Insurance cancelled, they now want large payment.

Lucy1991

Help!...I cancelled a motor insurance policy on Feb 28th 2012 via email. I took out the policy on Nov 30th 2011. I was asked to return the certificate and provide evidence of a new policy, which I did. In March they wrote me a letter saying that due to my direct debit failing they are cancelling my policy and want the full amount, some £800 ish. I phoned them and emailed them with a copy of the previous email saying the policy was cancelled. I got a reply saying that they had forwarded my corrispondance to the appropriate dept. Ive heard nothing since until last week when I recieved a letter from a solicitors saying I owe the £800 and have 5 days to pay. I phoned them, explained the situation, sent the emails as evidence etc. I have just received an email back to say they accept my cancellation of the policy from the 30th March 2012 however I still owe £600 made up of 2 months cover @ £92 each month plus charges. How can this be right? I don't have this sort of money spare and don't believe I should owe this much for a policy I cancelled! Oh and I should mention that they hiked up my annual premium because of an accident of which the claim is still pending by 3.5 times!! I found another insurance company that was much more realistic. Any help and advice will be gratefully received.

BertTheRaccoon

At the time you took out the policy (with this insurer) did you inform them of the outstanding claim - or did they discover it themselves and then came back to you for an increased premium?

Is it the actual insurer who is pursuing you (are you willing to name them) or is it a separate finance company who you had the instalment arrangements through?

Quentin

You need to ask them to itemise the charges you don't understand then take it from there.

When you cancel a policy midterm there are normally extra charges involved plus early termination fees if you were paying on the drip.

motorguy

Lucy1991 wrote: »

Help!...I cancelled a motor insurance policy on Feb 28th 2012 via email. I took out the policy on Nov 30th 2011. I was asked to return the certificate and provide evidence of a new policy, which I did. In March they wrote me a letter saying that due to my direct debit failing they are cancelling my policy and want the full amount, some £800 ish. I phoned them and emailed them with a copy of the previous email saying the policy was cancelled. I got a reply saying that they had forwarded my corrispondance to the appropriate dept. Ive heard nothing since until last week when I recieved a letter from a solicitors saying I owe the £800 and have 5 days to pay. I phoned them, explained the situation, sent the emails as evidence etc. I have just received an email back to say they accept my cancellation of the policy from the 30th March 2012 however I still owe £600 made up of 2 months cover @ £92 each month plus charges. How can this be right? I don't have this sort of money spare and don't believe I should owe this much for a policy I cancelled! Oh and I should mention that they hiked up my annual premium because of an accident of which the claim is still pending by 3.5 times!! I found another insurance company that was much more realistic. Any help and advice will be gratefully received.

Hi. You pay for your insurance yearly, but take out a credit agreement to pay it off monthly.

ie, you DONT pay for your insurance monthly.

Therefore when you cancel, although you are cancelling just two months in, they will still be charging you more than 2/12ths of the yearly premium for that period.

Sounds like whats happening. It would have been in any printed material you got with the policy, but it would be worth checking against what they are trying to charge you now.

Lucy1991

BertTheRaccoon wrote: »

At the time you took out the policy (with this insurer) did you inform them of the outstanding claim - or did they discover it themselves and then came back to you for an increased premium?

Is it the actual insurer who is pursuing you (are you willing to name them) or is it a separate finance company who you had the instalment arrangements through?

Thanks you all for the advice.
Berttheraccoon, They were the same company that had insured me the previous year and so are fully aware of the claim pending. Its a foreign uninsured lorry driver that ran into me on the motorway. I have an abundance of witnesses but it takes time so is still ongoing. It's the broker (Shearwater) that is pursuing for the money not the actual insurance company (Novae).

Johno100

Lucy1991 wrote: »

Thanks you all for the advice.
Berttheraccoon, They were the same company that had insured me the previous year and so are fully aware of the claim pending. Its a foreign uninsured lorry driver that ran into me on the motorway. I have an abundance of witnesses but it takes time so is still ongoing. It's the broker (Shearwater) that is pursuing for the money not the actual insurance company (Novae).

As you have a broker as a 'middle man' you definitely need a breakdown of what they say you owe. I'd want to confirm what the actual insurers are charging for the period of cover and how much your brokers have added on top.

You should also look for an explanation as to why there was an apparent delay in cancelling your policy from when you requested it. If this was down to the tardiness of the broker then they shouldn't be the one who is out of pocket.

However, short term cancellation rates can be punitive. typically-

30% of the premium for one month
40% of the premium for two months
50% of the premium for three months
60% of the premium for four months
100% of the premium for over four months

The figures for your policy should be in your policy document

vaio

they can put what they like in the policy T&C but the FOS enforces a "treat the punter fairly" policy which can override insurers T&C

The FOS view is that mid term cancellation costs should be broadly pro-rata for time on cover plus an admin fee of £50 (ish)

So, as the OP was on cover for 3 months, he should be paying about 25% of full premium plus the admin fee. Anything significantly more than that should be challenged via their complains system with a referral to the FOS if they don't change their stance.

colino

vaio have you any references for this? A punter had his car squished 3 weeks from buying it and (long story short) decided to keep the settlement, not replace the car and claim back the "remainder" of their policy. After much toing and froing this was refused as, to paraphrase their letter, they took 100% liability by accepting the risk on day one, which was subsequently used and there is nothing in their contract to return to the customer.

Quentin

Your friend was correctly advised. Once you make a claim, then there is no refund payable on an annual policy if it is cancelled mid term.

(If you pay by instalments, and want to cancel mid term and a claim has been made, then the outstanding balance for the year must be paid to cancel the policy)

The FOS is happy that this is the case.

vaio wrote:

The FOS view is that mid term cancellation costs should be broadly pro-rata for time on cover plus an admin fee of £50 (ish)

This FOS view is from some years ago (and inflation has put up cancellation charges past £50 for some insurers to £75+), but refers to cancellation charges mid term when there has been no claim(s) made on the policy.

vaio

Quentin wrote: »

Your friend was correctly advised. Once you make a claim, then there is no refund payable on an annual policy if it is cancelled mid term.

(If you pay by instalments, and want to cancel mid term and a claim has been made, then the outstanding balance for the year must be paid to cancel the policy)

The FOS is happy that this is the case.....

Yep, that's certainly the received wisdom but from a fairness pov I can certainly see an argument that "no refunds after a claim" is unfair.

Provision of cover has a "cost" to my insurer and if I decide to relieve them of that "cost" by cancelling then I struggle to see how it can be fair that whether a get a share of their savings depends on whether or not I've made a claim. It should be an equitable sharing of the saving (avoided "cost" to insurer)

If I was ever in that position it's certainly an argument I'd be thinking about running past the FOS

zappahey

colino wrote: »

vaio have you any references for this? A punter had his car squished 3 weeks from buying it and (long story short) decided to keep the settlement, not replace the car and claim back the "remainder" of their policy. After much toing and froing this was refused as, to paraphrase their letter, they took 100% liability by accepting the risk on day one, which was subsequently used and there is nothing in their contract to return to the customer.

There is no remainder to claim back. The insurers agreed to cover the risk for a year and the risk was realised, so nothing to claim back.