Motorcycle insurance rip off! Is this normal?

fatboy686

Quick question to the forumites!

My daughter had a scooter to get to/from work. She was paying for the insurance by monthly Direct Debit, and was only 3 months into the policy.

Unfortunately, her scoot was stolen, and has not been recovered. The InsCo has paid out a settlement that was reasonable. No complaints yet.

However, the InsCo are now demanding the balance of the payments for the year (~£300). How can this be? The bike has gone, and they are not covering anything? Why do they need payment for the 9 months when she will have no bike for them to cover?

Is this normal? Seems wrong to me.

Thx, Nigel.

[Deleted User]

Because an insurance policy is bought annually - even if you choose to break it down into monthly payments.

It's not specific to bike insurance.

fatboy686

So are you saying that if they pay out for a total loss, then the insurance policy ceases to exist?

I thought that if, for example, she replaced the bike, then she could put that on the policy for the remainder of the term? Subject of course to amendment fees, etc.

Is that not the case?

Thx, Nigel.

paddyandstumpy

As above, your daughter purchased an annual policy, and has benefited from this.

The fact she paid on drop is irrelevant.

Are they not offering to do a change of bike and put the new one on cover?

fatboy686

Unfortunately she can't afford to buy a new bike. She (maybe foolishly?) bought a policy with a £650 excess, which has left her with not enough money to replace it (and the helmet and other gear that was stolen along with the bike).

But my point is that had she been able to get a new bike, she would have benefited from the remaining 9 months of the insurance and been able to continue to pay monthly - wouldn't she? So it seems that she is still having to pay for the full year, even though they've only provided cover for 3 months.

I'm sure when I wrote my car off sometime ago, the policy continued and covered the replacement vehicle (with some fees due, of course).

Just seems wrong to me.

Nigel.

fatboy686

Yes, OK. Having thought this through a bit more, and got over my initial indignation, I can see that because the bike is not being replaced, she is effectively cancelling the policy, but as she's made a claim, the full amount is due.

What a shame for her. Because some thieving scumbag has stolen her £1600 bike, she will come out with only £650, so it's cost her £950 for 3 months use.

Thanks for letting me vent.

Nigel.

Aretnap

fatboy686 wrote: »

I thought that if, for example, she replaced the bike, then she could put that on the policy for the remainder of the term? Subject of course to amendment fees, etc.

That's correct - if she replaces the bike she should be able to transfer the remaining 9 months of the policy to it (subject to it being one the insurer would normally be willing to cover, and possibly an amendment fee). That's a relatively recent change by the Financial Ombudsman in the name of fairness - until a few years ago the insurer would have been free to cancel the policy entirely on writing the vehicle off, if that's what their T&Cs said.

However this doesn't apply if she doesn't replace the bike for whatever reason - and the Ombudsman hasn't (yet) extended the principle to require a pro-rata refund in that situation.

If the deduction of the outstanding premium from the settlement is what's stopping her from buying a new bike then I suppose in principle she could borrow the money to make up the difference - the repayments on the loan would probably work out pretty close to the monthly insurance payments (which she'd no longer be paying) so she wouldn't be much worse off, if at all.

But if it's the excess which is the problem... well buying a policy with an excess which you can't afford to pay is always going to be a risk, but it's a bit late to say that now.