Car Insurance Question

Stephen_Leak

The customer's policy with Company A expires on 05/08/07. The customer gets a cheaper quote from Company B and takes out a new policy with them, starting on 06/08/07.

Then Company A gives the customer gets a much better quote (in terms of the cover, NCD, etc.) and the customer takes out another policy with them, starting on 17/08/07. The customer then cancels the policy with Company B within the 14 day "cooling off" period.

However, does this mean that, albeit in retrospect, the customer has been driving without insurance from 06/08/07 to 16/08/07?

mum2one

Stephen_Leak wrote: »

The customer's policy with Company A expires on 05/08/07. The customer gets a cheaper quote from Company B and takes out a new policy with them, starting on 06/08/07.

Then, for reasons that are not relevant here, the customer gets a much better quote (in terms of the cover, NCD, etc.) from Company A and takes out another policy with them, starting on 17/08/07. The customer then cancels the policy with Company B. Please note that this is within the 14 day "cooling off" period.

However, does this mean that, albeit in retrospect, the customer has been driving without insurance from 06/08/07 to 16/08/07?

From my understanding from what you have said, although you will be cancelling within the 14 day cooling off period, once cancelled then that policy will stop, if you cancel on day 12 then from that day you will not be covered.

But bear in mind that you dont make a claim during the cooling off period, otherwise you could be paying 2 sets of ins.

raskazz

No, there will be no break in cover as long as the policyholder informs Company B to cancel the policy with effect from the 17/08.

The cancellation is not 'backdated' under the cooling-off rights - hence Company B will charge a pro-rata amount for the cover from 06/08/07 to the 16/08/07.

Stephen_Leak

There are no claims involved in this entire period. I understand that that would have prevented the customer from cancelling the policy with Company B.

My point is that the policy (or contract) with Company B doesn't just stop on 16.08.07, it is cancelled. And, if it is cancelled within the 14 days, the customer gets a full refund of his premium, and doesn't get charged a fee. It is as if the policy (or contract) never existed.

raskazz

Stephen_Leak wrote: »

My point is that the policy (or contract) with Company B doesn't just stop on 16.08.07 - it is cancelled, and the customer gets a full refund of his premium, not just a pro-rata refund of the unexpired bit. It is as if the policy (or contract) never existed.

This is incorrect. The policy is cancelled on a pro-rata basis under the cooling-off rights. The contract did exist, but was cancelled in accordance with the policyholder's cancellation rights.

It is not as if the contract never existed (void ab initio in the legal jargon).

Edited to add: If premiums were refunded in full for cooling-off cancellations after cover was in force, you could effectively have free insurance by incepting policies and cancelling them every two weeks.

This:

Stephen_Leak wrote: »

There are no claims involved in this entire period. I understand that that would have prevented the customer from cancelling the policy with Company B.

Is also not wholly accurate - if a claim occured prior to the effective cancellation date then the customer can still cancel the policy - they would, however, have to pay the insurer the full annual premium regardless.

Stephen_Leak

Noted with thanks. That was why I used the words, "It looks as if".

A new, free insurance policy every two weeks: now thats what I call "extreme stoozing"!