Insurance cancelled after car written off

vaio

To clarify....

Was your complaint that it was unfair that your insurance company ended your policy without refund because of the total loss claim?

and the FOS agreed?

Christopher7

Well done Pietaster, it is unfair that insurers cancel policies and don't refund the remaining premium when the insured vehicle is written off. if your car was repaired they wouldn't cancel the insurance would they, and they chose to write it off because it was more economical for them to do so. Well done for fighting this but there must be many others who didn't and the insurer got away with this scam.

dacouch

vaio wrote: »

To clarify....

Was your complaint that it was unfair that your insurance company ended your policy without refund because of the total loss claim?

and the FOS agreed?

I suspect they have ruled on favour of the OP due to the Insurer having brought in the cancellation for all write offs with no swapping over of replacement cars fairly recently and not notifying the OP or not being able to prove they have told the OP.

The FOS accept that the full premium is due on a write off (but make no mention of whether they expect an Insurer to cover a replacement vehicle.

"17. outstanding premium instalments or premium refunds

Usually the policy is a yearly contract and the full premium is payable even if the vehicle is written-off during the year. If the policyholder paid the yearly premium up-front, no refund is due. If the policyholder was paying the yearly premium by monthly instalments, the outstanding instalments are still payable."

mikey72

dacouch wrote: »

I suspect they have ruled on favour of the OP due to the Insurer having brought in the cancellation for all write offs with no swapping over of replacement cars fairly recently and not notifying the OP or not being able to prove they have told the OP.

The FOS accept that the full premium is due on a write off (but make no mention of whether they expect an Insurer to cover a replacement vehicle.

"17. outstanding premium instalments or premium refunds

Usually the policy is a yearly contract and the full premium is payable even if the vehicle is written-off during the year. If the policyholder paid the yearly premium up-front, no refund is due. If the policyholder was paying the yearly premium by monthly instalments, the outstanding instalments are still payable."

What was that taken from? Maybe the FOS have decided that it's really no longer fair to support that view, or even relevant to the insurance industry now. As many say, the true cost is the amount of damages the third party can claim, not what they would pay you for your claim for the cost of your car, hence a £3000 premium for a £300 car. So in cases like this, where the insurer has suffered no real loss, and will be claiming all their costs back from the third party, and there will be no future risk of paying out the millions to a third party, why not decide to pay back a fair pro rata? Even if all they paid was the £300 for the car themselves, again, their future risk won't be for the millions anymore, so a fair pro rata refund would seem called for. It seems a very reasonable approach by the FOS.

dacouch

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html

mikey72

dacouch wrote: »

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html

Ha - I should have recognised that, it's one of my favourite links!

vaio

dacouch wrote: »

I suspect they have ruled on favour of the OP due to the Insurer having brought in the cancellation for all write offs with no swapping over of replacement cars fairly recently and not notifying the OP or not being able to prove they have told the OP.

The FOS accept that the full premium is due on a write off (but make no mention of whether they expect an Insurer to cover a replacement vehicle.

"17. outstanding premium instalments or premium refunds

Usually the policy is a yearly contract and the full premium is payable even if the vehicle is written-off during the year. If the policyholder paid the yearly premium up-front, no refund is due. If the policyholder was paying the yearly premium by monthly instalments, the outstanding instalments are still payable."

Maybe, but consider my earlier post #18........

vaio wrote: »

OP...there are two interesting issues you raise

the first is the level of information you received at renewal regarding the fairly fundamental change in the policy terms.

the second is the general fairness (in the FOS sense) issue of ending policy on total loss claim.
Consider a youngster driving a £500 car and paying £3k year insurance who gets rear ended one month into the policy. The policy will have two sections, one is related to third party risks and the other relates to own car damage. The companies and many on here will rightly tell you that the vast bulk of his premium is not related to his car but is related to the third party risk and it seems inherently unfair to me to deprive him of the remaining 11 months cover if he makes claim and I’d be interested to see a case go before the FOS.

Don't you think the second point has some merit from a fairness point of view? Maybe the FOS agree and if they do it surely follows that such policies can also be cancelled by the policyholder for a refund if they don't want to transfer it to a new vehicle.

We need the OP to return and clarify what his complaint was.

dacouch

mikey72 wrote: »

Ha - I should have recognised that, it's one of my favourite links!

Lol...Hence why I did not post the link on the original post.

It's Vaio's favourite link too.

It would make it so much easier and fairer if Insurers had to draw the link eg by a leaflet to all customers going through a write off

pietaster

Hi again,
Vaio – my letter to the FOS essentially outlined two main complaints. I was aggrieved that I had no prior knowledge that this outright cancellation clause was in the policy and also I felt it deeply unfair that I could not transfer significant proportion of 3rd party liability cover that I had paid for onto my next vehicle. I also made general points that I felt the clause was discriminatory against those with lower value vehicles or who are in higher risk categories and used an example very similar to that which you used to highlight this.
Since contacting the FOS the only feedback I have had from them was that my initial complaint was upheld by the first assessor. It was then refuted by Esure. It was then going onto an Ombudsman, who I presume has also upheld my complaint hence the feedback I have had today.
I am not sure which part of my argument was able to persuade the FOS in my favour, nor I guess will they tell me as they always seem to be quite elusive on the subjects of their decision making whenever I have spoken to them. Dacouch may well be correct in suggesting that it was the fact that I had not been made adequately aware of this change to the policy. Nevertheless, the refusal of policy transfer onto replacement vehicles is profoundly unjust and I would hope that the FOS has taken this on board. I would urge more people in a similar situation to myself to contact the FOS and hopefully banish this unfair practice for good.

Christopher7

I think its about time the FOS were challenged on this, whose to say they are right. They could at least explain why they believe it is fair to withhold the remaining premium.

There comes a point at which a vehicle goes from being a repairable vehicle to being a total loss. For example, if the vehicle was worth £4000 and the repair estimated at £2999 the car would be repaired and the policy would remain in force. However if the repair was going to cost £3000 the insurer would write off as category D, cancel the policy and keep the remaining premium regardless of whether it had 11 months or 1 day to run.