Car Insurer giving wrong advice

catpower80

Hi

I need to check if my car insurer has breached regs by telling me I HAD to stay with them last year.

I had a BMW 4 series insured with them from Jan - June 2015 and changed my vehicle due to having a little one, to a 1 series. They said I had to stay with them or pay the rest of the years' premium. I was paying monthly.

Is this right?

Just 5 weeks after I changed the policy to the 1 series my car was stolen. It was insured for £34k and I'd done less than 800 miles in it. Now my insurer says it's worth £27k which leaves a deficit on my finance agreement. I have gap insurance but I'm having trouble getting the two organisations to speak to each other.

I want to know if I was unfairly made to continue with my insurance with this firm back in June. At the time I wanted to reduce the excess amount by paying a higher premium but they wouldn't let me, they said they only offer a £3k excess. Therefore I wanted to exit the policy and insure with someone else but they said I'd have to pay the rest of the years' policy even though I hadn't used it yet. This means I now have to pay £3k for having my car stolen.

Any advice?

Thanks
Cat

Sam_Fallow

catpower80 wrote: »

Hi

I need to check if my car insurer has breached regs by telling me I HAD to stay with them last year.

I had a BMW 4 series insured with them from Jan - June 2015 and changed my vehicle due to having a little one, to a 1 series. They said I had to stay with them or pay the rest of the years' premium. I was paying monthly.

Is this right?

Cat

Yes it's right, you were paying for an annual policy but paying for it monthly.

dacouch

Are you insured by XS Direct?

Did you have a claim on the BMW 4 series?

Are they saying the current car is worth £27k before or after the £3k excess?

FutureGirl

Car insurance polices are annual policies. If you choose to pay for it monthly, you're basically taking out a loan to pay for the annual policy.

Although insured for £34K, this just means this is the most they will pay out. They will only pay you for what it is worth, minus any excess This is then what you're gap insurance is for.

paddyandstumpy

Few points to add:

1) Unless it's an agreed value policy (unlikely on a new car) the insurer will pay market value. Just because you paid £34k for it new; it's not worth £34k once it's been driven off the forecourt. This is depreciation, and is most noticeable in the first year.

2) Usually when you are asked to pay the full annual when you cancel its because you've already claimed on the policy.

3) Regarding the £3k excess, either that's the lowest the insurer offers (bearing in mind that would have been reflected in the premium) or it's a 'termed car'; i.e. due to your age/location or the car age/value/group, the excess has been increased.

4) The gap will cover the difference between the new book price and the market value, excluding your excess. You'll be £3k out of pocket regardless.

rs65

paddyandstumpy wrote: »

3) Regarding the £3k excess, either that's the lowest the insurer offers (bearing in mind that would have been reflected in the premium) or it's a 'termed car'; i.e. due to your age/location or the car age/value/group, the excess has been increased.

I suspect its the only excess they offer.

OP, was it a new car and does the policy have replacement car benefit?

catpower80

dacouch wrote: »

Are you insured by XS Direct?

Did you have a claim on the BMW 4 series?

Are they saying the current car is worth £27k before or after the £3k excess?

Yes it's XS Direct.

I did have a claim, but not with XS Direct, with a previous insurer.

Not sure. I know I have to pay the excess, it's the deficit with the finance agreement and the trouble I'm having getting the Gap insurers to talk to XS Direct. This has been going on for over a month now....

FutureGirl

You're claiming now though, through XS direct - this is why they're saying the full premium needs to be paid because you're claiming within that policy period.

paddyandstumpy

I'm sure I saw a post recently where someone advised that there has been a FOS precedent where if the insurer pays market value the gap is obligated to accept that offer and pay the balance? Which would mean if the gap insurer isn't talking to XS Direct, they have to stump up the difference. Can someone else confirm?

OP, the only way I can think XS Direct can insist on the full years premium is if you've already claimed on this policy year, which pre 1 series loss you haven't confirmed if you have? You mentioned you've claimed before, in the same policy year?

Unless their wording states once you sign up you're liable for the year regardless, which I can't see as being the case. That's a barrier to cancel, therefore not allowed.

Also mentioned above is the new car cover, good shout. OP, this will provide a brand new replacement if you're the first owner and it's less than a year old. But not all policies cover this, check your wording to see if yours does.

dacouch

Thanks for answering the questions.

It would be helpful if you could answer the question re how old the car is and whether you were the first owner.

They have miss advised you in that you can cancel their policy although there are penalties

See here http://www.xsdirectinsurance.co.uk/documents/T&Cs.pdf

You "may" have a complaint with the Ombudsman that their miss advice left you financially at a disadvantage. However you would need to prove what financial loss this caused you eg with evidence of quotes you received at the time of their miss advice.

In addition this would then be weighed up against how much you would have lost in premium to XS Direct due to their cancellation charges, compared with the new premium and then taking into account what excess you would have paid to the new Insurer for the theft claim.

It would not be an easy complaint, but if you have the evidence AND that shows you were left out of pocket due to their incorrect advice. If the Ombudsman upheld your complaint they would expect XS Direct to put you in the same financial position you would have been if they had not told you the wrong information and you had changed Insurers.

When it comes to valuing a "recently" purchased vehicle, the Ombudsman expects Insurers to pay the amount you purchased the car for unless they can prove that the amount you paid was over the odds.

The Ombudsman does not define what they mean by "Recently" so whether they would regard five weeks as being recent you would not know unless you complained to the Ombudsman.

Which Gap Insurer are you with?

catpower80

paddyandstumpy wrote: »

Few points to add:

1) Unless it's an agreed value policy (unlikely on a new car) the insurer will pay market value. Just because you paid £34k for it new; it's not worth £34k once it's been driven off the forecourt. This is depreciation, and is most noticeable in the first year.

2) Usually when you are asked to pay the full annual when you cancel its because you've already claimed on the policy.

3) Regarding the £3k excess, either that's the lowest the insurer offers (bearing in mind that would have been reflected in the premium) or it's a 'termed car'; i.e. due to your age/location or the car age/value/group, the excess has been increased.

4) The gap will cover the difference between the new book price and the market value, excluding your excess. You'll be £3k out of pocket regardless.

I understand the depreciation point, it's just that a few people have said to me that you usually get 6-12 months on a brand new car where your insurance will replace your vehicle if it's stolen or written off in an accident that wasn't your fault.

I hadn't made a claim on this policy so that wasn't a reason for them to request the annual charge when I changed vehicles and was possibly going to cancel my insurance with them.

I wish I could get my gap insurers to speak to my insurers. They just keep asking me for more information from my insurers that they won't send me.