Cancelling car insurance policy - is this right/fair/legal?

chambh

Dear experts
A month ago my car was stolen and never found. The insurers have paid out and the car is a total loss. In the meantime I have bought a new car and insured it on a separate policy from another insurer.
I rang the old insurer today to cancel the remaining period of the policy (and the direct debit paying for it.)

I was rather surprised to be told I have to pay the remaining monthly instalments of the policy. I stated I was unhappy to continue to pay to insure a car that no longer exists. I was told I have to continue to pay 'because we (the old insurer) have paid out.' That, I said, is your problem and not mine, so why should I continue to pay for a cancelled policy? Insurance is about risk etc etc and as far as I see it the insurers have simply had to pay out and it's their bad luck.

Is this standard insurance practice? It may be, I don't know but it seems very unfair to me. Any views would be welcome with links to any guidance to strengthen my case.

shortcrust

Standard practice and all in the terms and conditions. Best thing is to cancel your new insurance and insure the new car on the existing policy. You might have to pay for change of details.

spacey2012

You took out a 12 month policy on credit , the balance is now due.
You do not have a case, you owe the remainder.
If they inform your new insurer of the overlap and you failed to mention the overlap or ongoing claim , they will cancel as well, they really do have you over a very deep barrel here.

mills705

As others have said you do enter into a 12 month agreement with insurance. The other fact here is that you have had a claim so the normality is the full amount will be payable as you have had the vehicle value from them!
Great advice above is to get the new policy cancelled and the old policy details changed.
Expect to pay a minimum time on risk charge also an insurance arrangement fee if through a broker for the new policy and then risk based adjusted premium on the old policy.

Quentin

It may not be as straightforward as cancelling the new policy and using up the original one.

Before you do anything read up in your original policy what happens following a total loss payout.

Some policies end after a total loss.

d0nkeyk0ng

The monthly payment doesn't mean a rolling monthly contract. What you've opted to do is finance the insurance over twelve months. Imagine if you'd taken out a loan to pay the insurance - would you stop paying just because of the loss or would you have to pay off the loan?

But as above, read policy.

magpiecottage

shortcrust wrote: »

Best thing is to cancel your new insurance and insure the new car on the existing policy.

As the great Eric Morecambe said, "Not necessarily in the right order".

Don't leave the new car uninsured at any time.

scheming_gypsy

chambh wrote: »

Dear experts
A month ago my car was stolen and never found. The insurers have paid out and the car is a total loss. In the meantime I have bought a new car and insured it on a separate policy from another insurer.
I rang the old insurer today to cancel the remaining period of the policy (and the direct debit paying for it.)

I was rather surprised to be told I have to pay the remaining monthly instalments of the policy. I stated I was unhappy to continue to pay to insure a car that no longer exists. I was told I have to continue to pay 'because we (the old insurer) have paid out.' That, I said, is your problem and not mine, so why should I continue to pay for a cancelled policy? Insurance is about risk etc etc and as far as I see it the insurers have simply had to pay out and it's their bad luck.

Is this standard insurance practice? It may be, I don't know but it seems very unfair to me. Any views would be welcome with links to any guidance to strengthen my case.

The insurance company agreed to cover your car against accident, fire, theft etc for 12 months at the cost of £x. Your car got stolen within that 12 months and they paid out. That doesn't mean you don't have to pay the balance of the agreed cost.

dunstonh

In the meantime I have bought a new car and insured it on a separate policy from another insurer.

Why did you use a different insurer? Most, but not all, will transfer the existing insurance to the new car.

That, I said, is your problem and not mine, so why should I continue to pay for a cancelled policy?

It isnt cancelled. You took out a policy that covered you for claims in a 12 month period. You claimed. It paid out. Job done.

Insurance is about risk etc etc and as far as I see it the insurers have simply had to pay out and it's their bad luck.

And you had the bad luck to pay for your insurance on credit and the bad luck in making the mistake of not putting the new vehicle on the same insurance.

Is this standard insurance practice? It may be, I don't know but it seems very unfair to me. Any views would be welcome with links to any guidance to strengthen my case.

It is standard and nothing will strengthen your case. Indeed, the FOS have in their publications that they consider it fair that where a policy is paid out, that no refund should be given.

Aretnap

Quentin wrote: »

It may not be as straightforward as cancelling the new policy and using up the original one.

Before you do anything read up in your original policy what happens following a total loss payout.

Some policies end after a total loss.

How does that tally with this from the Ombudsman's website? (linky)

Most motor insurance policies are yearly contracts – so the full premium is payable even if the vehicle is written off during the year. If the consumer paid the yearly premium upfront, they will not receive any refund. Or if the consumer was paying the yearly premium by monthly installments, they must still pay the outstanding installments after the vehicle is written off.

When an insurer declares a vehicle a write-off, we expect it to offer a consumer the option of bringing a replacement vehicle onto the insurance policy so that the remainder of the policy term can be used. Depending on the make and model of the replacement vehicle, an additional premium may be required by the insurer. This should be calculated on a pro rata basis for the remainder of the policy term.

sithemadmonkey

The insurer would have given OP the opportunity to insure the new car on the old policy, but he had already insured the new car elsewhere before ringing the insurer to cancel.

Hence why the advice from most posters here is to see if the old insurer will cover the new car, before trying to cancel the new policy.