RCIB Right Choice Insurance Brokers - cancellation

morph2020

Hopefully what I have been told can be appealed in some way!
I took out a policy in January this year with RCIB at a Premium of £816.84 to be collected in installments of £67.60 per month over 10 months after a deposit was paid.  The car I had insured with them became unusable and was sold on last week, I replaced this with a Van which they cannot insure.  I went to cancel the insurance with them and they have informed me that it is cheaper to stay on and pay the 2 remaining months of insurance premium by direct debit than to cancel the insurance.  If I cancel it will cost me 100% of the remaining premium plus a cancellation fee and admin costs totaling £224.20.

I cannot afford to continue the payments, I have no use for the insurance and it makes no sense to be paying more than the total remaining premium to cancel!
Does this sound right?  I have since googled RCIB and can see that they have a lot of negative reviews and complaints, at the time I just had to go with the cheapest insurer!  What happens if I send an email to cancel and just stop the Direct debit!

Any help or advice would be much appreciated.  

Sandtree

Whilst the policy is in force your insurance company will be the Road Traffic Act Insurer for the car (potentially joint with the new owners insurance). This means the courts can force them to settle on a claim by a third party even though you no longer own the vehicle... for this to happen a number of other things would have to have happened first like the new owner not buying insurance or buying it but then not playing ball etc). Almost all policies have terms that state if your insurer are forced to act as the RTA Insurer due to a breach in your policy terms then you will be liable to reimburse them.

So if you take their recommendation of leaving the policy running there is a small but real risk that the new owner could run someone over and you end up with a claim on your policy and being pursued for £50,000.

I personally have always taken exception to the cost of cancelling a policy being more than the cost of continuing it, in my opinion at worst case it should be capped to total annual premiums plus a basic admin fee... as we are talking a broker here they have lost the opportunity to sell your details to an accident management company for the accident you may have had in those last two months but the admin fee should be adequate in my opinion. Unfortunately I don't set the rules though.

Firstly, check the terms of your policy to ensure they have applied the charges in line with those terms. If they have there isnt that much you can really complain about other than potentially the advice to insure a car you no longer own but that probably was intended in good spirits even if its ill advised.  That said, even complaints without grounds can be upheld so can be worth a punt on the broader grounds of unfair that its more expensive to cancel than to keep it.

dunstonh

Does this sound right?

Yes it does.  The cancellation terms in the last month or two usually result in no return of premium.    As you have taken out a loan to pay for the premiums, you still owe those two month's loan payments.

 What happens if I send an email to cancel and just stop the Direct debit!

They will write to you several times demanding payment and then if you still refuse, they will instruct a debt collection agency who will add their costs to debt and will ultimately use the courts and destroy your credit record at the same time.

rs65

If it is cheaper to continue the policy, I would at least have an email to them advising them the car has been sold so they are no longer RTA insurers

Sandtree

rs65 said:

If it is cheaper to continue the policy, I would at least have an email to them advising them the car has been sold so they are no longer RTA insurers

To not to be RTA Insurer the policy must be cancelled otherwise the valid certificate of insurance makes them it irrespective of the sale.

rs65

Sandtree said:

rs65 said:

If it is cheaper to continue the policy, I would at least have an email to them advising them the car has been sold so they are no longer RTA insurers

To not to be RTA Insurer the policy must be cancelled otherwise the valid certificate of insurance makes them it irrespective of the sale.

So its not enough to tell an insurer you have sold the car?  If you change your car do you have to cancel the policy and start a new one?  Of course not.

A RTA insurer can only pursue the policyholder if the policy terms have been breached.  The duty on the policyholder is to tell the insurer of material changes such as the car has been sold.  Even if the insurer ended up being RTA insurer, it wouldn't then come back to the OP

Sandtree

rs65 said:

Sandtree said:

rs65 said:

If it is cheaper to continue the policy, I would at least have an email to them advising them the car has been sold so they are no longer RTA insurers

To not to be RTA Insurer the policy must be cancelled otherwise the valid certificate of insurance makes them it irrespective of the sale.

So its not enough to tell an insurer you have sold the car?  If you change your car do you have to cancel the policy and start a new one?  Of course not.

A RTA insurer can only pursue the policyholder if the policy terms have been breached.  The duty on the policyholder is to tell the insurer of material changes such as the car has been sold.  Even if the insurer ended up being RTA insurer, it wouldn't then come back to the OP

If you change your car the certificate of insurance is updated to reflect the change and the MID database similarly.

The issue here is that the OP is dealing with a broker not the insurer and the broker appears to be giving the choice of cancelling and paying a fee or let it run on on the vehicle and avoid the fee. If the OP chooses option two the certificate of insurance is still on the original vehicle and the MID database still shows the insurance on it and the insurer is likely to be non the wiser. It is similarly argued he has let someone not named on his policy use it by virtue of selling it and not cancelling the policy.

I would argue there would be a likely claim against the broker for the poor advice... whilst I have done RTA Insurer claims before none have involved a broker so cannot say how they'd end up.

rs65

Sandtree said:

If you change your car the certificate of insurance is updated to reflect the change and the MID database similarly.

The issue here is that the OP is dealing with a broker not the insurer and the broker appears to be giving the choice of cancelling and paying a fee or let it run on on the vehicle and avoid the fee. If the OP chooses option two the certificate of insurance is still on the original vehicle and the MID database still shows the insurance on it and the insurer is likely to be non the wiser. It is similarly argued he has let someone not named on his policy use it by virtue of selling it and not cancelling the policy.

I would argue there would be a likely claim against the broker for the poor advice... whilst I have done RTA Insurer claims before none have involved a broker so cannot say how they'd end up.

You are massively overcomplicating things.  The OP tells his broker he has sold the car - the broker has a duty to tell the insurer.  As far as the OP is concerned that car is no longer insured on his policy.  

A policy can be suspended - it does not have to be cancelled

dacouch

https://forums.moneysavingexpert.com/discussion/6004361/case-study-offical-complaint-re-short-period-cancellation

dacouch

https://forums.moneysavingexpert.com/discussion/6113867/law-rules-regarding-insurance-company-charges-for-policy-cancellation/p1

Sandtree

rs65 said:

Sandtree said:

If you change your car the certificate of insurance is updated to reflect the change and the MID database similarly.

The issue here is that the OP is dealing with a broker not the insurer and the broker appears to be giving the choice of cancelling and paying a fee or let it run on on the vehicle and avoid the fee. If the OP chooses option two the certificate of insurance is still on the original vehicle and the MID database still shows the insurance on it and the insurer is likely to be non the wiser. It is similarly argued he has let someone not named on his policy use it by virtue of selling it and not cancelling the policy.

I would argue there would be a likely claim against the broker for the poor advice... whilst I have done RTA Insurer claims before none have involved a broker so cannot say how they'd end up.

You are massively overcomplicating things.  The OP tells his broker he has sold the car - the broker has a duty to tell the insurer.  As far as the OP is concerned that car is no longer insured on his policy.  

A policy can be suspended - it does not have to be cancelled

Not all insurers allow suspension and a suspended policy will still be using the NCD so the OP couldnt use it on the new vehicle.

I dont think pointing out the risk of allowing someone else to drive around in your former car whilst you're paying the insurance on it is massively complicating things... the risk is small, as already mentioned, but I have dealt with multiple cases where the risk has materialised and the policyholder has been pursued for 5 figure sums. In those cases no broker was involved as already mentioned.