Car insurance cancellation charges

Bingolingo

Hello!

Just an FYI really.

I bought a new (second hand) car recently and asked my insurer to quote for the new vehicle. To my surprise they weren't even competitive with other insurers. Somehow they'd gone from being pretty much the cheapest to being one of the most expensive.

Now, I know that's the insurer's business how much it quotes but it got me thinking about how unfair the standard cancellation charge was in the circumstances. £75 and with 2 months cover already paid for (plus deposit) the total amount paid on cancellation would've been close to 50% of the whole premium - when I would've only had the cover for 1/6th of the term.

Anyhoo, I complained and they cut the fee in half. I accepted this to get the policy cancelled quickly before another direct debit came out but I've made a formal complaint about the unfairness of the charge, in the circumstances.

I can understand insurers putting such charges there to prevent people just chopping and changing frequently but, and I generalise, I don't think most people chop and change vehicle every other month. Car insurance is a legal requirement but what about when you have to get a new car? That then puts you at the mercy of your current insurer potentially offering an uncompetitive quote or charging a disproportionate penalty to cancel.

I'm going to push for even more of the fee to be refunded and will take this compliant as far as I can. I think an admin charge covering their costs is sufficient and no more.

rs65

Bingolingo wrote: »

I think an admin charge covering their costs is sufficient and no more.

The ombudsman ruled in the past that £50 isn't unreasonable. Half of £75 sounds quite good to me. I'm sure MSE did a table comparing all charges a while ago.

forgotmyname

Get a new car when your insurance expires. Get quotes BEFORE buying a new car.

They are cheap because of those admin charges. Look on the comparison sites and see those expensive ones further down, check their cancellation charges.

Go low enough down the list and you may find companies with no fee to make changes. But they cost £££ more instead of the ££ that you paid with the cheaper company.

And yes some people have lots of cars in a month. My sister changed hers over 6 times in one month.

Car broke down, she borrowed one for a few days so added that, then bought one which turned out to be a nail to changed back to the borrowed one, borrowed another, bought one and eventually went back to the original car.

If she had put all that money towards the repair it would have been done much quicker.

.

Bingolingo

forgotmyname wrote: »

Get a new car when your insurance expires. Get quotes BEFORE buying a new car.

They are cheap because of those admin charges. Look on the comparison sites and see those expensive ones further down, check their cancellation charges.

Go low enough down the list and you may find companies with no fee to make changes. But they cost £££ more instead of the ££ that you paid with the cheaper company.

And yes some people have lots of cars in a month. My sister changed hers over 6 times in one month.

Car broke down, she borrowed one for a few days so added that, then bought one which turned out to be a nail to changed back to the borrowed one, borrowed another, bought one and eventually went back to the original car.

If she had put all that money towards the repair it would have been done much quicker.

.

Wonderful advice. Thanks.

FYI The car had to go and quickly. The need to replace it quickly was urgent. Your sister sounds like the majority of people.

Thanks again.

Bingolingo

rs65 wrote: »

The ombudsman ruled in the past that £50 isn't unreasonable. Half of £75 sounds quite good to me. I'm sure MSE did a table comparing all charges a while ago.

Ok thanks. I guess then I might have got as good an exit from that policy as possible. I still intend to push this company to see if they really do think their exit charge was reasonable.

dacouch

There's no harm in putting an Official Complaint in, it's costs you nothing, the Insurer or broker must properly investigate the matter. They often waive some or all of the charges to complainers.

Keep the complaint concise, polite and remove emotion from it for the best results

liz7859uk

I have just been told I will have to pay an admin charge for cancelling my car's insurance, it has a month left !,SAGA wants £36.!! I had no choice as I have had to get a new car due to old one being SORN due to the cambelt and it was not worth repairing, of course the new car needs insuring, so I had to cancel or proof of no claims. I shall bear all these admin charges in mind should I need to cancel. I did complain and got a " you checked the box " reply. Well actually I had to go and search for this Admin Fee rule.
Personally I think they shouldnt be allowed to do this,
Thank you for reading my moan xx

dannyrst

Who are these with? I'm with Aviva who charge an admin fee over the phone, but you can make changes on the internet for free. Not sure you can cancel, but if you cancel early, they are more than within their rights to charge a cancellation fee.

WhatsUp

So, if your details on your policy are not up-to-date and correct - then your policy is invalid - right!? So if you're in an accident they can refuse to pay out - right?! Well what happens when your 'New Details' return a 'No Quote' and the underwriters apparently refuse to insure you??? And all I did was update my address, add my husband as a second driver, and changed my status from 'Housewife' to employed as a 'Customer Advisor' working in the 'Publishing-Local Press Industry'???? I am still dumb-struck and speechless by this!!!???

I had to call the insurer back twice (spending over 20-30 minutes per call) and after two attempts I could not successfully update my Policy details - as they came back as a 'No Quote' - apparently according to the Customer Advisor it was due to system not accepting my new 'employment details' so I asked what I should do, as without updating my details, surely my policy is invalid? She could not give me any further advice and I just laughed at her in dismay! When I asked, why I can get a Insurance Quote online with all my correct details as I supplied to her, she simply replied that it was a 'New Policy' which I was requesting and not an amendment on an existing one. So essentially, I have a Car Insurance policy that's worth nothing more than the paper it is printed on. How is this even legal???

The only logical step I could think of, was that I would need to cancel this policy and take out a new 'valid' policy with all the correct details. I therefore emailed my complaint, along with a request that my policy be cancelled with effect of immediately and requested that the remainder of my money be refunded to me.

With regards to the cancellation fee, I requested that they do not charge any, as it is due to their inability to update my policy and ensure that my policy is valid, that I had been left with no other option, but to request that they cancel my policy so that I can take out another policy, which would be valid. I did inform them that should they charge me a cancellation fee, that I will challenge it with the Financial Ombudsman.

Despite my request to them, they still charged me the full 50 cancellation fee!

Please advise whether it is fair for them to charge this fee - considering they were not able to assist me with validating my policy - and will it be worth my while to take this further - or is it a lost battle?

Thank you in advance.

Bigphil1474

All the factors you changed will have an affect on the quote and it's not unusual for insurers to not want to quote for all sorts of reasons. My guess is that the original policy was via a broker? - it might be that the underwriter of the new insurance is completely different from the old policy, hence the no quote on the updated policy vs. getting a new quote. I could be wrong .......

InsideInsurance

You buy a year long contract then once the cooling off period ends you are locked into the contract.

If you decide you want to move address or buy a new car its your own choice to have done so and the cost of changing your insurance(s) should be factored into your decision/ budget.

An insurer is under no obligation to offer terms on whatever change You decide to make. If that werent the case you could insure a teenager on a £500 1.1 engined old banger and then do a change of vehicle to a Bugatti Veyron. Similarly if they are "forced" to do a free cancellation then everyone would claim to have a £1m car they want to insure which no high street insurer is going to want to touch.

The cancellation fee isnt an admin fee, though that forms part of it, but the most significant part is reclaiming the unearned proportion of setup/ marketing costs.