direct line have gone down in my estimations and are just like the rest of em, con artists and hide it all in the small writing to cover themselves.

Premier_2

How this a rip off?

You can cancel the insurance. When you took out the policy you would have been given the terms of cancellation. It appears they have reiterated these to you now - charge equivilent to 1 month. That sounds very good compared to many other insurers.

Breakdown cover, with whichever supplier, rarely is refunded if cancelled early.

RodForte

Because all companies do dissimilar policies does NOT make it right or fair or ethical.

If you went to the supermarket and they charged you for food that you may buy next week and they all did the same would that be ok or products that you had picked up and put back on the shelf would that be OK because they all did the same and it's company policy

My point is, why do you have to pay for something, anything at all, that you no longer need or use or be penalised

If you don't need an item or you don't use a service, (agreed contracts not included, mobile phone companies do bend this one quite a bit), then there is nothing to pay for.

lfc321

RodForte wrote: »

My point is, why do you have to pay for something, anything at all, that you no longer need or use or be penalised

If you don't need an item or you don't use a service, (agreed contracts not included, mobile phone companies do bend this one quite a bit), then there is nothing to pay for.

That's the point - you have an agreed contract. Insurance premiums are calculated on an annual basis. You signed up for one year of insurance (albeit paying for it monthly - they charge you interest for doing this, or you have the option to pay a lump sum at the beginning of thh year). You are now cancelling the policy before the end of the year's contract. They have agreed to refund you for the unused months apart from a 'cancellation fee' of one month. Sounds reasonable to me.

The supermarket analogy is flawed. This is like a mobile phone contract that you are cancelling early - they'd charge you a cancellation fee too.

Hintza

RodForte wrote: »

My point is, why do you have to pay for something, anything at all, that you no longer need or use or be penalised

How do you think the policy is cancelled? By magic? Someone physically has to adjust the records and sort out all the paperwork. You have also taken out finance on the deal this needs to be sorted out too.

All premiums are paid annually in advance. If you decide to pay monthly you are in effect borrowing the annual premium which you then pay off. So you will have the finance charges to pay too.

RodForte

I see your point, but, car insurance is, or used to be, a Policy, not a contract if they wish to act as a financial institution and charge you interest so they can break down your payments into monthly chunks so that you, can afford to pay them, then at most you should pay the outstanding interest that they want to earn for giving you the luxury of being able to pay them a monthly payment.

The mobile phone companies do subsidise the purchase of a very expensive electronic gadget which someone has to buy from the manufacturer, so why not the user, but, your contract also includes a certain number of minutes that you are not going to be using for whatever number of months remain on your Contract but they do make it quite clear that it is a contract you are entering, they also offer a service without a contract, so the choice is yours

An insurance policy is only needed for as long as you are at risk, I wonder how many people pay home contents insurance for a house they no longer live in, they probably do, it's just that I am not aware of it.

The government stipulates that as an owner of a car, it is law that your car is insured to drive it on public highways and quite rightly so. The insurance company say that you will continue to for your policy whether you own a car or not because you paid by monthly installments.

If I was to miss a months payments I would get a letter within a 4 week period to pay up, if I cancel my policy I have to wait 4 months and pay a fee for then to pay up, mmm that does sound quite reasonable actually, what was I thinking of.

But, hey if the general public think it's ok to continue paying for something they no longer need or use, because they had been given the pleasure to pay for it by monthly installments, and because the other multi nationals do the same, then, I have definitely got it wrong, please accept my apologies and I will gladly continue to pay for my car insurance whilst somebody else is driving it and also paying car insurance to meet the legal requirements to drive that car on the public highway.

Maybe I should set up my own insurance company as the public really don't mind giving you money for the pleasure of being able to give you money on a monthly basis.:rotfl:

Premier_2

RodForte wrote: »

...If you went to the supermarket and they charged you for food that you may buy next week and they all did the same would that be ok or products that you had picked up and put back on the shelf would that be OK because they all did the same and it's company policy...

That's the wrong analogy.

Consider you go to the supermarket and buy a tin of beans. It's a large tin and you only use half of the contents.

Would you expect to be able to refund the unused portion of the contents and the supermarket to refund you half the price paid?

dacouch

Car Insurance is a contract, you pay the premium and agree to abide by their conditions (Which include any cancellation charges) and the Insurers' part of the contract is to pay any claims that are covered by the Policy (Contract).

A Car Insurance Policy is an annual contract (Unless you have taken cover for a smaller period). As the previous poster has pointed out the premium is payable up front, if you decide to pay over instalments you are paying the premium by instalments, you are not paying for each month at a time.

When you took cover out the Terms and Conditions were available for you to read and you almost certainly ticked a box to state you have read and agreed to them. If you were not happy with the cancellation charges you could have simply declined the quote and chosen another Insurer who would almost certainly have similar or worse penalty charges.

Halloway

Premier wrote: »

That's the wrong analogy.

Consider you go to the supermarket and buy a tin of beans. It's a large tin and you only use half of the contents.

Would you expect to be able to refund the unused portion of the contents and the supermarket to refund you half the price paid?

I'm afraid that yours is the poor analogy. The insurance company, aside from some admin costs are not paying for and then reselling a physical item. Rather they are betting on a particular set of probabilities. Those probabilities are affected by the time that the risk exists. Once the policy is cancelled that risk no longer exists so any premium paid for the expired portion of that risk is pure profit to the insurance company.

I'm not saying that that is necessarily a bad or wrong thing, merely that the 'tin of beans' analogy doesn't really apply.

RodForte

I admit the supermarket analogy is not perfect

RodForte

I entirely agree with having to pay the outstanding interest that you have accrued, but for someone to cancel a policy and adjust records cannot take that long or cost that much as most, I presume, use some kind of computing system, mind you the banks charge us a fair few quid for processing overdrafts and the like so maybe it does cost quite a bit and not magic. Thanks for your informative post