AA Insurance Cancellation Ripoff

johnny19

Took out van insurance with the AA in Feb this year - £680 per annum. Paid initial deposit of £60.93 then 3 more monthly payments of £56.33 ( total paid £229.92 for 3 months).
My van then blew its engine so I scrapped it.
Contacted AA to cancel policy they wanted £50 fee, which I was happy to pay. They then informed me that they wanted a further £260.49 to cancel and threatened debt collection agencies if I didnt pay.
I wrote to them stating how unfair this was, and am still awaiting a reply.
But today, they have taken the £260 from my bank account, even though I have no DD or SO set up for the AA.
My bank (Lloyds) say this is normal for insurance companies to do this even without DD or SO's set up!!! Lloyds say it is legal for the AA to use my debit card details I paid my inital deposit with as they consider it as a guarantee card?

All advice welcomed, thanks for reading

InsideInsurance

You need to get the breakdown of fees from the AA. Some elements of policies (eg breakdown and legal expenses) gain no refund after the cooling off period but overall the fees do look high.

johnny19

thanks for the tip, thats what I asked for in my letter they didnt reply to. Im now fighting both the AA for the ridiculous demand AND Lloyds TSB for allowing unauthorised access to my account

Buzby

Agreed, you need to look at the costs for early termination. The true cost to you will alway be calculated based on the ANNUAL cost, plus your hike for paying monthly, less the fee for changing (cancellation) and the refund is based on the unused term - if allowed for. It it a mistake to assume your monthly payment equals the cost of provision, but you need to work out the true cost you agreed to, and make sure any rebate reflects this.

InsideInsurance

If you bought from their website then check their T&Cs on the site and also in your documentation. As your bank has said, they almost always have a DPA statement saying they will retain your card details to take payment in case the DDs fail and basically make it a condition of sale that you agree to this (as you cannot proceed without agreeing to the T&Cs)

mikey72

Doesn't mean it's legal, or fair.


The cancellation fee seems ok, but the premium should be refunded pro rata.

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

InsideInsurance

Agreed, just because it is in the T&Cs doesnt make it legal but having had to deal with the ICO and FOS on complaints about these things they do consider it legal.

Fair is obviously a very subjective matter, with the same former client their T&Cs page has 20 paragraphs/ bullets to read, it also contains links to both the Important Information and Full Policy Wording. The average time spent on the page, including page loading time, was approximately 4.5 seconds!

If people dont read what they are agreeing to, and what they are agreeing to is deemed legal, is there any real grounds to say that it isnt "fair"?

dacouch

InsideInsurance wrote: »

Agreed, just because it is in the T&Cs doesnt make it legal but having had to deal with the ICO and FOS on complaints about these things they do consider it legal.

Fair is obviously a very subjective matter, with the same former client their T&Cs page has 20 paragraphs/ bullets to read, it also contains links to both the Important Information and Full Policy Wording. The average time spent on the page, including page loading time, was approximately 4.5 seconds!

If people dont read what they are agreeing to, and what they are agreeing to is deemed legal, is there any real grounds to say that it isnt "fair"?

Would be interesting to see if there was any difference in take up rate if an Insurer placed in very large unmissable writing their cancellation charges on one single page before payment.

I reckon the difference would be negligible with the small amount not taking it up being mainly the people likely to cancel, who most Insurers would rather not have

InsideInsurance

When I worked with them to change the page to comply with the ICO's guidance is was in its own highlighted box, about 3rd paragraph and in bold text. There was no change in length of time on the page, the click through rate or the subsequent complaint rate.

People simply dont read what they are agreeing to.... I know I am guilty of it with iTunes 20 pages of T&Cs but do tend to read the few bullets/ paragraphs for insurance policies, credit cards, holidays etc

dacouch

InsideInsurance wrote: »

When I worked with them to change the page to comply with the ICO's guidance is was in its own highlighted box, about 3rd paragraph and in bold text. There was no change in length of time on the page, the click through rate or the subsequent complaint rate.

People simply dont read what they are agreeing to.... I know I am guilty of it with iTunes 20 pages of T&Cs but do tend to read the few bullets/ paragraphs for insurance policies, credit cards, holidays etc

I've read many many policy booklets, not great fun but as you know you get used to skim reading them and can find any glaring omissions or additions.

Shame people don't take the time to read their policies as especially when it's covering their home, it's their largest asset they're risking

The_AA_Company_Representative

Hello johnny19,

Regarding your post on 23rd July, we would like to help. So that we can look in more detail to establish the reasons why this might be the case with your policy, please email [EMAIL="chat@theaa.com"]chat@theaa.com[/EMAIL] with reference number 14941 as the subject title.

Regards,
The AA