Cooling off - applies to renewal?

fingers456

hi all

I've just renewed my car ins (Aviva) and casually asked the call operative to confirm the cooling off period. He said there was no cooling off period, because it is a renewal not a new policy. He continued that if I wanted to cancel the policy, they'd charge me £40 for the privilege (the policy has not started yet).

I was a bit taken aback. He sounded gleeful. I always thought cooling off periods meant you could cancel for free, but CAB suggests a small admin fee may be payable.

So, two questions:
(1) is he right, there's no cooling off period, free or otherwise?
(2) is £40 a reasonable admin fee to cancel a policy?

Thanks!

paddyandstumpy

I can only talk about Home insurance, but presume the same applies to Motor. You are entitled to a cooling off period at renewal.
The only difference I can think of for Motor is CIE - I wonder if that has any impact on cooling off? I suspect not, but as I opened with; I don't know Motor.
In terms of £40 as a fee in cooling off; it's not the worst I've seen. It has to be justifiable, that's the steer from the regulatory bodies.

mattk_180

I've not come across this before. Have you checked your policy documents to see if it mentions anything in it there? I would imagine that although it is called a renewal, it's actually a new contract that just starts at the same time the old one expires. I'd expect therefore the cooling off period would apply.


Regarding cancellation, as above, it's definitely not the worst I've seen. Some companies will also charge you for the days you have been on cover as well so look out for that.

Smodlet

I am only guessing but I cannot see how this would work with motor insurance. Surely, for any "cooling off" period, you would not actually be insured, since you would not have take the decision to accept that contract? Since driving without insurance is illegal, how can you be covered if you have yet to elect to be so? This could be nonsense, it is just a theory but I don't really see how you can expect to have your cake and eat, insurance-wise.

mattk_180

You would have accepted the contracted as you have agreed to pay the premium and the insurer has agreed to indemnify you in the event of a claim. The problem is that in some situations you have entered this contract without knowing the full terms that have been offered.


Therefore, there is a period in which you can review the documents to ensure you are happy with them and if not, can then come out of the contract for an administration fee.


Cover still applies the same, it just gives the consumer a reasonable period where they can review and change their minds without being heavily penalised.

dunstonh

With insurance it is known as cancellation rights. You are entitled, even at renewal, to cancel within a period. However, it is not a free period. You can be charged an admin charge and the insurance for the time on cover on a pro-rata basis.

So, two questions:
(1) is he right, there's no cooling off period, free or otherwise?
(2) is £40 a reasonable admin fee to cancel a policy?

1 - partly right. There is no free period and it is known as cancellation rights as the cooling off period doesnt apply to financial services which has a slightly different arrangement. Cooling off period and cancellation rights are two different things but most people would understand that the average consumer wouldnt know there is a technical difference and would accept people using the terms incorrectly.
2 - yes. The requirement is that it has to be the published charge. Not one made up out of thin air.

The same applies to home insurance and car insurance. Also, where brokers are involved, their charge can be added on top as well.

Key things here:
1 - if you have not accepted the renewal terms and the policy is not yet in force and you contact them to say you are not going to renew then there is not a charge
2 - if you have accepted the renewal terms and then later change your mind then they can charge an admin charge (as time on cover has yet to start, it will be admin charge only)

Smodlet

Thank you, dunstonh, for such a wonderful, clear and concise explanation. It was not even my question but I really appreciate your time and help.

S x

fingers456

thanks for the replies.

Yes, I'm not having cake and eating it (but why not, incidentally, what's the point of having cake if you don't want to eat it too?) because I would pay for the days I was covered.

Thanks Dunstonh, great explanation.

Smodlet

Admittedly, it is a dumb expression but one which has been around for centuries. I imagine it is the way language has changed which make it seem so, rather than the intent behind the expression itself. To eat your cake, then have it, now that would be impressive.

rs65

fingers456 wrote: »

So, two questions:
(1) is he right, there's no cooling off period, free or otherwise?
(2) is £40 a reasonable admin fee to cancel a policy?

Have a look at page 6 of your policy