Car insurance cancellation

pamelavhill

Took out car insurance with a company called One Call Insurance just over a week ago. Have had ‘chats’ finished by them unexpectedly & unresolved. Found it impossible to have communication with them. Received texts from them at midnight which I was unhappy about. They refuse to give me a phone number to contact them. Finally got them today (in a chat) & said would like to cancel policy. They want to charge me around £50 to cancel even though I am within my 14days cooling off. Can anyone tell me if I have to pay this? I thought within 14 days there would be no charge? 

DullGreyGuy

pamelavhill said:
They want to charge me around £50 to cancel even though I am within my 14days cooling off. Can anyone tell me if I have to pay this? I thought within 14 days there would be no charge? 

A common misunderstanding unfortunately.

A cooling off period gives you the right to cancel, it doesn't have to be cost free. Post the cooling off period there is no statutory right to cancel at all but most consumer insurance like car and home does allow you to (for PMI by contrast the likes of Bupa give no cancellation rights after the cooling off period).

They are entitled to charge for the time on cover, which can be at a "short term rate" and a fee to cover their costs. £50 was the average many years ago so its somewhat good that its not increased with inflation over the years. 

SooB_2

How can it be ‘fair’ of yoga insurance which is a ‘low cost’ provider with no telephone service … to charge me a cancellation fee of £49.99 on day one of the car insurance policy plus a daily fee - I find this cost totally disproportionate  - 20% of price of policy for the year ! On day one … incidentally, when I had to make a roadside claim I even had to find my own garage for repair whilst stressed on the side of the road! No help or input - yet happy to charge top dollar to cancel a policy … a low cost provider with a limited offering should not be charging £49.99 should it?  Don’t tell me - silly question!?!

Smithcom

SooB_2 said:

How can it be ‘fair’ of yoga insurance which is a ‘low cost’ provider with no telephone service … to charge me a cancellation fee of £49.99 on day one of the car insurance policy plus a daily fee - I find this cost totally disproportionate  - 20% of price of policy for the year ! On day one … incidentally, when I had to make a roadside claim I even had to find my own garage for repair whilst stressed on the side of the road! No help or input - yet happy to charge top dollar to cancel a policy … a low cost provider with a limited offering should not be charging £49.99 should it?  Don’t tell me - silly question!?!

Unfortunately, they are a business and will have a range of costs, including employees, rent, rates, heating, lighting, IT, etc etc.

Their investment in their business has allowed you to incept a policy.    That incurs costs, which needs to be paid for.

I guess the alternative model could be that companies charge for quotations, so that their fees are equally charged between policyholders and prospective policyholders, but that isn't a model yet seen in the UK generally.

If the cancellation fee was not noted in their Terms & Conditions, you should make a complaint.

Equally, if their services (breakdown) was not up to scratch, you could make a complaint about that.

SC

DullGreyGuy

SooB_2 said:

How can it be ‘fair’ of yoga insurance which is a ‘low cost’ provider with no telephone service … to charge me a cancellation fee of £49.99 on day one of the car insurance policy plus a daily fee - I find this cost totally disproportionate  - 20% of price of policy for the year ! On day one … incidentally, when I had to make a roadside claim I even had to find my own garage for repair whilst stressed on the side of the road! No help or input - yet happy to charge top dollar to cancel a policy … a low cost provider with a limited offering should not be charging £49.99 should it?  Don’t tell me - silly question!?!

Its because its the average cost of cancellation and would be far too complicated were they to have 1,460 different cancellation rates depending on which day of the policy year you cancelled on, if you bought by aggregator, web direct, web via advertisement link or phone etc.  For those that cancel right at the start and end of the policy they are probably over paying whereas the person that cancels on day 15 is underpaying the most.

Smithcom said:
I guess the alternative model could be that companies charge for quotations, so that their fees are equally charged between policyholders and prospective policyholders, but that isn't a model yet seen in the UK generally.

The original alternative model was that everyone's premiums were bumped up to cover the cost of those that cancel early but this leads to problems:

1) 98% of people buy on price alone, being more expensive as you dont charge cancellation fees loses you business to others that are technically more expensive but charge a discrete fee

2) Negative selection - people needing to get their car from police pound etc buy from companies with no cancellation fees and after getting their car back cancel cost free

3) Is it really fair to charge the majority of customers who complete the year they committed to more to cover those that want to break the agreement early? Most argue that pay on use is fairer. Same goes for admin fees

dunstonh

SooB_2 said:

How can it be ‘fair’ of yoga insurance which is a ‘low cost’ provider with no telephone service … to charge me a cancellation fee of £49.99 on day one of the car insurance policy plus a daily fee - I find this cost totally disproportionate  - 20% of price of policy for the year ! On day one … incidentally, when I had to make a roadside claim I even had to find my own garage for repair whilst stressed on the side of the road! No help or input - yet happy to charge top dollar to cancel a policy … a low cost provider with a limited offering should not be charging £49.99 should it?  Don’t tell me - silly question!?!

Its very fair.  Your purchase has triggered a whole range of admin and reporting requirements.    As has your cancellation.  The firm has incurred costs. 

If you have chosen a provider that removed the cost of various admin tasks out of the premium, to make that cheaper,  and put in place explicit charges when you create admin tasks then that is what you should expect.   If you don't like paying for admin tasks, then don't use a provider that uses that model.  Instead, pay more in your premium each year with a provider that has lower or no admin fees.

When setting fees, they logically have to have a single fee.   That fee has to cater for the simple cancellation task and the more complicated ones.

Many feel that having a higher premium and getting all policyholders to pay for the work created by others is unfair.   You obviously feel different.