Outrageous Car Insurance Cancellation Charges

atlanticist

Guys,

New here, and I'm so incensed at the cancellation charges I've just been saddled with, I feel impelled to warn you guys and to seek some advice.

I insured my 55 Clio on 10 Nov with Swinton. The annual premium was £300.

I've just cancelled the policy (as I've sold the car), and for cancellation alone, a combination of Swinton and the insurer have charged me £103.32 in cancellation fees for the privilege.

So, in total, I've effectively just paid £135 for cover for my Clio for 29 days.

I get admin fees, I really do. It takes time and effort to set up a policy. But £100 in charges on a £300 annual policy strikes me as usurious........

Who are the good guys out there in terms of cancellation charges? Clearly going through a broker was not a good idea as they pile their charges on top of the insurers.

Is this a common problem ? Was I just unlucky ? Anyone else got any horror stories or things to look out for ?

InsideInsurance

You really need to get a breakdown of the charges. As you were outside of the cooling off window so any optional extras like Legal Expenses or Breakdown would be payable in full for the year.

Some brokers add on commission clawbacks etc but generally there is rarely much difference between cancellation charges from direct insurers or intermediaries.

Those selling insurance, particularly online, are often paying £75+ per sale in marketing charges which are irrecoverable after the cooling off period (and if its PPC then always irrecoverable) and thats before you add any actual administration costs etc

Caz3121

Did you price up short term insurance before you took an annual policy. I am wondering whether they have repriced it as such or whether it is just the add-ons and fees

dunstonh

I've just cancelled the policy (as I've sold the car), and for cancellation alone, a combination of Swinton and the insurer have charged me £103.32 in cancellation fees for the privilege.

That is unlikely to be correct. There will be some cancellation charge in there but part of it will be premium. Also, the cost in the early months is usually something along the lines of month 1 being the equivalent of 3 months cover. This is what Swinton publish as their cancellation costs:

After the ‘cooling off’ period
Some insurers do not provide a refund if the policy is cancelled after the cooling off period. Your policy document will set out your insurer’s terms in this respect and any applicable cancellation charges made by your insurer. We will also make a cancellation charge of £50. Our new policy inception or policy renewal service charge and any credit card handling charge made for arranging your insurance will not be refunded.

If we have given you a discount off your premium at inception this will be deducted on a pro rata basis from any refund due to you on cancellation. In addition, if we have given you an amount of cashback we have the right to deduct a proportionate amount of the cashback from any refund due, or recover the amount from you. Where a cancellation or other transaction results in a premium refund being due to you, that refund will be reduced by any service charge and any other sums you owe in respect of the policy.

I get admin fees, I really do. It takes time and effort to set up a policy. But £100 in charges on a £300 annual policy strikes me as usurious........

Cancellation charge is explicit. It will be the same whether the premium is £20, £200 or £2000. Although the premium refund will be pro-rata on premium paid.

Who are the good guys out there in terms of cancellation charges? Clearly going through a broker was not a good idea as they pile their charges on top of the insurers.

It is much the muchness nowadays. The race to have premiums low on the comparison sites has seen things like admin charges and exit charges moved out of the premium and charged explicitly. Typically, you have to move further down the comparison site price list to get pricing that has cancellation/admin charges low or removed.

NowRetired

I had to cancel insurance with Swinton as I changed my car and they wouldn't insure my new car and it would have cost me more than I paid because of a cashback deal.


No one else had any problems insuring my new car, just Swinton.


I just left it running as it was cheaper.


The car got scrapped.


I would never get insurance from Swinton again

Quentin

atlanticist wrote: »

.....Clearly going through a broker was not a good idea as they pile their charges on top of the insurers.

Is this a common problem ? Was I just unlucky ? Anyone else got any horror stories or things to look out for ?

It is usual (wuth most but not all brokers) to end up with paying the brokers fees as well as the insurers cancellation charges, as opposed to going direct to an insurer (but still usually getting cancellation fees).

Swinton are particularly savage with their cancellation charges, though that isn't the only reason they have such a poor reputation (search here or across the net for Swinton problems).

At least their multiple heads for cancellation charges were made clear before you bought the policy!

Quentin

NowRetired wrote: »

I had to cancel insurance with Swinton as I changed my car and they wouldn't insure my new car and it would have cost me more than I paid because of a cashback deal.


No one else had any problems insuring my new car, just Swinton.


I just left it running as it was cheaper.


The car got scrapped.


I would never get insurance from Swinton again

Your solution only "works" as long as you (presumably) didn't have any no claim discount you wanted to use on the new policy elsewhere. (As your NCD would be "tied" to the Swinton policy)

vaio

Cancellation will attract an admin fee (up to £50) and obviously you will need to pay for the time you have been on cover so, assuming you paid for the year up front and you are six months into the policy, you should get a refund of about half the premium less the admin fee.

If your numbers are significantly different then put a complaint in and refer to the FOS if you still aren't satisfied.

I suspect others will say that broker fees/finance fees/add ons etc won't be refundable, I'm inclined to disagree with that and would include the whole lot in the complaint and see what the FOS have to say about it.

shughes_uk

There are companies who don't charge at all, it's something to ask during the quotation, the price may be right but not the unmentioned bad features