Cancel Hastings Direct Car insurance

everj

Hi,

I rang to cancel my car insurance with Hastings Direct. I currently pay £32.03 a month and the policy started on the 10th June 2019.

I have been told there is a £45 cancellation fee which is fine as that's in the policy, but now I'm told I also have around £75 extra on top of this and the agent could not really explain why.

What are my options here?

Thanks,
Jez

lopsyfa

It depends on your payment schedule and whether you paid a deposit and how many monthly payments you have. If you paid no deposit and the payment is monthly in arrears, then £75 will probably be due to this. And remember, paying monthly is like taking a loan, so it may be possible that you also need to pay the 28/56 days interest for cancellation on top of this. Someone else will correct me if I am wrong.

Saying that, I think £75 is on the high side except if this includes the £45 cancellation fee and the person you spoke to is not very clear about this.

If you provide when you made the first payment, the number of monthly payments and the loan APR for the finance, it will be easy to calculate roughly how much you need to pay.

Only the insurance company can tell you the definitive answer and I suggest you call and maybe you will get someone more knowledgeable. If not raise a complaints, that will force them to explain the figure to you.

everj

Thanks, @lopsyfa for a great answer.

The APR is 36.3%. Payments of £32.03 for 12 months from the 5th July 2019 to 5th June 2020.

lopsyfa

A quick calculation shows the annual amount will be roughly £319.05. Basically what happens when you took the insurance is the finance company (say company A) will pay £319.05 to the insurance company and then you pay them the`£32.03 monthly to repay the loan at that APR.

When you call to 'cancel' the insurance, you are cancelling two things - the insurance product and the loan. The £45 cancellation charge for the finance is clear enough.

Assuming you are cancelling from today 19-Sep-2019/ From, 10th June to 19th Sep is 101. Therefore, pro-rata your insurance cost is £88.04 (101/366*£319.05). Therefore, the insurance company needs to refund you £319.05 (paid upfront) - £88.04 (pro-rata insurance used) -£45 (cancellation charge) =£186.01.

The current balance of the loan is £252.15 but that rises to £259.24 with 28 days interest.

Therefore, you need to add £259.24 (finance settlement) - £186.01 (insurance refund) = £73.24 to cancel the contract.

So I believe the £75 the guy quoted you should have already included the £45 cancellation charge.

NB: My value may be different because I have assumed the interest is accrued daily and have used that to calculate the annual amount and interests.

Rolandtheroadie

Had it years ago with a motorbike, cancelling after 6 months cost a years premium.
Broker due a payment for their part of the cancellation, the insurance underwriter due a payment for cancelling and a payment for short term insurance instead of a whole year.