car insurance cancellation fee's £500!!!

saltandpepper1

hi, i brought a new car and wanted to transfer my new car for my old car on my insurance they wanted £120 a month, but i have seen i can insure the car with another company for a lot less i my insurance company im thinking of leaving because it will save me a lot more money and they have said that it will cost a £35 cancellation fee plus 70% of my policy as i have seven months left on it so they are now asking for over £400 on top to cancel and have also said they will take it out of my bank there and then can they do this. why will i have to pay the rest of my insurance if i am no loger insured with them. please help..

forgotmyname

Read the terms on your policy document. Its not unusual for them to say the fee is not divided by 12.

Say you paid in full, They may say if you cancel in the 1st month you will only get 75% back. After 3 months 50% back and after 6 months you get zero back.

IF you cancel its normal for them to take the money owed fairly quickly. If you dont have the funds it may take you overdrawn at the back. Depending on the account.

Sounds like on of the cheaper companies and this is how they make up for low premiums.

You need to ask then for a full breakdown of all costs and figures, In the meantime get the policy documents out and have a good read.

vaio

also have a read of the FOS site, their general take is that you should pay pro rata for time on cover plus a cancellation fee of up to £50.

If your company are asking for significantly more than this then complain and if they don't change their minds escalate to the FOS

dunstonh

The fee sounds reasonable at £35. The premium difference should be relatively pro-rata (not exact but in that sort of range).

70% for 7 months of cover sounds relatively pro-rata.

vaio

dunstonh wrote: »

The fee sounds reasonable at £35. The premium difference should be relatively pro-rata (not exact but in that sort of range).

70% for 7 months of cover sounds relatively pro-rata.

Hate to nit pick but I read the OP as having 7 months left on the policy ie only been on cover for 5 months.......

saltandpepper1 wrote: »

...... they have said that it will cost a £35 cancellation fee plus 70% of my policy as i have seven months left on it......

this being the case then it's far enough away from pro rata to make it worth a complaint/FOS referral.

Maybe it's time everybody charged cancellation fees and non pro rata for time on cover complained/referred to FOS so we'll get a definitive answer about what is considered fair.

Same for the "non refundable" add ons they are so keen to sell us when we buy insurance, I can't see any argument why these shouldn't be treated as part of the main policy as far as cancellation is concerned

wilkinson07

I'm having a similar problem. I've bought a new car and a check on a price comparison site shows I can get insurance for £40 less than the insurance I had for my old car. Insurance company stated that to change my policy to new car would cost £25 admin fee plus £165 for the remaining 7 months of the policy.

Obviously thats ridiculous so told them I wanted to cancel. Terms state that after 5 months they would charge me 60% of the premium plus an admin fee. I assumed this meant 60% of my original premium I paid but theyre now saying it means 60% of my remaining premium. All adds up to me paying 80% of a 12 month premium for only 5 months cover. The terms are completely misleading and its a rip off so I'm complaining.