Insurance cancellation fee

Dave6642

I had insurance for 1 month as a learner then passed my test, called insurance company to notify and their premium to insure me was over the top, so I got insurance elsewhere and cancelled my learner policy. They are saying £315 is owed even although I paid a £344 deposit. I asked for clarification and they sent a breakdown of charges. (I have attached a picture) Basically they want to retain all of their commission for selling the policy. I think £600 + for one month’s insurance is outrageous. Can they keep all their commission? 

Grumpy_chap

There seems to be an error in that as the £2k owed to the finance company will reduce once the remaining balance will reduce for the future direct debits that have not and will not be taken.

Ectophile

Make a formal complaint.  Tell them that if they don't come up with a more sensible settlement, then you will take it to the ombudsman.

The ombudsman has previously ruled against ridiculous fees in cancelling a policy.

Grumpy_chap

What were the original payment terms for the OP?

I assume a monthly premium, so was that amount £2,353.89 less £344 upfront = £2,009.89 divided by 12 = £167.49 per month.
Was it "interest free" or were the monthly payments higher than that £167.49 because of interest added?

maxsteam

It's unfair and you are right to complain. This is how insurance companies work though. You signed up for a 12 month policy and that is what they want to sting you for. 

Sandtree

maxsteam said:

It's unfair and you are right to complain. This is how insurance companies work though. You signed up for a 12 month policy and that is what they want to sting you for. 

If you sign for a 999 leasehold property and decide after 6 months its not for you do you think you get 998.5 years back?

For many other things in life if you sign up for 12 months you have to have the full 12 months, cooling off period is only 14 days. Not really sure how its "the insurance company stinging you" when most the charge is the broker not the insurance company and its much better than most industries where you simply couldnt cancel full stop.

Jenni_D

A property lease isn't really a valid comparison, as you still have something of value that you can sell - car insurance offers no resale value.  

Grey_Critic

I note the broker does not reduce his commission.

Herzlos

Grey_Critic said:

I note the broker does not reduce his commission.

Why would they? They did the same work either way.

The credit thing is weird, as it sounds like they aren't offering any interest refund on the years credit which I don't think is legal, unless it was interest free

Sandtree

Jenni_D said:

A property lease isn't really a valid comparison, as you still have something of value that you can sell - car insurance offers no resale value.  

How much is your 12 month sim only mobile contract worth to sell? Or your 12 months Sky Entertainment Package? There are many services where we lock into a set duration contract and broadly dont expect to be able to renegage on that contract until the duration has ended and yet Motor insurers who do allow you to exit early are the ones that get the bad wrap (though noting that the insurer got £56 and the broker got £425)

Property may not have been the best comparison as you say you can sell it to others but a "nearly new build" in most instances would have depreciated far more than 6 months off of a 999 year lease were you able to cancel it mid term with the vendor. 

When you are going to pass your test is never known for certain but the OP bought a 1 year policy and passed within a month which would suggest they should have known that they were probably fairly close and instead should have bought a short term policy which costs more on a per day basis but doesnt have the early exist fees

Grumpy_chap

The figures in the letter need a little bit of thinking about, but they can all be worked out apart from the £2k owed to the credit provider.  To understand this, can the OP advise:
1. was the finance subject to interest?  If there was interest applied and the balance is settled early, the settlement figure is less than the "outstanding" figure (which assumes the loan will run full term).
2. In addition to the deposit £344, had the OP paid any monthly instalments?

Then there is also the matter of the fees that are being charged:
£10 set up fee is nominal and likely advised when the policy was taken out
£56 cancellation fee is also reasonable and, again, likely advised when the policy was taken out

The broker's fee is high and it seems as though they are seeking to claim full "loss of profit".  What does the paperwork say about how the broker's fee is calculated and / or how this is treated in the event of cancellation?