Direct Line car insurance cancellation fees?

sarah7610

Hi,
A few weeks ago my car broke down and I had to be towed home. After weighing up the cost of repair against what the car was worth we decided it just wasn't worth fixing and the car has been sold for scrap.
After phoning Direct line and cancelling my insurance they have sent 3 separate letters regarding the cancellation, (all in separate envelopes delivered on the same day).
Letter 1. Payments outstanding £110.25
Letter 2. Schedule confirming all cover has ceased.
Letter 3. Revised Motor Schedule with admin fee of £47.70

How can they justify £47.70 admin fees when it's all on computer and where do they get £110.25 outstanding from?

scotsbob

Most companies charge admin fees and you would have been advised of the scale of charges when you took out the policy.

I'm not sure anyone here could answer your question about the £110.25, why not telephone Direct Line and ask them?

arcon5

Admin fee is pretty standard nowadays tbh.
Not sure about the rest. Check what payments have been made to date and what percentage of refund you are entitled to by reading the contract. The rest is basic math.

feltyfan

sarah7610 wrote: »

Hi,
A few weeks ago my car broke down and I had to be towed home. After weighing up the cost of repair against what the car was worth we decided it just wasn't worth fixing and the car has been sold for scrap.
After phoning Direct line and cancelling my insurance they have sent 3 separate letters regarding the cancellation, (all in separate envelopes delivered on the same day).
Letter 1. Payments outstanding £110.25
Letter 2. Schedule confirming all cover has ceased.
Letter 3. Revised Motor Schedule with admin fee of £47.70

How can they justify £47.70 admin fees when it's all on computer and where do they get £110.25 outstanding from?

I totally agree with you! never mind folks saying it is standard! surely it does not cost this amount to cancel a policy? everything is automated these days, yes they ask you for your policy back in the post but this does not warrant £47+ figure. I questioned it as I have just renewed and then joined this forum to raise awareness. I have just written to my MP too.
EG: If I was to have a personal accident and couldn't drive and had to cancel my policy I would have to pay this sum on top of the other trauma going on!
Perhaps I should take out an insurance policy against having to cancel my insurance policy.
Come on people! just because it is there it dont make it right ....just look at the current PPI claims.
DO YOU THINK IT COSTS £47.70 to cancel a policy?
Would you be happy to pay it?
What if it went up £60?
Who is monitoring these charges?
Thanks for reading

Buzby

You agreed to the policy terms - arguing the toss now won't do anything. You are making staged payments on an annual policy, so the balance is always called for at cessation, and any rebate reflects the early termination.

In effect you bought short-term insurance which costs more than an annual policy, so whether it's a document fee or admin fee it is extra work they've done on your behalf.

InsideInsurance

feltyfan wrote: »

I totally agree with you! never mind folks saying it is standard! surely it does not cost this amount to cancel a policy? everything is automated these days, yes they ask you for your policy back in the post but this does not warrant £47+ figure. I questioned it as I have just renewed and then joined this forum to raise awareness. I have just written to my MP too.
EG: If I was to have a personal accident and couldn't drive and had to cancel my policy I would have to pay this sum on top of the other trauma going on!
Perhaps I should take out an insurance policy against having to cancel my insurance policy.
Come on people! just because it is there it dont make it right ....just look at the current PPI claims.
DO YOU THINK IT COSTS £47.70 to cancel a policy?
Would you be happy to pay it?
What if it went up £60?
Who is monitoring these charges?
Thanks for reading

The cost is not an administration fee, it is a charge to cover the overheads the insurer had - many marketing - in establising the policy and they'd budgeted for on the basis of it being a 1 year policy as you agreed. When you decide you want to break the agreement of it being a 1 year policy they ask for you to cover those additional fees that will no longer be covered by the remainder of the premium.

So for example, buy via an aggregator like confused.com and that can cost an insurer 75 quid, cancel it after 6 months and they effectively want you to cover the other 37.50

Evidently there are two options, either the insurer "sucks it up" which basically means everyone's premiums increase or its charged to the person who wants out of their 12 month policy early. Presently the regulators think its fairer that those that break the agreement pays for it rather than everyone.

The former FSA certainly challenged these costs as I was involved in pulling together the numbers for a prior client and they come out a lot higher than the 50 quid a policy they were charging.

colino

Unusually I'm on the side of the insurance companies when it comes to cancellations and refunds. Say you paid £200 to comprehensively cover a £10000 car. They take on the risk of you driving that car, bouncing off a bus and into a bus queue (Think of the children, etc.!) on the first day of cover. They don't pay out on 1/365th of the total liability just because it's the first day of cover, they cover you in full while the policy is in force. I'm surprised the FSA fell so heavily on the side of policy users, it almost indicates we should get all of our premium back after a year, just because we haven't made a claim.