Can insurance company take direct debit card payment out authorisation?

edmond

I had a car insurance policy with Autonet which I cancelled 2 months ago.
They stated when I cancelled there was an outstanding balance which needed to be paid of £73.49 which did not make sense to me as my policy was £39.00 per month which I paid every month.


I asked for a breakdown of these costs as I was unsure what they referred to. I did not receive the breakdown of costs. I did receive a number of letters chasing me for the balance, but as I did not receive the cost breakdown I refused to pay.


When I cancelled the policy I also cancelled the direct debit.


It now transpires the company have taken the £73.49 from my account using the debit card I used when I first took out the policy. But they have done this without my say so or authorisation.


Is this common practice?

spadoosh

Not sure on the specifics of individual direct debits. I'd guess though it would be covered in their contract. The same contract that probably explains about cancellation fees that might apply if you cancel the policy early.

FYI, its rarely a good idea to cancel the direct debit and refuse payment. It can lead to adverse effects on your credit file which can mean not being approved for a mortgage all for the sake of being 'right' and £73.49.

Fosterdog

Did you cancel before the policy end date? If so sometimes the admin charge works out more than the remaining payments would have been. They can retain your details and charge your card usually up to six months from when a contract was entered without even informing you, after that they should inform you before taking it.

edmond

I did cancel the policy before the end date, although I don't recall being hit with an admin charge on previous polices I've cancelled, albeit with other insurance companies.


I'm astounded that payment can be taken without my authorisation.

spadoosh

edmond wrote: »

I did cancel the policy before the end date, although I don't recall being hit with an admin charge on previous polices I've cancelled, albeit with other insurance companies.


I'm astounded that payment can be taken without my authorisation.

You almost certainly gave it in the documentation you agreed to.

DoaM

As above, yes they can charge an admin fee for cancelling a policy. In fact I've not come across and insurer (or broker) that doesn't do this.

Remember, when you take out insurance you're liable for the full amount up front. The fact you're paying monthly simply means you're paying off a loan that covered the full amount; the full amount was paid to the insurer at the outset.

agrinnall

edmond wrote: »

I did cancel the policy before the end date, although I don't recall being hit with an admin charge on previous polices I've cancelled, albeit with other insurance companies.

What other insurance companies do is utterly irrelevant, what you need to establish is what this one said they would do in the event of cancellation, by reading your policy documents.

nyermen

Remember, when you take out insurance you're liable for the full amount up front. The fact you're paying monthly simply means you're paying off a loan that covered the full amount; the full amount was paid to the insurer at the outset.

I suspect this is the case, assuming you cancelled early. And as an added point, having not paid the costs, your insurance may not technically have been cancelled by you (as the fee would be due to do so), and then by not paying means they terminated the insurance themselves. If they did, that's a black mark for life that has to be declared and will increase every future insurance quote.

DoaM

Whilst that's a possibility it is quite remote; after all it was the customer who requested the cancellation, not the insurer. The cost adjustment is to account for the early termination - if the insurer had cancelled then a full refund of the premium would have been due (less perhaps an admin charge).

All that will happen is that any No Claims for that insurance period won't have been accrued as the insurance didn't last the full term.

seashore22

DoaM wrote: »

As above, yes they can charge an admin fee for cancelling a policy. In fact I've not come across and insurer (or broker) that doesn't do this.

Remember, when you take out insurance you're liable for the full amount up front. The fact you're paying monthly simply means you're paying off a loan that covered the full amount; the full amount was paid to the insurer at the outset.

Agree with this. I've cancelled car insurance a couple of times when getting a new car and there was a final payment on both occasions. I think you were very lucky not to have experienced this before op and the way you handled it was certain to cause you these issues now.

Keep_pedalling

If you have added things like breakdown cover and legal expenses to the cover then then it is likely that they will have charged you for this for the final 2 months, as they will have payed this up front to 3rd parties.

Have as look at the terms and conditions of your insurance policy, and I think you will find you agreed to their cancellation policy, so you almost certainly owed them this money.