Car Insurance Cancellation Charges

west_one

Anyone have experience of cancelling a car insurance policy which was being paid for monthly? I just cancelled my policy because I bought a new car - assumed I would have to pay a cancellation/admin fee but that would be that. Now I'm being told that the "additional options" I purchased with my policy (rescue, enhanced courtesy car, legal cover) are non-refundable, so not subject to pro-rata refund. That doesn't seem fair to me. Anyone with a similar experience?

InsideInsurance

Standard practice.

You only have a right to cancel them in the cooling off period, and still they can charge admin fees and pro-rata then, after that there is no automatic right to cancel or refund.

Quentin

It's usual with any additional options (usually you can cancel them but without any premium refund).

Check your policy wording about what happens of you cancel optional additions. And if they haven't abided by what it says get complaining.

mikey72

That's always puzzled me, all these add ons are sold with a car insurance policy, they're no use without that policy, but you don't qualify for a refund if you cancel? It would be worth making a written complaint, stating you want a pro rata refund, and if they refuse, refer the complaint to the FOS, as they are not treating the customer fairly. Let us know how you get on. http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

annie1975_2

You will probably find the additional options might have been paid for up front by the insurance company..
My brother took out an insurance policy once on a monthly direct debit,and 3 months down the line he got rid of his car but still had to keep the direct debit payments up for the rest of the year.
When he enquired about this they said the insurance is done through a finance company,so its really like a loan.
Just check the t&c of the policy..

mikey72

annie1975 wrote: »

You will probably find the additional options might have been paid for up front by the insurance company..
My brother took out an insurance policy once on a monthly direct debit,and 3 months down the line he got rid of his car but still had to keep the direct debit payments up for the rest of the year.
When he enquired about this they said the insurance is done through a finance company,so its really like a loan.
Just check the t&c of the policy..

He should have got a pro rata refund.. The only time the insurance has to be paid is if a claim has been made. If it was recent(ish), and he hadn't claimed, tell him to write, and ask for a refund back, link as above.

dunstonh

He should have got a pro rata refund..

Only on the insurance premium. Not on non-refundable extras.

One of the risks when you take out a loan to pay for the insurance premium and addons is that the credit charge and the non-refundable extras still have to be paid for and if you add in the cancellation charge and the direct debt is probably not in sync with the premium owed, then it is not uncommon to find the actual bottom line is not "pro rata". Especially on small premiums.

vaio

mikey72 wrote: »

He should have got a pro rata refund.......

dunstonh wrote: »

Only on the insurance premium. Not on non-refundable extras.......

two opposing views, I tend towards mikey but would be interested to see what the FOS regard as "fair"

molerat

Many of the extras are not provided by the insurer but are bought in from outside organisations for a one off payment and will not be recoverable by the insurance company.

mikey72

molerat wrote: »

Many of the extras are not provided by the insurer but are bought in from outside organisations for a one off payment and will not be recoverable by the insurance company.

Most insurance is bought in from ouside. The underwriters for the car insurance policy can make a refund, the FOS can decide if the underwriters for the extras can, or if it's down to the sales outlet. It wouldn't worry me as a customer, so long as I got one. It will be interesting to see what the FOS would say here.

InsideInsurance

It would, and I have to say if the insurer/ broker happens to buy it in, bundle different companies policies together etc really should be of little interest to the insured. Insurers buy in reinsurance too but that and its cancellation policy has nothing to do with the insured either.

I think this is one of the more ropey areas, I did have a quick look on the FOS site and couldnt see any published cases on the matter.

Presumably the result would be the introduction of cancellation fees which for the minor products like LE would almost certainly be equiv to the remaining premium but for Breakdown could represent a saving