Fighting against outrageous cancellation fees in car Insurance

Kan1050

Hi, I am 29 years old and got my driving license back in 2010. I have clean driving record (no motor conviction, no claim) so far.

I took an insurance for my car (5 years old) with "The policy shop" this year for £1600 (with £3000 excess). Yes, I couldn't get anything cheaper than this as I don't have "No Claim Bonus". "The policy shop" is just an agent and they took the insurance with XS direct.

I have used only 5 months of insurance so far. I found a cheaper quote from some other company and want to cancel my premium with the policy shop and buy the new quote. When I checked the terms and conditions, it says the policy can only be cancelled only on certain monthly intervals. 1 months, 2 months, upto 4 months, upto 6 months, upto 8 months. I fall within category upto 6 months and my refund is (only 25% of the total premium - £49.50 commission amount for the policy shop) which will be only £364.

When I called the policy shop, they reply that they are just agents and 25% refund is XS direct terms and conditions (for 5 -6 months usage) and £49.50 is their loss of commission. I feel this is outrageous as I have used only 5 months of insurance cover. Is there a way to fight against this?

I have couple of questions here.
A) I am not sure whether "the Policy shop" is lying that XS direct only refunds 25% for cancellation between 5-6 months of the insurance cover. Seems like rogue trading.

£49.50 is the admin free from "the policy shop"? Feel this is too much.

Not sure where should I go from here. If you could guide me then that would be great.


Thanks.

rs65

Kan1050 wrote: »

I have couple of questions here.
A) I am not sure whether "the Policy shop" is lying that XS direct only refunds 25% for cancellation between 5-6 months of the insurance cover. Seems like rogue trading.

£49.50 is the admin free from "the policy shop"? Feel this is too much.

A) just from a quick google - yes they are correct. Its in the policy.

its not excessive.

dunstonh

£49.50 is the admin free from "the policy shop"? Feel this is too much.

Its not. The FOS publications from about 5 years ago had a case at £50 that they deemed fair.

Explicit charging is considered fairer than everyone paying more in the premium to cover it. However, you can choose which you want.

vaio

I thought the FOS ruling related to an insurers cancellation charge, the OP is complaining about a commission claw back from the broker.

OP......you could try a complaint as I think the FOS ruling mentioned that time on cover should be broadly pro rata for time on cover. I'm not sure that 75% premium for 50% time on cover qualifies as broadly pro rata.

Having said that it doesn't look like the insurer has charged a cancellation fee which might offset the extra premium.

Are you sure the saving is going to be worth it? You might save a few hundred quid but you'll also lose 5 months NCB which is probably worth 10% discount for the next 4 years

rs65

I think the insurer here is regulated by the Central Bank of Ireland. Does FOS apply to the short period charge?

vaio

I thought anyone that sold insurance in the uk was subject to the FOS

rs65

vaio wrote: »

I thought anyone that sold insurance in the uk was subject to the FOS

It was the broker that sold it - they will be FSA regulated therefore FOS is relevant. I don't know if you can complain to FOS about an Irish insurers cancellation charges.

vaio

yeah but, as above, i think any motor insurer sold in the UK is subject to the FOS

they have to be on a list of "authorised insurers" to comply with RTA and I'd be surprised if inclusion on that list didn't also involve scrutiny by uk regulators

rs65

From the FSA register

Consumers considering or currently doing business with passported EEA firms ('EEA Authorised'), may wish to ask for further information from the firm or its UK branch about its complaints and compensation arrangements. This is because the position may differ compared to a UK authorised firm.

I am none the wiser.

Kan1050

FSA register doesn't seem helpful. I wasn't expecting this. "Further info from the firm"? Firm is going to defend its policy...

opinions4u

When you take out an annual policy it's exactly that.

If you choose to break that contract after a few months and the T&Cs state "we'll charge you £50 to cancel and you ain't getting your premium back pro-rata" then that's the likely outcome.

If you are going to pursue a complaint with the FOS you will have, as I see it, two issues to be addressed.

1. The charges applied are excessive.

2. The charges applied are unclear.

On both counts I think you fail, based on my knowledge of the FOS and what's been posted above.

Cancelling is also going to delay your NCB accrual.

A car insurance policy is usually for a year. Their cancellation costs will reflect this.