cancelling car insurance rip off

andyhubble

Today I asked my insurance company to swap cars on my policy, as I have just sold one and bought a new one .The insurance company told me insurance for the new car , an mgf, would be over £600, my old car a V8 landrover was only £300. SAGA quoted me £201 fully comp for the mgf which I have accepted.
When I contacted my old insurer to say that I wanted to cancel my policy with them as they could not offer me with a competitive quote for a like for like policy ( actually get AA breakdown with SAGA ) I was told it will cost me £109 to cancel and that they could not begin to get competitive with SAGA ( or the 10s of other ins co I found on gocompare , all with sub £300 policies )

The t&c clearly state cancellation fees apply, but fail to mention that the insurance company can try to force your hand with over inflated quotations should you buy a new car ......

its no wonder people drive without cover

bod1467

I wonder if car (and other) insurance falls into the same scenario as gym contracts? Could the cancellation demand fall into the category of a penalty rather than a genuine estimate of loss?

I'm assuming you were paying monthly via DD? If yes then the cost of the "loan" is front-loaded, so your first payment or so only pays off the interest on the loan. As such if you cancel quite early in the term then you haven't really paid for the insurance cover as such for those months, so their demand includes the costs due for the cover thus far. (I'm guessing this is the argument the insurance co will use).