Cancelled Car Insurance and Accident Liability

amandamagpie

Wonder if somebody can tell me if my recent experience is 'normal'?

Recently renewed my car insurance with same company I have had for past few years. Few weeks ago my daughter (additional driver named on policy) drove in to the back of somebody. Fortunately, nobody was hurt, nor was the other driver's car damaged. Everything was very friendly but we notified the insurance company because my car was in a bad way. It was a very old Fiesta and to repair the damage would have cost more than the car was worth so we scrapped it and contacted the insurance company to notify them and cancel the policy. They told me we would have to pay a £45 cancellation fee which I thought was a bit mean, but okay. Had a letter today, however, telling me that the other driver did actually claim the day after the accident and, because, we no longer have insurance cover, we are liable for his claim of £800.

Now maybe I'm being a bit thick, but what is the point of insurance if they don't pay out in these circumstances? We had an up to date policy at the time of the accident.

Apparently, if we had kept the insurance cover they would have paid his claim, but why would I continue to pay insurance premiums when I no longer have a car?!

To make matters worse, when I said I couldn't afford to pay £800 within seven days, they said: don't worry, let it go to the debt agency and then you can arrange smaller, more manageable monthly payments with them!!

jacquit_3

that is absolute garbage! don't stand for it

you were insured at the time of the claim and your insurance company are legally obliged to indemnify you for it, regardless of when the third party made the claim. They can claim for ages afterwards, I think it's 2 years, and the company would still have to indemnify you!

You had a valid certificate of insurance which is a legal document, I hope you haven't returned it yet? Even if you had I'm sure the FSA would have something to say about their refusal to pay out.

Good Luck
Jacqui

Astaroth

How did you cancel the policy? Did you cancel it from the day you phoned them forward or did you ask the cancellation to be back dated at all?

Have you checked that the third party has reported the incident date correctly and not a later date that puts the incident after the cancellation of the policy?

Jacquit is, fortunately from my perspective, wrong regarding the indemnifying you if you have a valid certificate of insurance but had cancelled the policy. Whilst an insurer does have to act as the RTA insurer in these incidents (not the OPs) they have a legal right to recover from the former policyholder plus the former policy holder must have been to court twice (once to get judgement and a second time to get the judgement to be made defaulted) before the insurer can be forced to act as the RTA insurer.

jacquit_3

sorry Astaroth, you misunderstand me.
I was pointing out that Amandamagpie's certificate, and insurance was valid AT THE TIME OF THE CLAIM.
I agree that the company, or the third party may have logged the date of the claim incorrectly although this shouldn't have happened as Amandamagie had already informed them.
However, my experience is of a major insurance company who do indemnify under the road traffic act, maybe it is only FSA regulated companies that this applies to?
I doubt if the company had back dated the cancellation as it is a breach of FSA regs, that is if the company are regulated by them.

Jacqui

Astaroth

All insurers in the UK are regulated by the FSA.

You can cancel a policy back to inception at a customers request - normally this is limited to the 14 days cooling off period as the insurance company doesnt want to lose money but there is no FSA ICOB rules that prevent the cancellation from inception at a later date at the customers request.

If the certificate is valid at the time of the accident or had expired 14 days before the accident then the insurer can be made to deal with a claim as the Road Traffic Act insurer of the vehicle however after the insurance company has dealt with it they can get their money back from the driver of the vehicle at the time. Cases of RTA insurers is generally when the policyholder has committed fraud, allowed an unnamed driver to use their vehicle or when the vehicle has been stolen and the thief not caught.

jacquit_3

I'm sorry Astorath but you are wrong. I realise that you are very experienced and I have seen that you have given excellent advice on other threads.

The recent growth in the use of MID has led to changes in the way the FSA views the back dating of cancellations. This is now ONLY allowed within the first 14 days IF the policy does not meet the needs of the customer (ie not if they have found a cheaper quote), if cover has commenced they will still charge for the period of cover that has been used. The only other time back dating is allowed is if the insurer has made an error, has misquoted. Insurers cannot even back date cancellation in cases of dual insurance as they have been able to do in the past.
If this is not right then my company are lying to their employees who are then lying to their customers which I doubt they would do.

My company insist that certificates are returned following cancellation and say that it is an offence under the RTA to fail to do so. This is because they would be forced to deal with any TP claim if the customer was in possession of a certificate. Again as a major insurer I doubt that they would tell customers of this "offence" if it was not true. Or maybe I am just very trusting and naive!

Personally I cannot see that there would be any point in having insurance if a company were able to claim back the cost of a claim from a customer that had a valid certificate of insurance and cover in place just because they had cancelled their policy following the claim. Insurance companies would have a worse reputation than car clampers! It would be like saying "well if you're going to cancel I'll have my money back", the business equivelent of throwing the dummy out!
Professionally I know that the company would not have a leg to stand on as the policy is a legally binding contract that was valid at the time of the claim.

Bossyboots

You are correct about the Road Traffic Act. It is an offence not to return the certificate upon cancellation and you have to do that within seven days, so it is a bit surprising that having raised the issue you then remark that you hope the OP has not yet returned their certificate. If they have not done so, then the offence has already been committed and they should not be encouraged to hold onto the certificate any longer.

Astaroth

jacquit wrote:

I'm sorry Astorath but you are wrong. I realise that you are very experienced and I have seen that you have given excellent advice on other threads.

The recent growth in the use of MID has led to changes in the way the FSA views the back dating of cancellations. This is now ONLY allowed within the first 14 days IF the policy does not meet the needs of the customer (ie not if they have found a cheaper quote), if cover has commenced they will still charge for the period of cover that has been used. The only other time back dating is allowed is if the insurer has made an error, has misquoted. Insurers cannot even back date cancellation in cases of dual insurance as they have been able to do in the past.
If this is not right then my company are lying to their employees who are then lying to their customers which I doubt they would do.

My company insist that certificates are returned following cancellation and say that it is an offence under the RTA to fail to do so. This is because they would be forced to deal with any TP claim if the customer was in possession of a certificate. Again as a major insurer I doubt that they would tell customers of this "offence" if it was not true. Or maybe I am just very trusting and naive!

Personally I cannot see that there would be any point in having insurance if a company were able to claim back the cost of a claim from a customer that had a valid certificate of insurance and cover in place just because they had cancelled their policy following the claim. Insurance companies would have a worse reputation than car clampers! It would be like saying "well if you're going to cancel I'll have my money back", the business equivelent of throwing the dummy out!
Professionally I know that the company would not have a leg to stand on as the policy is a legally binding contract that was valid at the time of the claim.

I think we will have to agree to differ on this one then....

Having just spent 2 weeks with our director of regularoty risk trying to argue that we should not have to be cancelling policies back to inception for the current pilot I am in the process of setting up I am sure that she is correct in that policies certainly can be cancelled back to inception for reasons other than you mentioned (which is also backed up by an email from the FSA that she forwarded to me). Now your employers may choose not to cancel back to inception - ours do all the time at customers request and at times (eg fraud) the companies decision.

As I am sure you are aware, with almost all (if not all) insurers you cannot cancel the policy after having made a non fully recovered claim. If the OP did not cancel back to inception then our standard practice would have been to deal with the claim as their was insurance in place at the date of loss and we would then have also attempted to get the premiums for the remainder of the year back from the OP as the policy should never have been cancelled by them with a pending claim.

If the OP had been allowed to cancel back to inception then there would have been no insurance in place at the time of the incident but the OP would have had a valid certificate of insurance. I have always felt that my employers far too readily deal with claims as the RTA insurer so we would have paid out to the TP and in the mean time initiated debt recovery process (which are no way as strong as they should be either) against the OP..... though saying that, call our sales line enough times and I am sure they would have found someone green enough to be convinced into reinstating cover :mad:

I agree with your employers on the failure to return the certificate is an offence though.

Plus, as far as I was aware, our (insurance industry, not my employers) reputation is at least as bad as wheel clampers if not worse already