Car Insurance cancellation fees

ID1_2

Went to cancel my car insurance as i no longer have the car.
the insurance broker is trying to charge me 40% of my remaining insurance value for cancelling, i'm only in to my 2nd month of a 12 month policy
insurance cost £380 and they want to give me £190 back
is this right?
thanks

wealdroam

What do your T&Cs say about cancellation?

Most insurers these days when asked to cancel a policy will recalculate the premium based on their short term policies for the period covered.
These are significantly more expensive.

On top of that there is also the cancellation fee itself.

To use your figures as an example...
If a one year premium is £380, then a premium for two months will be significantly more that one sixth of that... say, £120... I've no idea really, you need to ask your insurer how they do their sums.

A cancellation fee of £50 might be specified.

whatmichaelsays

wealdroam wrote: »

What do your T&Cs say about cancellation?

Most insurers these days when asked to cancel a policy will recalculate the premium based on their short term policies for the period covered.
These are significantly more expensive.

On top of that there is also the cancellation fee itself.

And in addition to that, any extras like breakdown cover or legal protection usually have to be paid in full, even when the policy is cancelled.

mikey72

Write an official letter of complaint, then refer it to the FOS if you need to.
Should be roughly a pro rata refund, less up to a £50 fee.
So you should be looking for around £260 back.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

andy111

The above is correct.

My policy was £1250 for a second vehicle, I cancelled after 7 weeks, the pro rata was £190, plus £45 admin fee, plus a £293 cancellation fee!

I informed them they were not within their rights on the phone but they claimed to be correct - they hope you believe them and give up.
I wrote to them explaining they were not within their rights.

They phoned me to apologise and refund this outrageous cancellation fee.

This was a very large insurance firm, I dread to think how much they annually falsely claim from innocent, naive customers - absolute crooks.

adamc260

Your Insurer is cancelling on a short term basis which from another company (may even be yours) I found this

Month of cancellation / Short term rate (%of annual premium payable)
In the first 14 days N/A
14 days - 1 month 30%
2 – 40%
3 – 50%
4 – 60%
5 – 70%
6 – 80%
7 – 85%
8 – 90%
9 – 100%
10 – 100%
11 – 100%

The above figures are based on YesInsurance (http://www.yesinsurance.co.uk/car-insurance/policy-insurance-cancellation.html) but is to give you a bit of an idea.

I don't see how it can be referred to the FOS when even they state "The consumer will generally receive a pro rata refund of premiums paid, less a cancellation charge." but doesn't state the consumer HAS to receive a pro rata refund.

Short term = expensive cancellation.

mikey72

adamc260 wrote: »

Your Insurer is cancelling on a short term basis which from another company (may even be yours) I found this

Month of cancellation / Short term rate (%of annual premium payable)
In the first 14 days N/A
14 days - 1 month 30%
2 – 40%
3 – 50%
4 – 60%
5 – 70%
6 – 80%
7 – 85%
8 – 90%
9 – 100%
10 – 100%
11 – 100%

The above figures are based on YesInsurance (http://www.yesinsurance.co.uk/car-insurance/policy-insurance-cancellation.html) but is to give you a bit of an idea.

I don't see how it can be referred to the FOS when even they state "The consumer will generally receive a pro rata refund of premiums paid, less a cancellation charge." but doesn't state the consumer HAS to receive a pro rata refund.

Short term = expensive cancellation.

Because, fortunately for us all, the FOS will completely overrule any unfair or illegal t&c.
The insurer can say you have to paint yourself blue and hop on one leg for eight miles, but you don't actually have to do it.
They do have to pay pro rata though.
Not make up a fictitious "short term rate"

(Probably worth any yesinsure customers noting if they cancel, they will try to overcharge, so get the complaint in if yesinsure don't back down. Enough complaints and they will have to change the t&c's to legal ones.
You can claim retrospectively if you have been caught out)

Crabman

This "Ombudsman News" with case studies may be of help:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

mikey72

Crabman wrote: »

This "Ombudsman News" with case studies may be of help:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

post#4, but keep spreading the word.
The more people read it, and stop quoting "it's in the t&c's" the better.

Crabman

mikey72 wrote: »

post#4, but keep spreading the word.
The more people read it, and stop quoting "it's in the t&c's" the better.

Oops, sorry, completely missed that!

mikey72

It can't be posted too many times for me.
It's probably one of my favourite links with regard to insurance!