Charged £260 to cancel a car insurance policy only two months in..

Johno100

AdrianC wrote: »

No fluff at all. That seems very clear and simple - one to two months, they charge 40% of the total premium; two to three, 50%.

You've said you're being charged £240 of £540, which is near as dammit 45%. I suspect that the rounding of figures will bring it out to exactly one or the other, depending on which side of two exact months you are.

You implicitly agreed to that by not cancelling the policy in the first fourteen days after receiving the paperwork.

I thought the days of those sort of punitive short term cancellaton rates had long gone and a pro rata charge plus a cancellation fee was the norm?

The Financial Ombudsman Service have stated previously that consumers should get a pro-rata refund and these short term rates fall foul of the Unfair Terms in Consumer Contract Regulations 1999.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

http://www.financial-ombudsman.org.uk/publications/technical_notes/cancelling-renewing-car-insurance.html

And I'd add that according to the OP It's not him who wants to cancel but the insurers who won't cover his new vehicle. In my mind that should warrant a pro-rata refund regardless of the legality or otherwise of the cancellation rates.

Johno100

Iceweasel wrote: »

I don't see anything 'wrong' at all.

Insurance doesn't work the way you think.

What would have been the cost at the outset if you had asked for a 2-month short term policy?

It certainly wouldn't have been 1/6th of the annual cost.

Cancelling an annual policy means (for many insurers) that the policy reverts to a short term one and the whole thing is re-calculated.

Hence the references to 40% and 50%

If a refund was to be an exact pro-rata figure then anyone wanting insurance for say a week would be perfectly happy to pay for a year's cover and then cancel it after the week to get 51/52ths of the premium refunded.

But the OP didn't buy a short term policy, they bought a different financial product, an annual insurance policy.

And as I highighted in my previous post, it seems it is the insurer and not the OP who won't continue with the policy.

Iceweasel

Johno100 wrote: »

But the OP didn't buy a short term policy, they bought a different financial product, an annual insurance policy.

And as I highighted in my previous post, it seems it is the insurer and not the OP who won't continue with the policy.

Sure - I understand that - but he didn't let it run for a year - did he?

So as far as I can work out either using short term rates - or a pro-rata charge plus (a loaded) cancellation fee will come to near enough the same thing - approx half the cost is retained.

As I said, if it was otherwise why would anyone in their right mind even consider a short term policy?

The OP has in effect had a short term policy.

Johno100

Iceweasel wrote: »

Sure - I understand that - but he didn't let it run for a year - did he?

He can't, they won't cover his new car.

custardy

Johno100 wrote: »

He can't, they won't cover his new car.

Yup,but they agreed to cover the car he originally insured.
This is a specialised broker/insurer dealing in modified cars of specific values.

Iceweasel

Johno100 wrote: »

He can't, they won't cover his new car.

With all due respect, that is not the fault of the insurer.

Johno100

custardy wrote: »

Yup,but they agreed to cover the car he originally insured.
This is a specialised broker/insurer dealing in modified cars of specific values.

No doubt it is and I'd have an educated guess that it isn't the underwriter who is charging these punitive costs.

Johno100

Iceweasel wrote: »

With all due respect, that is not the fault of the insurer.

And neither is it the OP's.

Iceweasel

Johno100 wrote: »

And neither is it the OP's.

How come?

Insurer changed nothing.

OP changed his car - so changing the whole agreement.

I have all sympathy for the Op - but the insurers would seem to have followed the Ts & Cs.

Johno100

Iceweasel wrote: »

How come?

Insurer changed nothing.

OP changed his car - so changing the whole agreement.

I have all sympathy for the Op - but the insurers would seem to have followed the Ts & Cs.

And if those T & C's are unfair? Did you read the links I posted in post #12?