Car Insurance cancellation charge £102.31!

debsleypig

We have just cancelled one of our car insurance policies as we are changing from 2 cars to 1 car. The policy we have cancelled is with Hastings Direct (not recommended!). We expected a charge for cancelling the policy, but feel they are really taking the biscuit with trying to charge us £102.31 for this. Especially as the policy would have taken only a further 2 payments of £39.29!

We have looked through all the paperwork. In the terms and conditions it states that the cancellation charge will be £55. There is a more detailed bit on cancelling policies which again states that the charge will be £55 and also says 'and any charge made by the insurer' and to refer to your certificate for details of the cancellation charges. I did this which then referred to the policy booklet, and there is no mention at all of additional charges.

We got the cancellation letter through with a breakdown of everything. They are charging for: Insurer charges: 352.25. Additional product charges: 26.99. Arrangement fee: 5.00. Direct debit instalment interest: 47.95. Cancellation fees: 55.00. We have then been refunded a bit of the premium, direct debit interest, obviously the direct debits we have paid over the last 9 months have also been taken off, leaving £102.31.

We are not going to just accept this and pay it, and will be going through the complaints process. From what I have read so far, the FOS state that up to £50 is a fair cancellation charge-does anyone know where this is written down? Also that they are not allowed to make profit from a cancellation charge. Surely they are making profit if they are charging us more than we had left to pay on the policy? I feel like I should have left the policy running, but had no idea that they would try to charge us this much and now it is too late, plus I think it is a tad illegal to run an insurance policy for a car you no longer own.

Any advice gratefully received. Debs x

jonnyd281

You might find that cancelling so late in your policy, that the refund on your premiums is nil. since the entire premium is payable, it will state somewhere in the T&Cs how much of the premium is refundable at what points during the policy. (I'm assuming that you are 10 months into tyour 12 month contract with this).

debsleypig

jonnyd281 wrote: »

You might find that cancelling so late in your policy, that the refund on your premiums is nil. since the entire premium is payable, it will state somewhere in the T&Cs how much of the premium is refundable at what points during the policy. (I'm assuming that you are 10 months into tyour 12 month contract with this).

We pay by monthly instalments (total would have been 10 instalments, of which we had 2 left to pay). So refund of the premium is not applicable as we pay monthly.

opinions4u

debsleypig wrote: »

We pay by monthly instalments (total would have been 10 instalments, of which we had 2 left to pay). So refund of the premium is not applicable as we pay monthly.

But hasn't the premium been paid in full by the people you pay the finance to?

keith1950

Hi, you may feel you want to fight this on a point of principle however their written terms and conditions actually state a cancellation charge of £55 so by purchasing you have accepted this.
Some will also charge one month as notice of cancellation so in your case that would take it to £94.29p ( £55+£39.29p ) then there is probably a small charge to do with your arangement fee and other product charges.
If you paid extra for legal cover, hire car, key care or paid on credit etc. other companies are usually involved.
Remember Hastings is only a broker so there could be two or three companies involved if you took extra's and Hastings would need to cancel each one..
It is probably worth ringing them again and politely explaining that you are not happy with these charges but I do not think it is worth fighting it for the sake of what could turn out to be £5 or £10.

debsleypig

keith1950 wrote: »

Hi, you may feel you want to fight this on a point of principle however their written terms and conditions actually state a cancellation charge of £55 so by purchasing you have accepted this.
Some will also charge one month as notice of cancellation so in your case that would take it to £94.29p ( £55+£39.29p ) then there is probably a small charge to do with your arangement fee and other product charges.
If you paid extra for legal cover, hire car, key care or paid on credit etc. other companies are usually involved.
Remember Hastings is only a broker so there could be two or three companies involved if you took extra's and Hastings would need to cancel each one..
It is probably worth ringing them again and politely explaining that you are not happy with these charges but I do not think it is worth fighting it for the sake of what could turn out to be £5 or £10.

But I have no problem at all with the £55 charge, that is fine. I do have the problem with the £102 charge. Sure, I accept what you are saying about the charges. However, it states in the t+c that the cancellation charge is £55 and so that should be what we are being charged. It will be worth fighting even for the sake of £5 or £10, as that is a lot of money to us at the moment.

debsleypig

opinions4u wrote: »

But hasn't the premium been paid in full by the people you pay the finance to?

I guess so. In the breakdown, it just says £17.61 return of premium.

debsleypig

The main thing I want to know is about the FOS stating that around £50 is a fair cancellation charge. Is this written down anywhere? Or does anyone have a similar experience?

keith1950

As far as I understand, as long as the £55 charge is in the terms and conditions which you accept by ticking that you have read the terms and conditions then they can charge it .
As opinions4u says, Hastings have paid the full premium to the insurer and in this case you appear (from your figures) to be getting a refund of £17.61p out ot the remaining balance which is usually worked out on a sliding scale method.
I am not saying I agree with these charges but being realistic about the outcome.
If it were, for instance, Churchill the only charge would probably the one months notice of cancellation., but they are the insurer , there are no other companies involved.
Good luck if you decide to fight it.

bouncydog1

Suggest you have a look through your policy to see what it says about cancelling the policy before the insurance has run for a full 12 months. You are confusing the cancellation fee - £55 - with the actual insurance premium.

If you buy a policy for 12 months and cancel after 6, you will be charged short period rates which may equate to 7 or 8 months of the premium not 6!

As the policy is an annual contract all you are doing is paying in instalments - this is different to buying a policy on a monthly basis where the rates are much higher.

Have a read back through your policy before you set about making your complaint.

alistair.long

Hi, I am wondering if you have made a claim on your policy, or maybe windscreen cover etc..

and also if you have gone through a broker, both are probable reasons why the cancellation may be more