Insurance company taking me to court after raising credit card dispute

ZeroOne

I bought landlord insurance for an empty property in August 2019. A buyer made an offer in March 2019 but the chain was stuck, previous insurers didn't want to renew.

I wanted a short-term policy but the best I could find was this one, where I had to pay for 12 months with a pro-rata refund after cancelling (in the words of an email from the sales agent). The insurer required payment by card in 4 installments. The buyer completed the house purchase in December 2019 so I cancelled the policy.

From January to April 2020 I called about 10 times to get my refund. Each time I told it was processing and to call again 2 weeks later. On the penultimate call, they said the refund was ready but they needed my bank account number by email, so I provided it. Still nothing. On the final call, they said refunds can only go back to card, and also that the underwriter hadn't paid them so it was not ready. On most of the calls, I asked to escalate this and they just said they had made notes to chase the underwriter etc.

As I was getting nowhere with the insurer I asked my card company to dispute the payments. As the policy was in effect for 4 months, I should have been refunded approximately 2 and a half of the 4 payments. The card company's agent tried to work out a rough amount for the refund, and started a Section 75 claim for that amount.

In May 2020 the card company refunded all 4 payments in full.

The insurance company has now said they are taking me to court because they think I have acted unreasonably by doing a chargeback. Firstly I thought I had a Section 75 claim and not a chargeback. They said that if I had "made a complaint" they would have paid me back already, but this sounds like rubbish.  I didn't use the exact word "complaint" but I definitely asked to escalate the matter in my 10 phone calls and nobody mentioned that I should make a "complaint".

The insurer says they have been charged £60 in chargeback fees and under their terms and conditions (a tiny link at the bottom of the website, not mentioned by the sales advisor or in my policy documents), if customers do chargebacks the customer will be taken to court for the amount of these fees. The insurer also said that chargebacks need to be done within 120 days of the payment, so they were in error. But the card company says they just ignored that argument and refunded me anyway.

They also claim that I owe them the entire 12 months premium. I agree that I should pay for the 4 months I used. But I didn't ask the card company to dispute the whole amounts, only the 8 months that were unused.

How should I proceed now?

Surely the chargeback fees are a matter between the insurer and their bank? They only incurred these fees because of their failure to refund me promptly in the first place. And can they really rely on hidden clauses that they did not make me aware of? In the words of the insurer, they would rather take me to court and lose than come to a settlement.

Should I complain to the card company for them refunding too much? I didn't ask them to do chargebacks, as the agent I spoke to only talked about Section 75, but I understand the card company would want to get the money from the insurer rather than just paying me themselves.

dunstonh

I wanted a short-term policy but the best I could find was this one, where I had to pay for 12 months with a pro-rata refund after cancelling (in the words of an email from the sales agent).

It is rare for any 12 month policy to be exactly pro-rata.   Normally it is relatively pro-rata but can be out by a month or two depending on where you are in the policy life.

The card company's agent tried to work out a rough amount for the refund, and started a Section 75 claim for that amount.

That was not a good idea.    It isn't meant for this sort of thing.  Effectively, you have defaulted on the payment and they can apply to recover the payment they are owed plus costs.   In reality, they would probably accept what they are owed.

Surely the chargeback fees are a matter between the insurer and their bank?

No.  You have incurred them a cost and have defaulted on your payment.  As it was not paid up front, this was also possibly done under a credit agreement.  So, they can register a default on your credit file if that is the case and they chose to do so.

They only incurred these fees because of their failure to refund me promptly in the first place

That is an argument you make in your complaint.   They may well accept that.

And can they really rely on hidden clauses that they did not make me aware of? 

a) they are not hidden

b) you chose not to read it.

If you are going to go legalistic in these things, then you do not have the consumer-friendliness that the FOS would use.

In the words of the insurer, they would rather take me to court and lose than come to a settlement.

That is their right.   However, if they provide a figure and you pay it, then it will not go to court.  However, it is not guaranteed that a court rule in their favour.

Should I complain to the card company for them refunding too much?

They didn't refund too much.   they refunded the transactions.   It is not their place to part refund.  Its all or nothing.

Section 75 would not apply as there is no failure to supply.  Chargeback would be the logical transaction.

How should I proceed now?

Make a formal complaint to the insurer.  Do not be aggressive in tone. Be conciliatory.  Explain what happened and why you did what you did.  State that you wish to come to an amicable solution of paying what you owe but do not see that you should be responsible for charges that they incurred which would not have happened if they had acted fairly and in a timely manner.   State that you are prepared to go to the FOS if their response is unsatisfactory but you would prefer to resolve the issue without that being necessary.   Do not turn to legalistic speak as they will respond in the same style.  Except their response will likely be from a solicitor that knows what they are talking about.   If you use legalistic speak with the FOS, they too respond in style.  Keep the tone natural and calm but firm on what you want.

And next time, do not use methods incorrectly.   If you have an issue, you make a complaint.  And to avoid any doubt, make sure you use the word complaint.  Don't just vent.

ZeroOne

dunstonh said:

And next time, do not use methods incorrectly.   If you have an issue, you make a complaint.  And to avoid any doubt, make sure you use the word complaint.  Don't just vent.

Thanks. That was helpful. I have three further points:
1 - I don't believe there was any finance involved, they said that the payment was to be done in 4 installments. I would happily have paid the whole lot in one go.

2 -  I understand that I owe them the amount of the premium that I used.
But they didn't provide the refund and I paid by card, is it not reasonable to ask the card company to step in after 4 months?

The card company said they would file a partial dispute for the transactions. You say that a partial refund is not possible. How was I supposed to know this? Should I not have taken the card company's agent at their word when they said they were filing for a partial refund?


3 - The email from the insurer says they have already started county court proceedings (yet to be received). This was the first communication from them. Should they not have given a "letter before action" to state the amount they think I owe them?

After all this, I still don't know how much they think the refund should have been, as they refused to provide a figure during all of those phone calls. Which means I don't know how much I should pay them.

(And this is why the card company's agent thought he should try to work out the refund based on the dates - if I knew the refund amount he would have asked for that amount to be refunded - which you say is not possible).

jonesMUFCforever

If it was me I would pay what they want first - then complain. You do not want it going to court - from what you have written you may lose and then you will have a CCJ.

Thrugelmir

ZeroOne said:

dunstonh said:

And next time, do not use methods incorrectly.   If you have an issue, you make a complaint.  And to avoid any doubt, make sure you use the word complaint.  Don't just vent.

3 - The email from the insurer says they have already started county court proceedings (yet to be received). This was the first communication from them. Should they not have given a "letter before action" to state the amount they think I owe them?

You took unilateral action first.  The stakes have been raised. You can choose to settle the amount demanded or dispute it. 

Old_Lifer

Although  short-term policies  can be taken out to cover a holiday for instance ,   most short- term policies have an annual premium  which covers a period of 12 months.   You will usually be given the choice to  pay the premium by instalments but since the premium  is due in full at the start,   there is a cost to paying by instalments.    An insurer will seek to recover  this cost  by either applying a loading to the premium   or by charging interest, which is where the credit aspect arises  and this is the reason  dunstonh   has mentioned that  this may perhaps have resulted in a credit agreement being in place.

ZeroOne

Thrugelmir said:

ZeroOne said:

dunstonh said:

And next time, do not use methods incorrectly.   If you have an issue, you make a complaint.  And to avoid any doubt, make sure you use the word complaint.  Don't just vent.

3 - The email from the insurer says they have already started county court proceedings (yet to be received). This was the first communication from them. Should they not have given a "letter before action" to state the amount they think I owe them?

You took unilateral action first.  The stakes have been raised. You can choose to settle the amount demanded or dispute it. 

I gave them 4 months and 10 opportunities to send my refund.

I accept that I did not use the word "complaint" but I sent three emails and 10 phone calls. The contents of the emails would have been exactly the same as if I put the word "complaint" in the subject or at the beginning. I note that I sent the emails to the same address that they specified in their complaints procedure (I was never made aware of this when buying the policy, I only found out this was a thing from the response by DUNSTONH).

All my emails were ignored, and I know that at least one was received as when I phoned the final time the agent said that he could see the emails on his computer. He could not explain why nobody had replied to it even to acknowledge receipt.

If I am repeatedly ignored is it unreasonable to try another approach? It may be unilateral action but all attempts at getting them to engage failed.

All my banks repeatedly send me leaflets or messages saying that I can go to the financial ombudsman. Ok I didn't realise that they also deal with insurance companies but this company never sent me anything relating to complaints or the ombudsman.

rs65

ZeroOne said:

I accept that I did not use the word "complaint" but I sent three emails and 10 phone calls. 

You don't need to use the word complaint.  Financial companies have to treat an expression of dissatisfaction (verbal or written) as a complaint and they have 8 weeks to respond.  If they fail to respond you can go to the financial ombudsman

Jumblebumble

ZeroOne said:

Thrugelmir said:

ZeroOne said:

dunstonh said:

And next time, do not use methods incorrectly.   If you have an issue, you make a complaint.  And to avoid any doubt, make sure you use the word complaint.  Don't just vent.

3 - The email from the insurer says they have already started county court proceedings (yet to be received). This was the first communication from them. Should they not have given a "letter before action" to state the amount they think I owe them?

You took unilateral action first.  The stakes have been raised. You can choose to settle the amount demanded or dispute it. 

I gave them 4 months and 10 opportunities to send my refund.

I

And I suspect  they would have fobbed the OP off for ever in an attempt to wait till they got fed up and went away.
I would send them 50% of the premium by cheque and tell them you will see them in court if they want any more
I would hope a district judge would agree with my view that if an insurance company get charged £60.00 chargeback because they ignored 10 lots of correspondence they richly deserve it
Finally jonesMUFCforever tells us that if you lose in court then you will have a CCJ 
The implication is like all good debt collectors that this WILL have consequences beyond having to pay up. ( and probably some quite small fees)
He forgets to tell us  that if the OP  loses but pays within 30 days then the CCJ is of no consequence whatever

jonesMUFCforever

But if you pay now there will be no CCJ - he can still take his complaint to the ombudsman.
He would probably get the same amount refunded as per the insurance company 's T&C and maybe a small amount for compensation. IMO far less stressful than going down the court route.

ZeroOne

Well, it looks like the guy from the insurer who threatened to take me to court for £800 was just a loose cannon.

The annual premium was £450. I sent them a cheque for £150 based on my holding the policy for 4 months (well it happened to be exactly 122 days out of 366).

The insurance agent who was meant to be dealing with my case (and who failed to respond to any of my emails or call me back for 6 months - apparently it was his responsibility to do so, hence why anyone else I spoke to wasn't able to help) finally did call me. He admitted that he "may have been at fault" and that the guy who threatened court for £800 was being "silly".

He worked that I should only have paid £120 for my policy. Then he wanted to charge me the £60 chargeback fees they incurred. He also wanted to charge me a £70 cancellation fee but agreed to waive this as it was not clear from my policy documents. As I had paid £150 by cheque he wanted £30 more, which I have decided to pay given the low amount and the next paragraph:

I also made a complaint to American Express who said that they should have given me a partial refund rather than doing a full chargeback, and that they shouldn't have ignored the insurer's defence against the chargeback. And the agent thought Section 75 did apply - as under the contract I believed I had agreed to, I was entitled to a pro-rata refund, and Amex was liable to fulfill the contract if the merchant didn't. But as I'd effectively received a refund now, Amex wouldn't need to pay me after all. After updating Amex with the insurer's response they decided to compensate me £60 so I could reimburse on to the insurer for their chargeback fees.

Since the policy was somehow cheaper than I expected, I have ended up paying £30 less than I thought I would.