Insurance Details changed - can I can cancel policy?

Shields64

My wife's car has been with direct line for several years.
I have just asked for a quote for my car and on checking through her policy, her 6 points total for speeding and mobile use had not been registered with her policy - I have a feeling that because she's had a straight renewal that she's not notified them, so it is her fault.

The policy is 6 months in and she is paying monthly for it.

They have said policy is invalid and they gave me an updated cost which takes it from £500 to £800. So the remaining payments are in effect double, with the excess also increasing by a further £250. They are sending out a new policy, etc, based on this.

I've been online to comparison sites and the best 12 months cover is still slightly more than the original, but still in the region of £500.

As they are sending out an updated policy, can I cancel it and go elsewhere and would I be hit with Excessive cancellation costs?

scheming_gypsy

you'll probably be hit with a cancellation fee and also a bill for the 6 months back payment for the extra. So if there's a £300 increase if they want £150 back for the 6 months you've had, and a cancellation fee then you'll probably be better seeing the policy out and getting the extra years NCD as you won't be making a £300 saving.

Although somebody with more knowledge on it will be along soon...

lisyloo

Cancellation costs shouldn't be excessive - the fee should be max £50 fee (you can check online on what DL charge I think it's £29 off the top of my head).

The problem is that you owe the money from the last 6 months (or from when the points occured).
Whether they could or would pursue this I don't know but in theory at least this bill from the past still stands whether you cancel or not.

dunstonh

If 3rd party products were also bought with the insurance premium, such as legal expenses and breakdown cover, then these are non refundable on cancellation. So, if paying monthly, you will have to pay the equivalent of the full amount for the year. Only the insurance premium should be "relatively" pro-rata.

You may also have to disclose to new insurers that a policy was altered due to non-disclosure (depending on the wording) if you dont pay the premium first. That may put some insurers off quoting or increase their price.

lisyloo

Just out of interest does anyone know if the costs for the past period are contractually due? (for the undeclared points).
and would the insurer likely pursue it?

dunstonh

lisyloo wrote: »

Just out of interest does anyone know if the costs for the past period are contractually due? (for the undeclared points).
and would the insurer likely pursue it?

Yes. The point at which the points should have been declared is chargeable and premium due backdated to that point. So, some of the increase is likely to reflect that. So, the OP looking at cancelling still wont avoid that cost.

If the person doesnt pay the insurer, then the insurer will void the policy due to non-disclosure and may refer it to a debt collection agency (especially on monthly payment one under a credit agreement).

The non-disclosure declaration will likely result in higher costs. I am sure the OP hasnt shopped around declaring that they have a voided policy due to non-disclosure but they may like to see what difference it makes.

Lazzza

Sorry for the slight thread hijack but is the position different if the insurance company incorrectly records personal information given over the phone? e.g. it sends out policy document overstating NCB and customer later notices and informs insurer, then is quoted a much higher premium which customer doesn't want to accept.

Is the insurer obliged to cancel policy with effect from day 1 as no valid coverage ever existed?

vaio

Yep but only if you can prove no valid cover ever existed.

If the boot was on the other foot and say you had an accident and needed to claim. I’d say that the insurance company (maybe prodded by the FOS) would have paid your claim with or without a premium adjustment to reflect the price difference.

If you have evidence that you gave them the right information originally I think you’ll have more luck arguing that they should honour the original price, if you did it by phone then get hold of a copy of the recording.

Lazzza

Thanks.

This scenario is complicated by the fact that the customer didn't notice the discrepancy in NCB on the schedule within the 14 day period and only found out when talking to the insurer about a potential minor claim 8 weeks in. Insurer said customer must now pay 3x the original premia from day 1, customer says they don't want to, and will go elsewhere (and pay the minor claim themselves).

There is now a dispute over whether premia should be refunded and at what level (original quote or based on the correct NCB) and cancellation fees etc.

While this seems to be a mistake of the insurer (which the recording may reveal), customer could perhaps have spotted the error earlier. The equitable result seems to be that the insurer either (i) covers the customer for the 8 -week period until notified at the original quoted premium and allows customer to continue or cancel with minor (or no) fees only or (ii) voids the policy from inception and returns premiums. The insurer however is trying it on and wants the 2 months premiums (at the higher "true" rate) and a cancellation fee.

Any thoughts greatly appreciated.

dunstonh

While this seems to be a mistake of the insurer (which the recording may reveal)

It will hinge on the evidence and if there is a recording then that is pretty good evidence. That will decide what is fair. If insurer was told and offered terms knowing that then they would be expected to honour the price and not ask for more. If customer didnt say it then insurer is right to ask for the money they should have paid in accordance with the FOS published rules on non disclosure.

Lazzza

dunstonh wrote: »

It will hinge on the evidence and if there is a recording then that is pretty good evidence. That will decide what is fair. If insurer was told and offered terms knowing that then they would be expected to honour the price and not ask for more. If customer didnt say it then insurer is right to ask for the money they should have paid in accordance with the FOS published rules on non disclosure.

I'll tell them to ask for the recording and see what happens. My guess is its a misunderstanding (10 years NCB was put in when it should have been zero - quite a discrepancy), maybe they'd just asked them how long they'd lived in the UK etc but hopefully the recording will put them in the clear.