Car insurance cancellation charges

Quentin

WhatsUp wrote: »

......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......
.

You must first send them a formal complaint and give them the opportunity to deal with it before being able to escalate to the FOS.


Their complaints procedure will be set out in the policy docs.


Although this is all down to you wanting to change the goalposts, and their fee for you cancelling mid term will have been set out in the ts + cs you agreed when buying the policy, a complaint won't cost you, nor will using the FOS and we do often see insurers killing off complaints by way of a goodwill gesture (it costs them time and money dealing with complaints, especially if the FOS get involved).


Waiving admin fees is a quick goodwill gesture!

WhatsUp

InsideInsurance wrote: »

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.

When I initially took out the policy I specifically informed the agent that I am in process of moving and that I am looking for work and that my circumstances will be changing. I was informed that all my details can be updated accordingly, but that it will be subject to an administration fee of 50pounds. They also informed me that being employed will reduce my insurance, and that this could 'waive' the 50pounds admin fee. They made it sound as if it is no-problem at all!

WhatsUp

InsideInsurance wrote: »

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

Will it be better to get a monthly contract then if you know that your circumstances will be changing or will this make no difference?

Quentin

WhatsUp wrote: »

Will it be better to get a monthly contract then if you know that your circumstances will be changing or will this make no difference?

It will be far more expensive!

mycar37

Bingolingo wrote: »

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.

Well said. Same thing happened to me just this past week. Told them I thought £75 as a rip-off but all I got was a shrug. Will now pursue this for a reduction.
Thanks for the alert!

mycar37

InsideInsurance wrote: »

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.

Seems like Insurance companies can saddle the customer with anything they want to. Why should it be £75 for some and as low as £10 for another?

rs65

mycar37 wrote: »

Seems like Insurance companies can saddle the customer with anything they want to. Why should it be £75 for some and as low as £10 for another?

It's supposed to represent the actual costs incurred. There is no way that every insurer would incur the same costs to implement a change.

If they all charged the same, people would be screaming 'cartel'.

You can only be saddled with the charge you agreed to when you took out the policy.

Theboyfluff

Car insurance policy through autonet insurance.

I changed my vehicle yesterday and was charged £341.83 for the remainder of the policy running till February and a fee of £35 (very excessive). I did an online quote through go compare and found I could get a new 12 month policy for £289.62. I was told if I cancelled my policy and started a new one through them I would get just over £200 back to put towards the new policy. If I cancelled all together I would then be charged 2 admin fees taking the refund down to just over £100. For a period of just over 24 hours not even including my original £175 fee, that time on risk charge is ridiculous. I was told the the original cost £175 (old car) and the adjustment fee for the new vehicle £341 are added together and then divided by 365 days, refunding for days left. Effectively they backdated the cost of my new car to the start of the original policy.

Any advice where I stand with this.

Bingolingo

Good to see that some others may be able to complain that revised charges and cancellation fees are not fair in certain circumstances.

Also good to see the 'you signed a contract you are liable' brigade still out in force - keep it up guys, so very useful.

I've had my complaint acknowledged but am yet to hear further from the insurer. I think there may be a chance that the previous challenge about the fairness of cancellation terms was not robust enough to take account of certain circumstances. Will keep this post updated as and when.