Cancellation costs of motor policy seem high

BertTheRaccoon

I had a vehicle insured which had been renewed around 20th Sept with the same broker and insurer. I sold it on 13th October and notified them I wished to cancel the policy a few days later as I had not bought another vehicle and it may be some more weeks until I get a replacement.

I sent in my certificate of insurance a few days later, so there would have been give or take 1 month of actual " on risk" time for the insurer.

I had paid the 1st month instalment by DD too.

The annual premium was about £500. So they had roughly £60 off me for the 1st month DD.

I get a letter confirming the cancellation from the broker and asking me for another £95.

So I phone up and ask how roughly 30 days cover has cost me over £150.

I am informed that when the policy is taken out, they pay the insurer (Highway) the full premium and then I pay the full amount over the 12 months plus interest.

When it is cancelled, Highway only reimburse them so much, which is what the difference they are seeking from me is.

Does this seem to be "on the level" to you?

I had the choice of either just keeping the cover running until I bought something else, but didn't want to take that risk in case the new owner did not take out cover and then had a crash, or cancelling. I thought cancelling would be the cheaper option but it has turned out to be anything but.

I am probably banged to rights with this, it just seems incredibly bad value for money.

Quentin

You need to compare the cost of a one month temp policy with what they have charged you.

And factor in their cancellation fees (which will include any charge for the early termination of the loan)

InsideInsurance

Your policy book will say the cost of cancellation and ask your broker for an exact breakdown.

One consideration is that many add ons (eg Legal Expenses or Breakdown) are non-refundable once you get out of the 14 day cooling off period so these can significantly increase the cost of early termination.

dunstonh

Does this seem to be "on the level" to you?

Yes. it seems logical and correct.

You took out a loan to pay the annual premium. That is how monthly premiums work with most and have done for many decades.

I thought cancelling would be the cheaper option but it has turned out to be anything but.

That is quite common.

You can ask them for a breakdown of the charge but typically the monthly direct debit is not in sync with the time on cover. Plus, early cancellations tend not to be exactly pro rata on cancellation rates as the bulk of the costs of providing the policy occur at the start. So, cancelling in month one may actually see a rate that is equivalent to 2 or even 3 months. Plus, an admin charge that is typically around £20-£60 on top.

BertTheRaccoon

Thanks guys, I realise there probably wasn't anything untoward here, it was just a fair bit more than I envisaged.

BertTheRaccoon

Just to update on this, I spoke with my brokers, who were sympathetic to the situation and they reduced their commission from the transaction of the policy and also because legal protection cover had been sneaked in at renewal, they scrubbed that off too from the £95.00 they wanted.

So it got bumped down to £63.00

I have been happy with the service I have had from Keith Michaels and they properly dealt with the risk on a highly modified car (over 100% increase in engine capacity and power output from standard).

I recall them speaking with the underwriters about my car history & experience and they mirrored my 10 years NCD that I had running on another vehicle I had insured at the time of taking out this policy.