Cancellation fees

Donna.C_2

I have just had to cancel my car insurance with Swiftcover because I changed my car and they wouldnt insure my new one as it has modifications. I rang them and was told I have to pay a £52.50 cancellation fee! I am outraged by this and have logged a formal complaint with them! surely this cannot be allowed?? I have also cancelled the direct debit with them so when they try to collect the money they wont get it....any suggestions as to how to avoid paying this fee would be appreciated

huckster

Ask for a breakdown. The £52.50 should include a relevant time on risk element for the cover you have had, plus a cancellation admin fee. The Insurers are allowed to charge an admin fee of up to £50. If you want to check on this with someone independent you could always phone the FOS and they will clarify this for you.

Donna.C_2

Ive actually just rang up and paid £43 odd which is what I owe them taking into account I have already paid this months premium, next months due on 24th....I think its disgusting that they can charge this much, especially as I had no option but to cancel as they wouldnt insure me! she def said £52.50....not happy

Donna.C_2

Yep, def £52.50, just looked on their website

dunstonh

I rang them and was told I have to pay a £52.50 cancellation fee!

Fairly normal. Swiftcover have had this charge for many years (I recall the same around 2006 when i last used them). Most insurers have it.

I am outraged by this

Two things on that:
1 - why are you outraged?
2 - why did you buy it if you didnt like the terms?

surely this cannot be allowed?

Yes it can and indeed, it is preferred. If you go back to the old model, everyone paid for the admin and cancellation in the annual premium. So, people that didnt cancel or didnt make amendments were paying towards those that were. With explicit charging, only those that use those services pay. Much fairer.

I have also cancelled the direct debit with them so when they try to collect the money they wont get it

Not a good idea. Monthly premiums fall under credit agreements and they can register it as a default on your credit file and you can suffer the damage that goes with that.

any suggestions as to how to avoid paying this fee would be appreciated

In future, use one of the rare insurers that make no charge. You tend to find them further down the comparison site list as their annual premium charges are higher as they have to factor it into the premium.

The Insurers are allowed to charge an admin fee of up to £50.

There is no limit on what they are allowed to charge. The £50 figure is commonly quoted as the FOS publication has one example from about 7 years ago where someone complained their £50 charge was too high. The FOS did not agree it was too high and found in favour of the insurer. Since then, the general rule of thumb is that if the charge is under £50 then you more or less know what the FOS is going to say. With inflation, that £50 is around £65-70 in real terms now.

InsideInsurance

Prior to my client at the time having cancellation fees (though they were in the process of introducing them) they were asked by the FOS/ FSA to provide the cost of an early terminated policy.

The calculations were extensive and from memory about 5-6 years ago it came out in the region of £120 for new business and £75 for renewals.

Some would argue that to ONLY pass on £50 to the customer that is wanting to cancel is unfair because the remaining £50-£70 is having to be covered by people who buy a years contract and keep it for a year.

As has been said, there are still insurers out there that dont charge for admin or cancellation but so select one of them if you have a personal issue with it but expect to probably pay more up front for your policy.

rs65

InsideInsurance wrote: »

to the customer that is wanting to cancel

I agree with what you say but in the OPs case, it is the insurer wanting to cancel (I do appreciate it was her choice of car though).

I hope her complaint succeeds.

Donna.C_2

thanks for all your input, I'll let you know how I get on but I'm not holding my breath
and to dunstonh, sorry but i didnt find your comments helpful but rather patronising....and I wont default on my direct debit because I rang and paid the outstanding balance on a debit card
and to rs65, thank you for getting the point, I didnt want to change insurers, they forced my hand by not insuring a modified car..

dunstonh

and to dunstonh, sorry but i didnt find your comments helpful but rather patronising...

Just because you didnt like the answer didnt make it wrong. It is correct.

If you choose to take no notice of what I said then you will just sleep walk into the same thing again and again.

and I wont default on my direct debit because I rang and paid the outstanding balance on a debit card

Good. So, at least you did take something from it.

Donna.C_2

I had already paid the outstanding before you commented as I was aware of the fact and I dont sleepwalk into anything, its not that I didnt like the answers its the manner in which they were given...

dunstonh

I had already paid the outstanding before you commented as I was aware of the fact

I replied within half an hour of your post. That was quick of you.

I dont sleepwalk into anything

Evidence suggests otherwise. Swiftcover have had a cancellation charge for over 5 years. It is published and disclosed. Yet you are outraged after for them making a charge that you knew about before you bought the product. Most people would not buy a product if they didnt like the terms.

its not that I didnt like the answers its the manner in which they were given...

I suggest you take a read of your own post. You emphasised points and you said they wouldnt get the money. If you are going to post in that style then its probably best not to comment on other posting styles.

As it happens, I don't think my response was anything like as bad as you are making out. It just must have touched a nerve. Perhaps you are embarrassed now you realise it is your fault.