rip off RAC car insurance cancellation fees

softekcom

Hi All:
My husband's car insurance came up for renewal on the 11th of July. However the RAC quote was incredible. So he got insured with the Co-Op for 1/3rd the price. Unfortunately, he called up RAC only yesterday (1st Aug) to cancel. They told him that he would have to pay almost £500 in addition to the £162 already taken out of his account on July 14th. I accept that it was our fault for not reading the fine print and for calling up a week after the 14 day cooling off period when there would have been no penalty. But to have to pay about £650 is unreasonably high. Would appreciate advice on how to handle this. Thanks in advance.
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dunstonh

Generically, you would expect a cancellation charge up to around £50 and cost of the premium up to the next cancellation point (typically relatively pro-rata to next month).

However, if he had any third party products bought with the insurance, such as breakdown cover or legal expenses, then these have to be paid for in full as they are non-refundable.

The RAC publish their cancellation terms and they require 30% of the premium if cancelled in month one (outside of the 14 day cancellation rights period) with a cancellation cahrge of £35 on top.

30% is quite heavy for a month one cancellation and a complaint may get that reduced. The FOS generally expect the cost to be pro-rata but do state that they accept that in the early months, the cost may be higher.

InsideInsurance

Ask for a breakdown of the costs - what is admin, what is for time on cover etc.

Legally you only have the right to cancel during the cooling off period but one of the tenants of the FSA's Treating Customers Fairly is the freedom to cancel policies and so unless there is something else going on like a claim I would be surprised if an FOS complaint would allow such high fees to stand

Morph4610

Hi - think this might be simpler. You can't be insured on 2 cars at the same time. Explain to the RAC that you have cover elsewhere so no claim would ever have been paid and so their cover is null and void. You should only really have to pay for any minimal admin

InsideInsurance

Morph4610 wrote: »

Hi - think this might be simpler. You can't be insured on 2 cars at the same time. Explain to the RAC that you have cover elsewhere so no claim would ever have been paid and so their cover is null and void.

You can insure two cars at the same time, and you can also have to insurance policies on a single vehicle at the same time (which I assume is what you meant).

Some insurers will declare their own policy void if there is other cover in force, others will say claims would be proportioned across all insurers. A quick scan read of the RAC policy and I couldnt spot anything in which case apportionment would most likely apply.

At the end of the day they can as easily turn around and say it is their policy that would have been valid and the other one that was void.

david39

You can't be insured on 2 cars at the same time

I think you mean that you can't insure the same car twice - I've had two cars insured at the same time for many years.

softekcom

Thanks a lot to all of you. We don't have ay claim pending with the RAC so the charges do seem very high. I will ask for the breakdown of costs and take it up with the ombudsman.

Wheeler01

I know how you feel!
I did have my car insured (punto) with them but when I changed vehicles 6 months into the policy they said that they couldnt underwrite the new vehicle using the old policy, the policy would have to be cancelled and a new one set up, on hearing how much they wanted for the new vehicle I said I would shop around. I got insurance £200 cheaper than with them with someone else. I called back asking them to cancel the policy as the old vehicle had been sold they said it was fine - £114 cancellation fee!!!!

They took the money from my bank account on 5th August.

I have written to them twice, explaining they were cancelling the insurance anyway even if I had stayed with them as the policy I had did not underwrite the new vehicle, that my breakdown cover is with them at a cost of £143 and my warranty for my new car is also with them that cost £300. As of todays date they have not replied!

I would never use RAC in any way ever again.

dunstonh

£114 cancellation fee!!!!

That is not correct. The RAC do not have a £114 cancellation fee.

What you are being charged is outstanding premium (as you are paying monthly) which may or may not include a cancellation fee in that. It may also include the cost of any ancillary products, such as breakdown cover, which are normally non-refundable and as you are borrowing money to pay the premium, you have to pay the outstanding loan due on those.

Wheeler01

According to them I had used £163 worth of insurance but had paid £196, so balance of what they told me was a cancellation fee was £81 which has been taken from the bank. Like I said have written to them twice asking for a breakdown of costs and also that my breakdown/warranty is with them so maybe a good will gesture but they havent replied.

dunstonh

£81 is above their published cancellation charge of £35. It should be premium be broken down something like this:

outstanding premium £x
non-refundable products: £x
Cancellation charge £35

So, check your policy docs, find out what the cancellation charge says on there and if its less than £81 then complain.