Car Insurance cancellation fee after car is written off?

mummybearx

My sister was involved in an accident (not her fault) and her car was written off. The other guys insurance company have sent my sister a cheque to pay for her car, good, thats all sorted.

She called her own insurance company to cancel her policy as she no longer has that car. They are saying she needs to pay a cancellation fee and admin fee of just under £200, is this right?

I remember cancelling my own policy and I didn't pay anything, so thanks to anyone who can help with this one

x

dunstonh

She called her own insurance company to cancel her policy as she no longer has that car. They are saying she needs to pay a cancellation fee and admin fee of just under £200, is this right?

No. You have got the wrong end of the story.

If you make a claim and do not replace the car with the same insurer then you have to pay the full premium for the year (as its done its job). The £200 is not an admin fee. It will be the premium outstanding (if she pays monthly).

anniecave

I think if you have a claim (even if not your fault and settled in full by a third party) then possibly you can't cancel the policy in the same way as if you've had no claims during the period. As the above post. Check the policy Ts and Cs.

Was she paying monthly? That normally incurs a cost due to the finance costs, and they may then be charging for the full year if so.

Or some policies used to have a less than pro-rata refund policy, eg at month 6 you only get 40% back, at month 8 only 20% back, and at month 10 or after you get nothing back anyway. I don't know if this still happens, but I had this on my first policy I took out.

Is she not planning to get another car? If she is, they normally give you a month or so to do this and then let you just transfer the policy to the new vehicle (with any amendment fees and adjustments to the premium if the new vehicle is worth more or in a different insurance group etc).

mummybearx

Thanks dunstonh, that makes more sense, I was just repeating what the guy from the insurers said to my sister.

Will ask her to look out the t&c, will probably help a lot x

vaio

dunstonh wrote: »

No. You have got the wrong end of the story.

If you make a claim and do not replace the car with the same insurer then you have to pay the full premium for the year (as its done its job). The £200 is not an admin fee. It will be the premium outstanding (if she pays monthly).

OP said the claim was against (and paid by) the third party, that being the case then her own policy can be cancelled in the normal way and with the normal guideline of pro rata for time on cover plus admin fee of up to £50.

If they want to charge significantly more than that then complain and if they don’t resolve to your satisfaction escalate to the FOS

I’d also say the admin fee is a consequential cost and should be recovered from the third party insurer

ab7167

I thought that if a car is written off the policy is cancelled forthwith with no refund due anyway? If you pay in full yearly, no refund, and if you pay monthly you have to pay up the months due. Some insurers will let you transfer the balance to a new car, but I don't think this is universal.

I've had 2 cars written off, neither my fault, and no refund in either case (I pay yearly). In one of them, the insurance company wouldnt' even give me the balance on another car, so I ended up paying another whole years insurance only 3 months after I paid the last one...

vaio

ab7167 wrote: »

I thought that if a car is written off the policy is cancelled forthwith with no refund due anyway? If you pay in full yearly, no refund, and if you pay monthly you have to pay up the months due. Some insurers will let you transfer the balance to a new car, but I don't think this is universal.

I've had 2 cars written off, neither my fault, and no refund in either case (I pay yearly). In one of them, the insurance company wouldnt' even give me the balance on another car, so I ended up paying another whole years insurance only 3 months after I paid the last one...

Yep, if you claim on your own insurance (even if a third party is at fault and costs are recovered) then you are bound(ish) by the terms of your policy and if they include a term that ends the policy on a total loss with no refund and/or option to transfer to a replacement car then you are stuck with it. (until someone wins an FOS case on the subject)

In the OPs case it seems the claim was direct against the third party so the above shouldn’t apply

ab7167

One of the policies was third party only, so I couldn't possibly have made a claim for being rear ended. I clearly remember it, I phones my insurance company and they told me to go away and claim against the third party myself? So should I have had a refund for that one? It was many years ago, so I can't go back, just interested...

mikey72

There have been a few cases on here and the motoring forum where the insurer has tried to treat a third party claim as a total loss, and tried to refuse any refund of premium, or tried to claim the remainder of the years payment, even when the cheque has come directly off the third party.

If that's the case, complain, then refer it to the FOS.
The same applies if they are trying to overcharge on a normal cancellation, it should be a pro rata refund, and a fee up to £50.