Paying outstanding premium when car is a write off

Gem62

Help!My car was in an incident which resulted in it being declared a write off by the insurance company (Sabre). I had a policy with Sabre which I took out through the broker, One Call Insurance.
Sabre requested return of all my documents which were duly sent and by return I was sent the settlement cheque and notification from DVLA of no longer owning the car. All fine and clear so far!

Then I got a letter from One Call saying they required me to send them the Certificate of Insurance (which I didn't have as had returned it to Sabre as they were with whom I was insured). The letter from One Call also said if i wanted to insure another car on the same policy I would have to do it in 14 days of receipt of the settlement or the policy would be cancelled. I don't have another car so that was OK by me.

I called One Call to let them know the Certificate of Insurance had been returned to Sabre thus I no longer had it. On that call, the person taking the call then said 'oh - well how are you going to pay the premium you owe?. I was a bit confused and asked what premium. She went on to say regardless of no longer having the car, not having a policy etc I was still expected to pay the remaining sum of money for the policy which was not due to expire till August this year. I was, understandably, a little ticked off and said i did not have any knowledge of this clause and where was it on the documentation She was like a broken record and just kept saying ' you have to pay - you owe the money'. I hung up.

I have now received a demand for the outstanding sum which is very high (it was because the car was for my recently passed her test daughter to drive). I have searched all the paperwork I have and the website where my on-line account with the finance company (needed that to pay the high premium in installments) and no where can I find this clause. I have now written to One Call to say I did not cancel my policy rather it was nullified by Sabre when they paid the settlement and that unless and until they provide evidence of this clause and where, pre-sale of the policy, they highlighted this clause to me, I am not paying. I have given them 14 days to respond or I will go to the ombudsman.

I suspect I am fighting a losing battle here and can find NO one to help.:(

Is this the right thing for me to do or should I be doing something else?

Gem

ilikewatch

If you've taken an annual policy and made a claim then you owe for the rest of year - whether you paid in a lump sum at the beginning, or chose to finance the annual lump sum and pay it off monthly.

What has probably confused the issue is being given the choice of insuring another car or cancelling the policy - in this case cancelling the policy doesn't mean that any refund would be due as there has been a claim made.

i.e. if your policy cost £365 for the year, but you wrote your car off on day one you couldn't expect a £364 refund.

~Beanie~

As far as I am aware, this is normal and you need to pay. You aren't buying monthly insurance, you are buying an annual policy and being allowed to pay it in monthly installments, there is a difference.

If you had only had the policy for 3 days and you wrote your car off, would you expect them to pay your losses when you had only probably one installment of the policy cost? And if someone had paid the annual premium up front and later wrote their car off, you wouldn't expect them to get a refund.

dunstonh

I suspect I am fighting a losing battle here and can find NO one to help.

Afraid so. When you suffer a claimable event in the policy year, the insurer is entitled to be paid the full premium for the year. The FOS also verify that stance in their publications.

It is one of the risks of borrowing money to pay the annual premium.

Most insurers will transfer the policy to the new vehicle. However, some of the budget providers won't. So, when you buying a policy, you cant just look at price. You need to be aware that budget providers will often remove features/options.

22johnny22

On the basis of what you have said, I fully concur with others, you bought cover for a year and have to pay for the year.

the monthly payments were for your benefit only

Quentin

Gem62 wrote: »

....I have searched all the paperwork ...and no where can I find this clause. I have now written to One Call to say .. I am not paying. I have given them 14 days to respond or I will go to the ombudsman.....

Read your policy again.

Look in the section regarding cancellation.

Also read up on the complaints procedure, and the FOS website. You must have their reply (or have to allow the insurer 8 weeks to reply) to a complaint before going to the ombudsman.

You say you have searched the finance company website, but they won't have the details. This is from the one call website where you can download their full documents:

Please note that refunds will not be given if a claim has been made prior to the cancellation of a policy as the insurer will charge 100% (all of the premium and all administration charges on your policy) of the premium regardless of the amount of time that cover has been in force. If you have paid in full, you will not be entitled to a refund. If you are paying by Direct Debit, we will write to you to confirm your account balance.

dunstonh

You must have their reply (or have to allow the insurer 8 weeks to reply) to a complaint before going to the ombudsman.

Although we know the FOS position (copied and pasted):

We generally say that if a claim has been paid, it is not reasonable to ask the insurer to make a refund - even if there is time left on the policy. But if a claim has been paid that was for less than the total of all the premiums paid, we may ask the insurer to pay the difference.

dacouch

dunstonh wrote: »

Although we know the FOS position (copied and pasted):

We generally say that if a claim has been paid, it is not reasonable to ask the insurer to make a refund - even if there is time left on the policy. But if a claim has been paid that was for less than the total of all the premiums paid, we may ask the insurer to pay the difference.

Isn't that from the FOS notes on GAP Insurance?

This is what they currently say for motor (It has changed relatively recently)

"17. outstanding premium instalments or premium refunds

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 instalments, they must still pay the outstanding instalments 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."

http://www.financial-ombudsman.org.uk/publications/technical_notes/motor-valuation.html

Quentin

dunstonh wrote: »

Although we know the FOS position (copied and pasted):

Nevertheless the OP can go to the FOS for their adjudication on their case as they have stated

My comment was to advise the OP on the complaints procedure (as telling the insurer to reply within 14 days or the FOS would be informed is pointless because of the rules)

dunstonh

Isn't that from the FOS notes on GAP Insurance?

It was but I couldnt find the article specific to car insurance. However, the FOS apply the same principle across the board. Pleased you found the latest one though which verifies the position is the same.

I notice they have included a bit about transferring it to a new vehicle. That is a relatively new statement. I suspect it has come about because of these budget plans starting to cut that option out.

So, things are nice and clear now. You are expected to pay the premium but you can transfer to a replacement vehicle. Nothing to complain about.

Quentin

dunstonh wrote: »

.... Nothing to complain about.

You often try to deter us from using the FOS to complain. Why?

In this instance the OP feels treated unfairly and insists they cannot find anything to say what happens after a write off, and hasn't actually cancelled the policy!

So there is something to complain about.

And we often hear that insurers will make goodwill payments to complainers just to nip a complaint in the bud, so it is always worth spending the cost of a stamp and complaining, and know that whatever the outcome there will be no cost to the policyholder (but the insurer faces large costs plus expensive management time dealing with complaints, hence the chance of a goodwill payment)