Car Insurance Refund Rip Off

prendergoggles

Love this site and use it for all my advice. So I hope that some people may have had a similar experience to me and can advise if I am wasting my time.

My car has come off the road having given up the ghost and is off to the scrapyard.
I am part way through my insurance year and my car breakdown policy. Admiral, my car insurers, refunded my part year but took off a cancellation fee of £47.50!
Green Flag, my breakdown cover providers, offered me no refund at all despite my policy having three months to run. I calculate I have £23 to run and they have taken this when providing no service.

I have written to both to ask them to breakdown why it costs so much to cancel their policies. I cannot believe it costs them this much to do the work. It would not surprise me if it was simply a case of updating their system.

I know that they can point to terms and conditions and say it says it here, but I cannot believe the actual cost is justified. Have the banks not been hauled over the coals for charging unjustified admin charges, these guys are up to the same thing in my eyes.

I am happy to take them both to the relevant Ombudsman if necessary but has anybody here had a similar experience and am I just wasting my time. However one thing this site has taught me is to battle these institutions to the end and they will cave in.

Both the people who provide my parking permit outside my house and my car tax are offering me part year refunds with no deductions.

Thanks in advance.

noh

The short answer is you are wasting your time.

Oscar_The_Grouch

The long answer is as follows:

You probably bought your insurance through a price comparison site. They charge around £40 for each policy sold. The insurers and brokers work to about 10% commission (brokers) and 90% loss ratio (Insurers), so their "cut" is only ever 10% of the premium you pay. Unless your premium is more than £400 (before insurance premium tax - that goes straight to the government), they are making a loss on providing you with a policy.

The insurance market is so competitive that if they charge more for their premiums, no one will insure with them. So what they do is make money by getting "kick-backs" from solicitors and credit hire firms if you make a non-fault claim and by charging those people that make changes to their policy.

Under FSA regulation, the charges have to be fair and reasonable. This means that they have to be able to justify the charges they are making. What they do is work out the cost of the time for the employee to put through the change or cancellation, the cost of the paperwork, the cost that the software house charges for the transaction, the fee, if any, from the price comparison site, the postage costs and (this is also a reasonable expense) the cost of the time it takes staff to explain the costs to the policyholder.

Aviva, who do not use price comparison sites, charge £39.25 if you cancel your policy.

As for the car tax, I think you will find they only refund the cost of any full months left on your tax disc, so if you apply for a refund on 2nd of the month, the "charge" is almost 1 months tax.

I hope this helps explain that the insurers are not trying to make a fast buck; they are just trying to make sure that only those that use their resources are charged for it.

Dangermac

prendergoggles wrote: »

Love this site and use it for all my advice. So I hope that some people may have had a similar experience to me and can advise if I am wasting my time.

My car has come off the road having given up the ghost and is off to the scrapyard.
I am part way through my insurance year and my car breakdown policy. Admiral, my car insurers, refunded my part year but took off a cancellation fee of £47.50!
Green Flag, my breakdown cover providers, offered me no refund at all despite my policy having three months to run. I calculate I have £23 to run and they have taken this when providing no service.

I have written to both to ask them to breakdown why it costs so much to cancel their policies. I cannot believe it costs them this much to do the work. It would not surprise me if it was simply a case of updating their system.

I know that they can point to terms and conditions and say it says it here, but I cannot believe the actual cost is justified. Have the banks not been hauled over the coals for charging unjustified admin charges, these guys are up to the same thing in my eyes.

I am happy to take them both to the relevant Ombudsman if necessary but has anybody here had a similar experience and am I just wasting my time. However one thing this site has taught me is to battle these institutions to the end and they will cave in.

Both the people who provide my parking permit outside my house and my car tax are offering me part year refunds with no deductions.

Thanks in advance.

Presumably, you agreed to a 12 month insurance policy. An insurance policy is a contract, like any other contract. All insurers and brokers have to impose cancellation charges to cover their costs, otherwise, what would happen is that everyone would be changing insurers very other month when the next good deal came along. For the (generally) small premiums involved in car insurance, this would be an admin nightmare.

With regards to the Green Flag cover, the same applies. Also, I'm sure that you havent, but they could have been called out to 10 breakdowns during the time that they were providing this service to you. Hence, no refund.

prendergoggles

Thanks for all your responses, probably not what I wanted to hear but I will see what these companies say.

Cheers again.

dunstonh

I am happy to take them both to the relevant Ombudsman if necessary but has anybody here had a similar experience and am I just wasting my time. However one thing this site has taught me is to battle these institutions to the end and they will cave in.

For reference, the FOS have sided with the insurers when the cancellation fee is £50 or less and published. They also expect a relatively fair refund system but it doesn't have to be exact. Anything up to 2-3 months out seems to be acceptable to them.

Examples of real cases have appeared in the FOS publications.

Inky_Pete

I'm in a similar position in as much as my partner has bought a new car half way through her year long policy and her current insurer (Budget) has quoted a ridiculous premium on it - between 3 and 4 times as expensive as quotes we've got via internet search engines.

When we enquired about cancelling the Budget policy to go with one of the cheaper quotes they are insisting that there would be a cancellation fee of £35 (fair enough), but that there would also be no refund at all for the unused 6 months of the policy!

I've spoken to various people at Budget and have finally been promised a call from a "senior manager" on Monday, but so far everyone is just sticking to the script and insisting that this is the way it must be.

I've since found this on the Financial Ombudsman Service website -

54/4
cancellation of motor insurance by policyholder – whether firm correct in refusing any refund of premiums
Mr A took out the firm’s standard motor policy in February 2005 and paid the annual premium in full. Five months later, he decided to sell his car as he no longer needed it. However, when he returned his policy to the firm, it refused his request for a refund of some of the premium.
The firm said that if it cancelled a policy, then it would normally make a pro rata refund of the amount the customer had paid. However, when a customer cancelled the policy it did not refund any premiums if the cancellation was made four or more months after the start of the policy. When the firm rejected Mr A’s complaint about this, he came to us – saying he thought the firm was ‘grossly unfair’.
complaint upheld

- (It's issue 54 of their newsletter but I can't post links as a new user) - it contains this case study of an upheld complaint which seems to cover my situation nicely.

Fingers crossed that I can make someone see sense on Monday!

prendergoggles

Well I took Admiral, my insurers who charged me £47.50 to cancel, to the ombudsman and I got a letter today from them saying they will waive the charge not because they are wrong but because they value all customers.
Whatever it is I count it as a success and contrary to the pessimistic posts above. It shows you need to push needs guys all the way and they will cave in. Now to get my cash back from Green Flag.

I coming for my cash baby!

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What a waste of time. Be sure to bill them for that too.

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prendergoggles

What are you being sarcastic about?