Car written off - still have to pay insurance?

angelta

My husband, who paid his premium in full, wrote his car off a couple of months ago. The insurers paid out the current market value of the car and he has replaced the written off vehicle with a smaller one, more affordable one. However, the insurers refuse to insure the replacement car and have, in effect, cancelled his insurance. As there was a write-off I can understand why he gets no refund, but does anybody know if it is normal practice for an insurance co to refuse to insure the driver. The broker claims it is the car they won't insure, but when I spoke to another member of staff it is clear that it is my husband they won't insure.

redux

angelta wrote: »

My husband, who paid his premium in full, wrote his car off a couple of months ago. The insurers paid out the current market value of the car and he has replaced the written off vehicle with a smaller one, more affordable one. However, the insurers refuse to insure the replacement car and have, in effect, cancelled his insurance. As there was a write-off I can understand why he gets no refund, but does anybody know if it is normal practice for an insurance co to refuse to insure the driver. The broker claims it is the car they won't insure, but when I spoke to another member of staff it is clear that it is my husband they won't insure.

Do you mean they won't insure him at all, or not on a continuation of the original policy?

Some insurers regard the policy as ending on write-off with the premium being fully earned, as discussed a bit above, which would cover the latter case, but if they simply won't insure him even on a new proposal that's another matter.

Some insurers don't want to cover certain cars they define as higher risk or higher value, or maybe not some cars for people with low or nil no claims bonus.

For instance, when I looked for quotes about 3 years ago, even with several years no claims bonus, two insurers said they don't quote for these high risk cars. Yet this is a family saloon not a sports model.

More recently, I looked at the possibility of having a second car with better fuel consumption and lower road tax, which would mean starting a new policy of course. My current insurer would produce quotes for certain cars but not others, or with one type of car would decline if I have no NCB at all but would offer cover if I had one year. (So if I actually went ahead I'd be asking them for some kind of introductory bonus offer.)

So it might be something like that, that with no NCB they won't offer cover. But if he had protected NCB then my surmise will be wrong.

vaio

angelta wrote: »

My husband, who paid his premium in full, wrote his car off a couple of months ago. The insurers paid out the current market value of the car and he has replaced the written off vehicle with a smaller one, more affordable one. However, the insurers refuse to insure the replacement car and have, in effect, cancelled his insurance. As there was a write-off I can understand why he gets no refund, but does anybody know if it is normal practice for an insurance co to refuse to insure the driver. The broker claims it is the car they won't insure, but when I spoke to another member of staff it is clear that it is my husband they won't insure.

Run a dummy quote direct with the insurer to see if they will offer cover for the car/hubby combo.

If they do then lodge a complaint as they are treating you unfairly

Joe_Horner

property.advert wrote: »

A contrasting argument is that should you decide to cancel a policy mid term then you would not have to pay for the full term, receiving either a refund, perhaps pro rata or an ability to cese direct debit payments.

I looked at this years ago and found some slimy cheating small print to allow them to claim. However, I am not sure if this would stand up to heavy scrutiny.

raskazz wrote: »

Er, it is not an unfair term or unlawful - indeed, it would not require any contract term for this to be enforceable - it is based on common law principles of contracts being "discharged by performance".

I think people may be misreading PA's original post. He doesn't seem to be talking about the case where there's a claim involved, rather the case where you cancel for somme other reason (eg: you fall at work, break your legs, and won't be driving for 6 months).

In this case, insurers' usual position - in the small-print of most policies - is to either keep cover in force or "convert" the time on cover to short term rates, which usually means no refund or even a hefty extra payment. Their justification for this is that short-term cover is at higher rates to cover the statistically higher risk of this sort of policy and that the conversion is to deter people from taking a year policy, knowing that they'll be cancelling after x months, to benefit from the lower rates.

His argument seems to be that this is one-sided and likely an unfair contract term and he's got a good point. Such terms are grossly biased in favour of the insurer and their justification doesn't allow for the fact that, assuming no claims are outstanding, the time on cover is no longer a statistical risk. Rather, it's an objectively determined risk of zero which can't possibly be used to justify a higher premium.

As for the OP, your friend has to pay the full year premium.

vikingaero

It's interesting to note that a fair few people think that there should be a refund of premium if they pay monthly. I don't think insurance companies are explicit enough in stating this when you purchase a policy on monthly instalments (but then again I always pay in full).

A low risk driver could insure a £30k car for £250 per annum. Over £30-35k is the level at which most insurers load premiums for a more valuable car. That works out at 68p-ish per day. Imagine taking out a policy for a year, writing off the £30k car the next day and only paying 68p! The economics don't stack up.

vaio

vikingaero wrote: »

.........A low risk driver could insure a £30k car for £250 per annum. Over £30-35k is the level at which most insurers load premiums for a more valuable car. That works out at 68p-ish per day. Imagine taking out a policy for a year, writing off the £30k car the next day and only paying 68p! The economics don't stack up.

The economics aren't much better if you write it off on the last day of the policy either, but I think the thrust of the previous posts is that insurance is a yearly contract and so the punter should get a year of cover irrespective of claims.

Similarly, providing that cover has a cost to the insurer and if the punter decides to cancel it seems fair to me that he gets some of that "avoided cost" back from the insurer

Joe_Horner

vaio wrote: »

Similarly, providing that cover has a cost to the insurer and if the punter decides to cancel it seems fair to me that he gets some of that "avoided cost" back from the insurer

That's what the cancellation fee is to cover, which is fair enough.

What's not fair enough is also converting the (say) 6 months cover that you've used to their much more expensive "short term" rates - which are allegedly designed to cover the higher risk of short term policies - when they already know that there was zero risk because the 6 months are in the past and you haven't claimed.