House Insurance - Do I have to cancel it for my current property when moving?

luke222010

Hi,

We have just exchanged contracts on selling our current property and purchasing a new home.

We have already paid a full years fees for our current property (paid up front last December).
We have enquired whether we will be due any money back seeing as we intend to cancel on 31/10 because we won't be at the property any longer.

To our surprise, rather than be due money back, we will be charged £61.50 to cancel (£35 cancellation fee from Hastings, and £26.50 fee "from the insurer"-presumably the underwriter).

We have already taken out new insurance for the new property from the date of exchange so we can't transfer the current insurance over to the new place. My issue now is whether I legally have to cancel the insurance at my existing property or whether I can simply let it run until the end date even though I don't own the property anymore, to avoid the ridiculous charges they have quoted.

Any information on where I stand in this situation would be appreciated. If it is that I just have stump up and shut up then fair enough but I can't seem to find any literature on the internet to indicate my rights (if there are any).

InsideInsurance

luke222010 wrote: »

To our surprise, rather than be due money back, we will be charged £51.50 to cancel (£35 cancellation fee from Hastings, and £26.50 fee "from the insurer"-presumably the underwriter)

Underwriter and insurer are interchangable terms, it comes from the traditional way that business is done in Lloyds of London where the broker comes with a slip with a description of the risk and if the insurer wants to insurer all or part of it they will write their details, the percentage they are taking on and the price underneath the risk, hence an "underwritter".

There is no legislation that you'd be breaching, so you wont go to jail, the problem is that it will be a term of the contract that you notify them of material changes to the policy. Thus if you fail to cancel it they could void the policy which still triggers the cancellation fees but also gives you a policy voidance for non-disclosure that you must declare to all future insurers (car, home etc) for the rest of your life (for the majority).


For those that attack me for "always" defending insurers..... I do actually disagree with this practice and personally think that the costs should be capped at the remaining unearned premium level so the total cost of cancelling the policy is never more than the cost for having it for the full year or at worst full cost of policy plus notional admin fee.

There would be a consequence that the cost of cancelling a policy earlier in the year would go up but I think that overall it is both more logical, given the justification of fees, and fairer.


Firstly check the policy terms you have and ensure they are correctly applying them. Ultimately you could run the risk of letting it run to term or alternatively pay the cancellation fee but log a complaint and threaten to go to the FOS if you arent happy with their decision in the hope they take the economic decision to wave the fee rather than pay the ~£500 fee the FOS will charge them win or lose

luke222010

My issue is, we paid for the policy up front as we do every year, and as we did this in December last year there is effectively only 2 months remaining on the policy - more like 40 days in reality taking into consideration the exact date. Factor this in with the fact the policy was around £120 for the year, and they now want to charge us £61.50 because we want to cancel around 40 days of the end of the policy date, I think it is wholly unfair. That is over half of the cost of the policy!
Its not like we pay monthly and they aren't getting their next two payments. They've already had the full whack! So how is it fair they charge cancellation fees?

I think I will write to them and let them know I am unhappy but to be honest I am unsure whether to just let it continue till the end of the policy.

InsideInsurance

Paying monthly or annually makes no difference to the contract itself, in both cases its still an annual policy but with monthly payments you simply get a loan, normally with a high interest rate, to pay it.

If you go through a big direct insurer or broker like Direct Line or Budget then they self finance that loan. If you go via a small broker then often there will be a separate finance house that provides that loan - and indeed normally they charge an early settlement fee for cancellation on top of the fees that the broker and insurer is charging.


Ultimately either route is a gamble, leave it running and if they void your policy it will mess your insurances up "for life", pay it and they may stick to their guns and not refund it as part of a complaint.

Quentin

luke222010 wrote: »

....to be honest I am unsure whether to just let it continue till the end of the policy.

In your OP you said you had already contacted your insurer to enquire about a refund.


In which case your account may have this already noted against it.


Don't risk getting your policy cancelled over this - the long term consequences would cost you far more than this (outrageous) cancellation fee.

*Scarlett

Gawd! That is a bit extortionate.

Most companies have a cancellation charge and £35 is pretty normal.

Even if they waive the extra charge, the refund that you would be due from an annual premium of £120 would be eaten up by this.

I have no idea about the legalities, but I would be tempted to let the policy run rather than it costing you more money,

Linton

The easiest thing I would have thought is, at least for the first year, to insure your new house with the same insurer as your old house. Presumably you would then get a refund with no cancellation charges.

InsideInsurance

Linton wrote: »

The easiest thing I would have thought is, at least for the first year, to insure your new house with the same insurer as your old house. Presumably you would then get a refund with no cancellation charges.

The problem is the overlap period where you need to insure the new property after exchanging contracts but still want to insure your current hope until you've got the money in the bank. Unlike Car insurance where you can add your new car on as a Temporary Additional Vehicle until you've sold the old one there is no Temporary Additional Home option with Home cover

Hastings_Direct_company_representative

luke222010 wrote: »

Hi,

We have just exchanged contracts on selling our current property and purchasing a new home.

We have already paid a full years fees for our current property (paid up front last December).
We have enquired whether we will be due any money back seeing as we intend to cancel on 31/10 because we won't be at the property any longer.

To our surprise, rather than be due money back, we will be charged £61.50 to cancel (£35 cancellation fee from Hastings, and £26.50 fee "from the insurer"-presumably the underwriter).

We have already taken out new insurance for the new property from the date of exchange so we can't transfer the current insurance over to the new place. My issue now is whether I legally have to cancel the insurance at my existing property or whether I can simply let it run until the end date even though I don't own the property anymore, to avoid the ridiculous charges they have quoted.

Any information on where I stand in this situation would be appreciated. If it is that I just have stump up and shut up then fair enough but I can't seem to find any literature on the internet to indicate my rights (if there are any).

Hi Luke,

Thanks for posting about your situation. If you would like us to check on this for you and clarify what the outstanding balance is for and the options available to you please feel free to contact us at help@hastingsdirect.com

Many Thanks,
Jamie

Money_maker

Why dont you just post them on here, Jamie? You have the full story.

stator

Personally I would write them a letter cancelling the policy and see if they bother chasing it.