Motor Insurance Cancellation Charges

RedChef

I had a car insured with Churchill. Their policy clearly states that early cancellation may result if a cancellation charge.

The insured car (specifically named in the policy) was scrapped after it broke down as I was informed it was not repairable.

My argument is that from that point I no longer had an insurable interest which meant I would legally nolonger be able to make a claim under the policy and the insurance company nolonger had any risk to cover. I would add that the breakdown of the car was unforseeable and not the result of any action of my own.

The contract between myself and Churchill in my opinion is a contract between two parties, neither of which could continue their obligations. ie. Churchill would never be required to pay out against any claim and I no longer had an insurable interest in the car. I see this a frustration of the contract and not a cancellation by myself at my descretion. If the car had remained in my ownership and insurable I would have continued the policy. I believe this is a different situation than if I had replaced or sold the car.

Churchill are of course persuing me for an early cancellation fee (£85) which I am challenging as the contract between us has been frustrated and not cancelled at my descretion.

Does anyone know of any precedents on this or any knowledgable opinions regarding insurance contract law?

dunstonh

The contract between myself and Churchill in my opinion is a contract between two parties, neither of which could continue their obligations. ie. Churchill would never be required to pay out against any claim and I no longer had an insurable interest in the car. I see this a frustration of the contract and not a cancellation by myself at my descretion. If the car had remained in my ownership and insurable I would have continued the policy. I believe this is a different situation than if I had replaced or sold the car.

Your contract was also an annual contract. You are looking to break that contract early. Who is going to pay the costs if you are not?

Churchill are of course persuing me for an early cancellation fee (£85) which I am challenging as the contract between us has been frustrated and not cancelled at my descretion.

Why it is £85? Churchill's published fee is £53. Are you paying monthly? if so, the difference will be premium rather than a cancellation charge.

Does anyone know of any precedents on this or any knowledgable opinions regarding insurance contract law?

The FOS dont have a problem with cancellation charges and nor for the FCA. As long as they are published (there is a bit of fairness priced in there but yours is not at a level that would be considered unfair). You are free to test it in a court of law but I am not aware of anyone going to court over small admin charges.

Why did you enter into a contract with an agreed cancellation charge if you have this point of view?

RedChef

dunstonh

My issue was not with the cancellation charge in principle, it was the circumstances in which the policy became unfulfillable on both sides. The subject of the insurance (the car no longer existed) and I was legally unable to continue with the insurance (no insurable interest). None of this was the result of either parties' actions and could not have been prevented. Contract law states that parties are freed from any further obligations under a contract where performance of the contract is frustrated unless the contract specifically has a 'force majeur' clause catering for the circumstances. There is no such clause in the policy just the provision for an early cancellation charge if I decided to cancel by choice. I had every intention of continuing the policy for a full year when I took it out and indeed would have done so if the car had remained roadworthy. I don't know what the breakdown of the £85 is, I have simply been asked to pay that amount.

rs65

How is this different to selling a car?

All you've done is sell it to a scrap dealer.

RedChef

I take your point, however, the question seems to be at which point does a car cease to be an insurable vehicle. It was nolonger roadworthy and would not move under it's own power (ceased engine). The value of the vehicle was just £500 at the time I bought it. If it could never be used on the road again then what would the policy be covering?

rs65

Someone could fit a new engine.

lizziesharples

If you are getting a replacement car you could change your insurance over to the new car (as long as Churchill are happy to insure it.)

Unfortunately though, with the cancellation, you are ending the contract early (even though it isn't your choice) so you would need to pay the cancellation charge and any pro-rata amount owed.

takman

Exactly as rs65 has said a new engine could be fitted. But you chose not to fit a new engine and instead chose to dispose of the car.
That's just like anyone deciding to sell their car because they don't want it anymore.

Xilef

I find out that when searching for car insurance quotes on Compare the market, people with foreign names have a higher premium even if they have conviction. I have tried it several times with different names, both first name and last name do affect the quote even all other details are the same. Is it discrimination or just a bug? Anyone experienced this?

agrinnall

Xilef wrote: »

I find out that when searching for car insurance quotes on Compare the market, people with foreign names have a higher premium even if they have conviction. I have tried it several times with different names, both first name and last name do affect the quote even all other details are the same. Is it discrimination or just a bug? Anyone experienced this?

Define 'foreign name'.

dacouch

Xilef wrote: »

I find out that when searching for car insurance quotes on Compare the market, people with foreign names have a higher premium even if they have conviction. I have tried it several times with different names, both first name and last name do affect the quote even all other details are the same. Is it discrimination or just a bug? Anyone experienced this?

It's most likely due to some of the Insurers tweeking their programs to respond to customers playing around with the quotes by increasing the premium.

The above is fairly common with a number of Insurers who basically don't want customers that have manipulated their quotes to find the cheapest possible option and in doing so may have given false information