£45 to cancel car insurance...

Mick-Coll

My car exploded on saturday!! it was due to a mechanical problem and its far too technical to go into any detail... but basically there was a build up and it went BANG!!

so... i called my insurance... i pretty much knew i wouldnt be covered as it was mechanical wear and tear. i accepted this and understood that all i could do was cancel my policy... however they want to charge me £45 to cancel?!

now im no money expert... far from it. but can they do this??? i've heard all the talk about illegal/unlawful admin charges that have been on the radio recently and this seems to fit that description.

what can i do (if anything) to avoid paying this? i need help... i'm a financial idiot lol.

thanks!!

mick

Bossyboots

You are not being charged a penalty for breaching contract terms, you are being charged an admin fee for cancelling your policy. This will be your t&c's and is standard practice. There is nothing you can do to avoid paying it unless you can persuade your insurer to waive it.

Mick-Coll

from what i've read on the net tonight... the consumer goods act 1979 states that a company can only charge "admin charges" that cover their costs and no more. is that nonsense?

Bossyboots

Mick-Coll wrote:

from what i've read on the net tonight... the consumer goods act 1979 states that a company can only charge "admin charges" that cover their costs and no more. is that nonsense?

There is a difference between penalty charges and cancellation fees. Penalty charges can only equate to the admin costs actually incurred as a result of the breach of contract. The consumer has not control over these as the amount is set by the companies as they please so are an unfair contract term.

Cancellation charges are a term of your insurance policy should you wish to end the contract mid term. You are told the level of these at the start of the policy and have the option to cancel the policy at the start if you do not agree with it.

Astaroth

The "problem" is that you signed a 12 month contract... are you intending to buy a new vehicle then you should be able to suspend the current policy and then change the cover over to the replacement vehicle when you have it - this will possibly attract an admin fee so it may be worth checking if doing this is going to be cheaper than paying the cancellation fee and then just taking out a new policy on the new vehicle

Irezumi_Muzan

I've been wondering about this... My mom's ancient car died last December. She immediately bought a new (old) one (8 years old instead of 19 years old...). She called her insurance company and asked for a quote for the new car. She had previously paid in September for the old car (about £170) and expected to add a little bit more for the newer car. The insurance company quoted her an extra £500 for the end of the year. She shopped around and went to another company for £127 for a year. She cancelled the policy with the old company and they charged her £100. It's been bothering her so she contacted the ombudsman who said there is no reason why the insurance company should have charged her so much and she was to start on at them to get some of the money back. Does that sound about right? My mom isn't confrontational (unlike me...) so doesn't want to start on at the insurance company if she isn't likely to win. I do understand they are allowed to charge an admin fee but £100 does seem rather steep... Any opinions?

Bossyboots

Irezumi_Muzan wrote:

I've been wondering about this... My mom's ancient car died last December. She immediately bought a new (old) one (8 years old instead of 19 years old...). She called her insurance company and asked for a quote for the new car. She had previously paid in September for the old car (about £170) and expected to add a little bit more for the newer car. The insurance company quoted her an extra £500 for the end of the year. She shopped around and went to another company for £127 for a year. She cancelled the policy with the old company and they charged her £100. It's been bothering her so she contacted the ombudsman who said there is no reason why the insurance company should have charged her so much and she was to start on at them to get some of the money back. Does that sound about right? My mom isn't confrontational (unlike me...) so doesn't want to start on at the insurance company if she isn't likely to win. I do understand they are allowed to charge an admin fee but £100 does seem rather steep... Any opinions?

You need to put in some more facts and figures here. How much was the premium for the policy she started in September? When you say they charged £100 do you mean they deducted this and sent her the balance of the premium or that they charged £100 admin fee.

Your mum will still have had to pay for the three months she was covered, as well as the admin fee. Are you sure this isn't how the £100 was calculated?

Irezumi_Muzan

She paid approx. £170 at the end of September to insure the old car. When she told them she wanted to cancel the policy, they sent her the amazingly huge total of £2.15. They said approx. £68 was to cover the months she had been insured (end of September to start of December; we're not arguing about this part) and that the £100 was an admin charge. They only told her this after she phoned up to ask why she hadn't received a larger amount back. Hope I am making more sense now...

Bossyboots

Irezumi_Muzan wrote:

She paid approx. £170 at the end of September to insure the old car. When she told them she wanted to cancel the policy, they sent her the amazingly huge total of £2.15. They said approx. £68 was to cover the months she had been insured (end of September to start of December; we're not arguing about this part) and that the £100 was an admin charge. They only told her this after she phoned up to ask why she hadn't received a larger amount back. Hope I am making more sense now...

That is much clearer and yes, it does seem astronomical to charge £100 admin fee. If she has been advised that this is too much, then she should pursue it. If she doesn't want to then she could authorise you to do so on her behalf.

Penelope_Penguin

I bought a new (to me) car last year, and shopped around for insurance. All the companies I looked at (all big well-known companies) included a fee (about £35 if I remember) if you amended or cancelled the policy before the year was up. I tend to shop around for car insurance ever 2 years, and this was the first time I'd seen something like this.

I get the impression that companies want to keep the *headline* quote as low as possible, so add *hidden* charges like this.

Penny x

Irezumi_Muzan

Bossyboots wrote:

That is much clearer and yes, it does seem astronomical to charge £100 admin fee. If she has been advised that this is too much, then she should pursue it. If she doesn't want to then she could authorise you to do so on her behalf.

I've just spoken to her and she has agreed to go for it (with me right behind her, of course). I'm glad it wasn't just me thinking £100 was a bit harsh... cheers!