Insurance cancelled after car written off

anniecave

pietaster - a good result - and thanks for updating us!

I had forgotten this thread - and i contributed to it a year ago!

At the time, the wording wasn't clear in the Tesco policy, and I queried it with then, and Tesco said that in the event of a total loss, they would let me transfer onto another policy. I wasn't sure I believed them, but I made a note of the person I spoke to just in case.

I've just checked in my renewal this year (I'm still with Tesco), and it's now quite clear in the new policy booklet that if you get a new car within 30 days then you can transfer the policy, otherwise the policy will be cancelled.

I have just gone onto the Admiral website, and looked at their policy booklet and it says that under total loss then all cover will then cease.

And I was thinking of going with Admiral for my renewal, as they are a lot cheaper than Tesco. Maybe I'd better think again!

So Esure and Admiral are the companies to avoid for this then?

anniecave

And elephant, bell and diamond also have the same clause in it - as I expected. Total loss = cover cancelled.

antrobus

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 the FOS appear to be saying here is that the policyholder can't claim that the policy is cancelled and demand a refund; because it's an annual contract. So logically speaking, neither can the insurer claim that the policy is cancelled and deny cover for the remainder of the term.

Just_Some_Guy

When you have a total loss your car becomes a wrecked lump of metal owned by your insurance company. This means you no longer have an insurable interest in the car, and without insurable interest you can't have an insurance policy. This is the reasoning behind why insurance policies can cancel themselves after a total loss. It's an accepted legal point and it is not going to change anytime soon.

However whether this actually happens when you suffer a total loss depends on the small print. Nicer policies allow the customer to acquire a new car and continue cover from there, evil policies automatically cease to exist leaving a demand for payment as an epitaph. The FOS seem to take the view that evil policy terms can be enforced as long as they're not downright diabolical and you tell your customers in advance about them.

What happened here was an insurer moving the goalposts on a customer without clearly telling them what was happening, which is unfair, and so the FOS rightly sided with the customer. Had esure bothered to put in an A5 leaflet with the renewal offer saying that the T&Cs had changed then the FOS would have sided with the insurer.

anniecave

Just_Some_Guy wrote: »

When you have a total loss your car becomes a wrecked lump of metal owned by your insurance company.

Or a lump of metal that is actually still a car that is still perfectly safe and legal to drive, but that the insurers have decided isn't economical to repair.

But I take your point though!

Obviously Elephant back in 2007 was a "nicer insurance company" as when my car was damaged beyond economical repair back then, they let me keep the car and I continued to drive the car for the rest of the policy term (6 months) and they gave me a cheque for settlement for total loss as well.

I'm guessing times have changed and insurers aren't likely to do that any more...

real1314

For car insurance it's the vehicle and the third party liability that is being covered.
The FOS seem to have concluded (rightly imho) that by failing to provide the third-party liability for the full term (which for most policies is the bulk of the charge), the insurer has denied themselves of the right to the premiums.

Comparing to house-contents, if I notify a valuable item worth £5k as part of a £50k contents; and that assets is stolen, I expect to be able to replace it, and my policy would continue; still covering the replacement £5k asset. :cool:

mikey72

Just_Some_Guy wrote: »

When you have a total loss your car becomes a wrecked lump of metal owned by your insurance company. This means you no longer have an insurable interest in the car, and without insurable interest you can't have an insurance policy. This is the reasoning behind why insurance policies can cancel themselves after a total loss. It's an accepted legal point and it is not going to change anytime soon.

However whether this actually happens when you suffer a total loss depends on the small print. Nicer policies allow the customer to acquire a new car and continue cover from there, evil policies automatically cease to exist leaving a demand for payment as an epitaph. The FOS seem to take the view that evil policy terms can be enforced as long as they're not downright diabolical and you tell your customers in advance about them.

What happened here was an insurer moving the goalposts on a customer without clearly telling them what was happening, which is unfair, and so the FOS rightly sided with the customer. Had esure bothered to put in an A5 leaflet with the renewal offer saying that the T&Cs had changed then the FOS would have sided with the insurer.

But saying as the FOS haven't provided any explanation, and you are purely guessing, I would equally guess and say that as there is no insurable interest, the insurer has been made to comply with the terms of the policy cancellation, and give a pro rata refund for the remaining period, as is required for any cancellation, and has been ruled on many times. So I would doubt even an A5 would have made an evil policy term enforacble, and the FOS appear not to side with an insurer even if they do decide they can advise the customer they are going to screw them beforehand. So, anyone else who is in the same position, even if it's in the t&c's in block capitals three feet high, refer the complaint to the FOS, and let us know the outcome.

[Deleted User]

anniecave wrote: »

and it's now quite clear in the new policy booklet that if you get a new car within 30 days then you can transfer the policy, otherwise the policy will be cancelled.

That happened with my HSBC policy, when my car was stolen.

Within days of accepting their settlement offer, I received a letter telling me that, if I didn't transfer the policy to another vehicle by a certain date, the policy would be cancelled.

vaio

mikey72 wrote: »

But saying as the FOS haven't provided any explanation, and you are purely guessing, I would equally guess and say that as there is no insurable interest, the insurer has been made to comply with the terms of the policy cancellation, and give a pro rata refund for the remaining period, as is required for any cancellation, and has been ruled on many times. So I would doubt even an A5 would have made an evil policy term enforacble, and the FOS appear not to side with an insurer even if they do decide they can advise the customer they are going to screw them beforehand. So, anyone else who is in the same position, even if it's in the t&c's in block capitals three feet high, refer the complaint to the FOS, and let us know the outcome.

and Mikeys guess happens to tally with my feelings and provides a fairer outcome for the punter which is, after all, the whole aim of the FOS

mikey72

Bedsit_Bob wrote: »

That happened with my HSBC policy, when my car was stolen.

Within days of accepting their settlement offer, I received a letter telling me that, if I didn't transfer the policy to another vehicle by a certain date, the policy would be cancelled.

Cancelled, and cancellation is subject to a pro rata refund for every other occasion. As is always said, the premium is for the risk for the year, so it seems fair to refund the period when you are no longer a risk. To keep a years premium of a customer that has an accident on the first day of cover, is grossly unfair, and even punative compared to customer that has a claim on the last day. Particuarly as now it may be thousands of pounds premium, for a claim that may be on a £500 car with a £500 excess, so basically for no payout at all. Treating the customer fairly.