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Car insurance..cancellation
rara879
Posts: 56 Forumite
Hi,
At the beginning of last year I was in hospital and my finances ended up in a bit of a terrible state.
Paying bills was the last thing on my mind so I stupidly missed a car insurance payment.
I arrived home to find a letter telling me that I had 7 days to pay or my insurance would be cancelled, however I didnt get home to get the letter until the 8th day. I immediately called the company who told me they couldnt take the payment then and it was too late to do anything as they had already cancelled the policy. Therefore I ended up taking out a new policy with another insurer.
Nearly a year later I have been sent a letter by the companies debt collection department telling me I have to pay over £300 within 14 days or they will be passing my case to an outside debt collection agency. This apparently consists of a cancellation charge plus the remainder of the years insurance, even though I was actually only insured for 5 months, which were paid for. This is the first I have ever heard of these charges, nearly a year later and there is absolutely no way I can afford to pay it in 14 days!
Is there anything I can do as this is the first time they have informed me of this almost a year later?
And also, is it right that they can ask for payment of the remainder of the year even though they have already been paid for the months I was insured for?
Your help would be greatly appreciated, I already have enough debts to worry about without this as well!!
At the beginning of last year I was in hospital and my finances ended up in a bit of a terrible state.
Paying bills was the last thing on my mind so I stupidly missed a car insurance payment.
I arrived home to find a letter telling me that I had 7 days to pay or my insurance would be cancelled, however I didnt get home to get the letter until the 8th day. I immediately called the company who told me they couldnt take the payment then and it was too late to do anything as they had already cancelled the policy. Therefore I ended up taking out a new policy with another insurer.
Nearly a year later I have been sent a letter by the companies debt collection department telling me I have to pay over £300 within 14 days or they will be passing my case to an outside debt collection agency. This apparently consists of a cancellation charge plus the remainder of the years insurance, even though I was actually only insured for 5 months, which were paid for. This is the first I have ever heard of these charges, nearly a year later and there is absolutely no way I can afford to pay it in 14 days!
Is there anything I can do as this is the first time they have informed me of this almost a year later?
And also, is it right that they can ask for payment of the remainder of the year even though they have already been paid for the months I was insured for?
Your help would be greatly appreciated, I already have enough debts to worry about without this as well!!
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Comments
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Times are hard in the insurance world so they are probably trying to get any money they can in.
They can claim outstanding money for up to six years.
You need to read your policy as the terms in there are what will (probably) apply.
Bur generally……
If you cancel you end up paying a cancellation fee plus short term rates for the time you are on cover. The one of mine I have to hand says if I cancel after five months (so have been on cover for 40% of the year) I have to pay 60% of the premium.
If they cancel then I get a pro-rata refund so for 5 months cover I’d have to pay 40% of the premium.
Your policy might be different.
If you think that you have been treated unfairly because if the inflexible way they dealt with your case taking into account your stay in hospital then it is open to you to lodge a formal complaint and, if you are not satisfied with the outcome, you can escalate it to the FOS. Your company must deal with your complaint within 8 weeks but if it goes to the FOS that can take a year+.
I seem to remember reading somewhere that debt collection action should be suspended whilst there is an unresolved complaint in progress.
At the end of the day if you owe the money then you should and will have to pay but the timescale needs to be reasonable (on both sides)0 -
They cant come after you for the full premium as you didnt go the full term. They can however, come after you for any outstanding amount due up to the point of cancellation plus a cancellation charge. That can mean if you had paid for 5 months you could be required to pay 7 months premium as its not exactly pro-rata. The companies are required to tell you the cancellation rates.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Yep, but doesn't it depend on who cancelled? As above if I cancel then short term rates and cancelation fees apply, if they cancel the it's pro-rata and no fees0
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Yep, but doesn't it depend on who cancelled? As above if I cancel then short term rates and cancelation fees apply, if they cancel the it's pro-rata and no fees
In effect the OP has cancelled due to non payment.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
In effect the OP has cancelled due to non payment.
but the OP does say that they had to pay up or they would cancel.
I know some companies work different ways and have it the policy wording that if you pay by DD etc and cancel the mandate or miss payment they will take this as notification of cancellation, some others canel pro rata as they have insticated the canellation.
Would depend on the company, if the OP advises which company there maybe online policy wording.0 -
but the OP does say that they had to pay up or they would cancel.
That is correct. The non payment is down to the OP. Not the insurer. Like any business, it will only provide services whilst it is being paid.I know some companies work different ways and have it the policy wording that if you pay by DD etc and cancel the mandate or miss payment they will take this as notification of cancellation, some others canel pro rata as they have insticated the canellation.
Legally, cancellation of a direct debit does not cancel the contract and you can still be liable for any debt built up due to non payment. Whilst some companies choose to treat it as such, that is a choice they make.
Remember that car insurance is an single/annual payment. Any monthly payment is done under a credit agreement and you are effectively borrowing money to pay the premium.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Legally, cancellation of a direct debit does not cancel the contract and you can still be liable for any debt built up due to non payment. Whilst some companies choose to treat it as such, that is a choice they make.
If that is true, the insurer must define their choice in the t&c's beforehand.
If they don't, they cannot choose a non-legal definition later.
So the contract must still stand, or be subject to a pro-rata cancellation, as the customer has not legally cancelled.
Would you also argue in this case if the customer has cancelled, they don't have to declare they have ever had a policy cancelled on proposals?0 -
Certain policies ask if a proposer has had a policy cancelled due to default so in that scenario it would need to be disclosed.0
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That is correct. The non payment is down to the OP. Not the insurer. Like any business, it will only provide services whilst it is being paid..............Remember that car insurance is an single/annual payment. Any monthly payment is done under a credit agreement and you are effectively borrowing money to pay the premium.
Surely the premium was paid in full when the loan was taken out and any subsequent default on the loan is independent of the policy?
So on what basis do they cancel the insurance rather than just chasing the outstanding loan repayments?0
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