Motor Insurance cancellation fee

Moon937

I took out motorcycle insurance in February 2012, paying theinsurance premium in one single payment. I sold the bike in August 2012, with no intention of purchasing anothermachine, however, when I informed my insurance company of this fact, they have asked me toreturn the certificate and a pay £45 penalty. When I refused to pay thepenalty, and told them I will not cancel the policy and just allow it to runits course for the remainder of the 12 months period, I was told that I was legallyrequired to return the certificate because I no longer had an insuranceinterest in the vehicle, and subsequently I would have to pay the £45 penaltydue to a change in circumstance. Surelythis cannot be right; they are after all getting 5 months’ worth of premiumsfor nothing.

Bangton

I don't understand. Why would you choose to pay 5 months of policy premiums over the £45 cancellation fee?

vaio

suppose that depends on the premium and how much of it the insurers are giving back

Moon937

I paid the whole year’s premium in one single payment. Incancelling the policy with still 5 months to run, I do not get a refund, justthe £45 admin charge because of the change of circumstance..

Bigdazman1

What they have told you is correct. Just think could I just setup insurance for myself , insuring your car? Exactly the same circumstance.

Moon937

I have no problem with my having to give up on the remaining 5 months worth of premiums, (although getting a refund would have been nice), and fully understand that I made an agreement for them to insure me for the full year and so must pay for the full year irrespective of the fact that I no longer need it, what I'm having difficulty understanding is how they can then charge me a further £45 'admin fee'. And further that when I told them I would just let the policy run and not cancel it, thereby not incurring any extra admin, they said that would be illegal.

Quentin

You had nothing to insure when you sold your bike, therefore the policy couldn't continue (though "illegal" was the wrong word to use - no policemen would have come!)

The cancellation fee should be set out in the policy/broker conditions (if not, then dispute it)

Faith177

It depends on if they charge TOR or Pro Rata. If TOR then you lose a percentage every month so 1 month you only get 90% 2 months in 80% back ect.

Asked them to clarify why you will not be receiving a refund on the remaining 5 months and go from there.

If it is a pro rata canc then they would normally deduct the £45 from that.

What company is it?

Moon937

It is actually through BMW's own insurance service, which was one of the reasons I was so surprised.

Quentin

Virtually all insurers make a charge for processing mid term cancellations

vaio

yep, and virtually all insurers will refund the unused 5 months of premium in line with the FOS rules.