Car Insurance Cancellation Charges

Click_3

Have just sold a car and phoned to cancel the insurance policy after it running for 4 months. Expected to receive some sort of refund as had paid the full 12 months premium up front. Was aware of cancellation fee and obviously having to pay for the 4 and a bit months that the insurance had run for but after an additional fee calculated as a percentage of how long I'd had the policy any refund had been completely wiped out. This is not the first time this has happened and I have previously been advised to transfer our new car details onto the existing poliy however this didn't work out as cost effective as we could get cover for the new car much cheaper elsewhere. While I appreciate that cancellation fees have become the norm surely companies cannot get away with this when a policy has been in place for such a short length of time and I had been a good customer by paying the full premium upfront so that they were guaranteed getting the money from me for the full year ahead. What can we do about these unfair charges??

iamana1ias

Click wrote: »

Have just sold a car and phoned to cancel the insurance policy after it running for 4 months. Expected to receive some sort of refund as had paid the full 12 months premium up front. Was aware of cancellation fee and obviously having to pay for the 4 and a bit months that the insurance had run for but after an additional fee calculated as a percentage of how long I'd had the policy any refund had been completely wiped out. This is not the first time this has happened and I have previously been advised to transfer our new car details onto the existing poliy however this didn't work out as cost effective as we could get cover for the new car much cheaper elsewhere. While I appreciate that cancellation fees have become the norm surely companies cannot get away with this when a policy has been in place for such a short length of time and I had been a good customer by paying the full premium upfront so that they were guaranteed getting the money from me for the full year ahead. What can we do about these unfair charges??

Nothing. You accepted them when you kept the policy documents (which had all of these clauses in them). You signed up for 12 months of insurance. It is not a pay as you go arrangement. You broke the contract so you pay the charges.

dunstonh

What can we do about these unfair charges??

What is unfair about them?

I had been a good customer by paying the full premium upfront so that they were guaranteed getting the money from me for the full year ahead.

And that is what has happened.

I have previously been advised to transfer our new car details onto the existing poliy however this didn't work out as cost effective as we could get cover for the new car much cheaper elsewhere.

That "advice" would be unusual and would need to be justified. In most cases the advice would be to stay with the existing insurer until renewal and change then unless you can make up the cost of cancellation.

To be honest, I am surprised you are not getting some refund after just 4 months. Typically you would expect around 50% minus a cancellation charge of no more than £50. If the refund was less than the cancellation charge then it makes sense but that would suggest an annual premium of less than £100 which is unlikely (but not impossible).

DianeM

Exactly the same thing has happened to us with bike insurance and they wouldn't let me transfer to car insurance which was due either.
We paid about £90 in full a couple of months ago and when I tried to cancel last week they advised of the £50 cancellation fee and then told me they still want another £13 off me. I accept that we have paid in full and that we have to pay a fee but don't understand why they need more money off me. I thought the fee would come out of the insurance which was no longer required.
Anyway, my question is what will happen if I leave the policy to run it's course? I'm not happy about this but it is the cheapest option for us.

Quote

dunstonh wrote: »

Click wrote: »

I have previously been advised to transfer our new car details onto the existing policy however this didn't work out as cost effective as we could get cover for the new car much cheaper elsewhere.

That "advice" would be unusual and would need to be justified. In most cases the advice would be to stay with the existing insurer until renewal and change then unless you can make up the cost of cancellation.

That's what they said.

chelle39_2

I understand the £35 cancellation fee and would happily pay that, however i was insured with the post office. I had a direct debit agreement with them to pay £117.33 on or around the 18th of each month. They took a payment on 18/9/09 and then another on 1/10/09 and had changed the frequency of the direct debit to two weekly (some typing/computer error on their part) without notifying me. Surely they broke the contract? After a lot of argueing, as they refused to refund the 2nd payment taken when it was not due, i told them to cancel the policy and i would go elsewhere. They are now trying to charge me a £35 cancellation fee plus £284.23 for what they call a short cover rate plus the £268.16 i have already paid. So in total i have been charged £553.99 for less than 2 months insurance. Surely these fees are over the top and totally unjustified?

olly300

chelle39 wrote: »

I understand the £35 cancellation fee and would happily pay that, however i was insured with the post office. I had a direct debit agreement with them to pay £117.33 on or around the 18th of each month. They took a payment on 18/9/09 and then another on 1/10/09 and had changed the frequency of the direct debit to two weekly (some typing/computer error on their part) without notifying me. Surely they broke the contract?

Nope they have broken no contract they have just changed the terms without notifying you or made a "mistake".

chelle39 wrote: »

After a lot of argueing, as they refused to refund the 2nd payment taken when it was not due, i told them to cancel the policy and i would go elsewhere. They are now trying to charge me a £35 cancellation fee plus £284.23 for what they call a short cover rate plus the £268.16 i have already paid. So in total i have been charged £553.99 for less than 2 months insurance. Surely these fees are over the top and totally unjustified?

Don't argue with any business on the phone. It's a waste of your time, you can get angry and say anything and so can the person on the other end.

If your dispute is not being sorted out make sure you have the name of the person you are speaking to and note the date and time you made the call. Then politely end the call.

I usually say something along the lines of "unfortunately as we don't seem to be getting anywhere I am going to deal with the problem by writing to your head office" , then say bye and put the phone down. I have been phoned up again by the person in the call centre but I've repeated my previous line. Then if they phone me up again I ignore the call.

In your case what you can do is contact your bank in writing informing them the dates and the amounts you think that were wrongly debited by the post office and ask them to refund the money using the direct debit guarantee. The reason I said write to the bank is because some banks come out with rubbish excuse of why they can't do this and you need to contact the company etc. So to make your life easier always write to the bank either via a letter or using secure email from online banking and ask them to do this.

Then at the same time write a letter of complaint to the post office. Give your letter the title "Formal Complaint" and make sure you send it via recorded delivery to the complaints address noted in the policy booklet. This is so there is no argument that they haven't received the letter and when you sent it.

Clearly and concisely state what is disputed. State who you spoke to on the phone with the date and time when you originally tried to sort the issue out. State that you have cancelled your direct debits and as you owe them money for x,y or z (be honest about this) state you have enclosed a cheque for the amount you owe them, state the amount and put the cheque number in the letter. Staple the cheque to the back of the letter when you have finished writing it. Your last line should be something along the lines of if this issue is not sorted out then your next step will be to take them to court and they will be liable for all costs and interest.

Then wait 8 weeks for a written reply. Some companies will phone in this time - you I always ignore their phone calls, or say I'm busy and they need to deal with the issue in writing and then say "bye" and put the phone down.

After 8 weeks if nothing is resolved contact the Financial Ombudsman Service.

Most companies will resolve things before you need to take them to the FOS or start court action if your letter is clear and points to T&C in the policy document that are unfair or things that are not mentioned, and you have shown that you are not trying to get out of paying what you reasonably think you owe them. Whatever you do you must not stop the cheque you sent them.

In addition keep an eye on your bank account for the next year to check the company doesn't try and set the direct debit up again. If they do immediately ask your bank for a refund under the direct debit guarantee. This dispute is nothing to do with your bank and they have no legal right in most cases to pay a direct debit to a company that you don't give them authority to.