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Backdating and reinstating insurance

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I just need some help understanding these keywords.
my insurance cancelled my policy without my knowledge and later they apologised stating that they have backdated my insurance from the original date it was started and in the letter they also stated that they have reinstated my insurance.

What does these two words mean exactly? are they the same? do they affect my policy, future insurance quotes etc.?

Thank you
«1

Comments

  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
    10,000 Posts Combo Breaker
    Reinstate - put the original policy back in place - ie uncancel it/ clear any exhausted limits etc

    Backdate - put a new contract in place that is effective from a date before the date it was created

    They shouldnt really be using both words in the letter as they have either reinstated the old policy or setup a new policy and backdated its inception date.

    From your point of view you want them to have reinstated the old policy and confirm they have updated CUE but the letter is sufficient to deal with any future problems anyway.
  • Cpu2007
    Cpu2007 Posts: 724 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    edited 29 August 2014 at 2:08PM
    Thank you

    I was reading about policy reinstatement and some users explained that insurances shouldn't and can't do it. One response was that once the insurance is cancelled. They notify the Motor Insurance Database straight away that it is cancelled.If they were to then put it back in force at a later date, they would in effect be backdating cover to the date it was originally cancelled from. It is an offence under the Road Traffic Act for an insurer to backdate cover.

    The insurer would usually advise you that you need to start a new policy from now, then they would transfer the no claims discount etc to the new policy. If you are eligible for a cancellation refund from the old policy, they may be able to knock that off the charge for the new policy, but I doubt very much that they will reinstate your policy.


    so can they legally do so?
    and
    what is CUE?
  • Quentin
    Quentin Posts: 40,405 Forumite
    edited 29 August 2014 at 2:26PM
    CUE = Claims and Underwriting Exchange


    A database for insurers to record policyholders' claims/incidents/injuries etc whether or not they claimed.


    Nothing to do with recording cancelled policies (which are recorded on a separate database)


    You can check your cover is back on AskMID website.
  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
    10,000 Posts Combo Breaker
    Unfortunately people talk rubbish.

    Insurers must update the MID for personal lines motor insurance. A few may do it "instantly" most are done on a batch process over night. Legally they must get a set percentage of updates done within 7 days, I cannot remember the exact percentage but think its around 95%. They are monitored on adherence on a rolling 3 month period and the first time it goes below they get told off, second time they get fined and after that in theory they could have their access to MID revoked which would mean they legally couldnt write Motor insurance any more. I am not aware of this ever happening and suspect more and heavier fines are more likely for anything but a two bit player.

    Adherence/ the 7 days is measured by the difference between the effective date of the "change" and the date MID receive it - ie its not the date the change is actually keyed into the insurers system but the date that change takes effect.

    Because of the above insurers dont like back dating things as if I put in place a new motor insurance policy today saying it actually commenced on the 1st July then that would go across to MID in the next update (this client does them nightly) and so would be well outside the 7 day agreement (ie 1st July to 30 Aug > 7 days).

    There are lots of reasons why things are backdated, a common one is cancellations sent in by post when theres a backlog, similarly things go late due to system failures that cause the batch not to be sent etc and so insurers arent keen on increasing the number of non-adherent transactions by willingly back date.

    So in short, yes its perfectly legal just isnt desirable for an insurer to do from their own perspective.

    CUE is the Claims and Underwriting Exchange. Its a database that some insurers use to pass information about policyholders to each other. So if you have a claim with ABC Insurance they upload this fact to the db. Next year you get a quote from XYZ Insurance and say you've never had a claim. XYZ check CUE and see the claim was registered there and naturally they'll then ask questions as to why you've not declared it.

    It is widely used but not all insurers subscribe to it for all products but its worth ensuring that the insurer states that there will be no cancelled insurance record on CUE either by the fact they dont subscribe or that they have removed it.
  • huckster
    huckster Posts: 5,284 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    As far as I know it is not illegal to backdate cover in some situations, where a mistake has been made by Insurers. e.g if they cancelled a policy in error. But if they do it to put cover into effect that was not there previously then that would be illegal.

    This goes back ages ago, before Insurance companies had the IT systems and data bases, when they were issuing cover notes for periods, before the proper policy documents were issued. Insurance companies had to be very careful to ensure that cover notes were not issued backdated and the cover note books were subject to inspection. The cover notes were for 28, 30, 60, 90 days and sometimes by mistake Insurers/brokers allowed cover notes to run out, before a new cover was issued to continue the cover. Obviously as an annual policy was bought by the customer, they should not be affected in anyway by a mistake caused by the Insurers/brokers. So in these exceptional circumstances, it was ok to issue the cover note backdated. But staff that has forgotten to issue a new cover note in time were given a b*llocking.

    CUE= Claims Underwriting Exchange. It is just a central database of claims that used/available to most Insurers.
    The comments I post are personal opinion. Always refer to official information sources before relying on internet forums. If you have a problem with any organisation, enter into their official complaints process at the earliest opportunity, as sometimes complaints have to be started within a certain time frame.
  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
    10,000 Posts Combo Breaker
    huckster wrote: »
    But if they do it to put cover into effect that was not there previously then that would be illegal.

    Why? Which law/ section would it break?

    I can see an argument that they may be complicit in fraud/ perverting the course of justice etc if someone called up saying they'd been caught by the fuzz, that they'd lied and said they had insurance when they didnt and could they do them a favour by back dating it but if there wasnt "pending prosecution" or other such issues then I dont know of any law that stops backdating.
  • Quentin
    Quentin Posts: 40,405 Forumite
    Unfortunately people talk rubbish.......
    its worth ensuring that the insurer states that there will be no cancelled insurance record on CUE either by the fact they dont subscribe or that they have removed it.






    Despite your unnecessarily antagonistic "rubbish" remark,


    CUE doesn't record cancelled policies.
  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
    10,000 Posts Combo Breaker
    Quentin wrote: »
    Nothing to do with recording cancelled policies (which are recorded on a separate database)

    And which database is this?
  • huckster
    huckster Posts: 5,284 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Why? Which law/ section would it break?

    I can see an argument that they may be complicit in fraud/ perverting the course of justice etc if someone called up saying they'd been caught by the fuzz, that they'd lied and said they had insurance when they didnt and could they do them a favour by back dating it but if there wasnt "pending prosecution" or other such issues then I dont know of any law that stops backdating.

    Now your asking. Sometime since I looked at this. From memory there was an update to the original Road Traffic Act, which covers how Insurers act when issuing cover. e.g they can't issue cover note/certficate showing backdated cover, unless they had already accepted the risk from the date concerned.
    The comments I post are personal opinion. Always refer to official information sources before relying on internet forums. If you have a problem with any organisation, enter into their official complaints process at the earliest opportunity, as sometimes complaints have to be started within a certain time frame.
  • InsideInsurance
    InsideInsurance Posts: 22,460 Forumite
    10,000 Posts Combo Breaker
    huckster wrote: »
    Now your asking. Sometime since I looked at this. From memory there was an update to the original Road Traffic Act, which covers how Insurers act when issuing cover. e.g they can't issue cover note/certficate showing backdated cover, unless they had already accepted the risk from the date concerned.

    I can see a fair few small websites saying similar mentioning the RTA but no one mentions any sections. A few say even backdating to covernote dates could be considered illegal however its common practice (so evidently the sites are old as cannot remember the last covernote I saw). A few do however say there is no case law on the matter.

    Would be interested to see the exact terms people are referring to, certainly I've known insurers to backdate new motor policies when they've messed up but none of the sites are mentioning any exception for this.
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