Removing my learner daughter from insurance *doubles* the premium?!?

KenDFish

We bought a little Kia for our daughter to use whilst learning to drive. We took out insurance with the Post Office; my wife as the main driver, with myself and our daughter on the insurance as additional drivers. Our daughter obviously only had a provisional license, and was only driving it whilst we were in the car with her. Insurance was around £30 a month.

Daughter has now passed her test (hooray!), but the car has given us a lot of trouble so we're selling the vehicle, and she won't be using the car in the meantime. So we called the Post Office to remove her from the policy; they now want double the payments per month? Both myself and my wife have 30+ years driving experience, how can removing our daughter from the policy cause the payments to double?

They've also said that, if we leave the policy as it is, it's effectively invalid, as our daughter is no longer a learner and has a full license. Again, she won't be driving the car: does any of this sound correct, as I'm struggling to understand how removing someone from the policy can cause the cost to increase so much, and if we don't go ahead apparently we're technically not insured?

DullGreyGuy

How many months left do you have to run?

Its likely you are  paying an admin fee for the change, if you've only a few months left to go then that alone is likely to nearly double a £30 monthly premium given its typically around £50

Insurance pricing is not based on risk alone but also commercial considerations. If I have great experience from mass-exclusive types I can choose to reduce their premiums to attract more of them. Likewise if I really dont want to get mixed up with people with cheap bangers that get written off if they get a windscreen chip then I can either decline to quote them or jack up the price to discourage them buying from me.

Post Office car insurance is a rebrand of Budget insurance brokers and so they will have placed the business with one of the insurers on their panel. Its possible that particular company has been trying to win more learner driver business hence you got a good price before she passed her test but now you want to remove her you may not be appealing customers anymore and hence the notable step in price. 

Have you asked them to price the changing her from learner to newly qualified? There is no obligation for her to drive it so if its cheaper then no harm in still having her on the insruance as long as all her details are correct.

The other option is cancelling the policy and buying a new one; if you speak to the PO they may be willing to do something with their fees if they place the replacement policy... they can then rebroke the business and potentially place the new policy with a different insurer who you now fit with better.

facade

As DullGrey Guy says, it depends on how long the policy has left to run. The £30 is not a monthly fee.

You will have bought a years insurance for around £300, but elected to finance that £300 and actually pay £60 "interest & fees" on top to make it £360 or £30 a month.

Say there are 2 months left to run and you want to make a change to the policy.

"Cheap" insurers charge an absolute fortune in "admin" fees to make the tiniest change, £50 would be cheap, so the £50 (plus a bit of interest etc. call it £60 is added on to what you have to pay, but you only have 2 payments left and therefore you pay an extra £30 a month, making £60.

I'm not sure about the policy becoming invalid.

Certainly you daughter absolutely cannot drive the car, as now she has passed her test (and could go out careering round the roads on her own) her risk has increased enormously and she won't be covered. (The policy will have something about her provisional status)

Changing her circumstances will cost a small fortune, and add a lot more than £30 a month for the remaining term, as there is an additional premium, plus that admin charge of £30 a month.

However as the main driver and your circumstances haven't changed I can't see what valid reason they would have to cancel the policy or refuse a claim made by either of you. (You only wanted her to drive it under your supervision until she passed her test...)

facade

Plus, if you sell the car you have to pay that "admin + fees" AGAIN as you must remove the insurance otherwise if the new owner is in an accident your insurer may have to pay out money that they wouldn't have had to if you'd cancelled the policy, so they can take you to court to pay them back (and it could be many thousands of pounds)

Grey_Critic

Insurance cover for a learner driver expires as soon as the examiner says congratulations. The newly qualified driver cannot even drive the car home from the test centre so you do not need to remove her from the policy as the rules automatically cancel her authorisation to drive. If she were to lose her licence due to the totting up procedure (couple of speeding convictions) then she would (in theory) be able to drive as a learner if the policy were still in force. Your mistake is asking for her to be removed as it then becomes a new policy.

Aretnap

Grey_Critic said:

Insurance cover for a learner driver expires as soon as the examiner says congratulations. The newly qualified driver cannot even drive the car home from the test centre so you do not need to remove her from the policy as the rules automatically cancel her authorisation to drive. If she were to lose her licence due to the totting up procedure (couple of speeding convictions) then she would (in theory) be able to drive as a learner if the policy were still in force. Your mistake is asking for her to be removed as it then becomes a new policy.

This is incorrect. As things stand the insurance company essentially have incorrect information about the licence status of one of the drivers. As with any failure to provide correct information this could indeed affect the validity of the policy as a whole, whether or not the person in question actually uses the car.

The OP's options are to 

(1) Inform the insurers that she had passed her test, ask for her to be kept on the policy, pay any admin fees and additional premium that may be due,
(2) Inform the insurers that she had passed her test, ask for her to be taken off the policy, pay any admin fees and additional premium that may be due, or
(3) Cancel the policy entirely and buy a new one from another insurer. Likely to be a cancellation fee but may work out cheapest overall.

(I suppose the OP could argue that he has already informed the insurer that she has passed her test so there is no misrepresentation, however if he doesn't pay the fees etc associated with either 1 or 2 then the insurer could cancel the policy for non-payment and send the debt collectors after him, which is still not an outcome that he wants either, for all sorts of reasons).

DullGreyGuy

facade said:

However as the main driver and your circumstances haven't changed I can't see what valid reason they would have to cancel the policy or refuse a claim made by either of you. (You only wanted her to drive it under your supervision until she passed her test...)

There is a risk they would be captured under the CIDRA rules, by having her still declared as a learner when the PH clearly knows they now hold a full license would be an intentional/reckless false declaration entitling the insurer to void the policy and retain the premiums.

Grey_Critic said:

Insurance cover for a learner driver expires as soon as the examiner says congratulations. The newly qualified driver cannot even drive the car home from the test centre so you do not need to remove her from the policy as the rules automatically cancel her authorisation to drive. If she were to lose her licence due to the totting up procedure (couple of speeding convictions) then she would (in theory) be able to drive as a learner if the policy were still in force. Your mistake is asking for her to be removed as it then becomes a new policy.

If they have bought a specialist second top-up policy for learner drivers then that would be correct, they terminate as soon as you pass. If you have a standard policy and the PH or a ND is a learner it doesn't instantly cease on the passing. You are obliged to inform the insurer as soon as is reasonably practicable of the change in circumstances.

Were that not the case you'd have hundreds of problems... people saying "I do" suddenly can't drive as their marital status (and possibly name) has changed. Your boss fires you, you can't drive your car out their carpark as your employment status is now unemployed. 

Grey_Critic

The daughter was insured as a learner driver and must be accompanied by a fully qualified driver. Once she has passed her test then she is no longer covered. The fact she MUST be accompanied by a fully qualified driver in theory reduces the risk to the insurance company. The only way she can drive is if she is added to the policy as a qualified driver.

I would hazard that you do not need to remove her from the policy if she does not drive it. Learner drivers do not drive regularly only when practicing.

But then I am not the expert and only giving my opinion. The only people with the definitive answer are the insurance company. They are the ones accepting the risk. They make the rules - nobody else.

DullGreyGuy

Grey_Critic said:

I would hazard that you do not need to remove her from the policy if she does not drive it. Learner drivers do not drive regularly only when practicing.

Unfortunately the Government, FCA and PRA also make rules including things like the Consumer Insurance (Disclosure and Representations) Act 2012. The law requires that a consumer makes true declaration to their insurers and deliberate or reckless failure to do so allows the insurer to void the policy and keep the premiums. 

In this case the OP has made the correct declaration, their daughter now has a full license but they dont want to pay the adjusted premium. In reality their options are:

1) Pay the adjusted premium and keep daughter on
2) Remove daughter 
3) Cancel policy

I cannot see an option where the OP keeps their daughter listed as a learner driver even if they arent going to drive and undoubtably would at least result in the policy being cancelled if not voided.

chrisw

DullGreyGuy said:

Grey_Critic said:

I would hazard that you do not need to remove her from the policy if she does not drive it. Learner drivers do not drive regularly only when practicing.

I cannot see an option where the OP keeps their daughter listed as a learner driver even if they arent going to drive and undoubtably would at least result in the policy being cancelled if not voided.

Genuine question - how would the insurance company ever find out if the daughter never drove?

She would never have an accident, they only ever ask for the policyholder's and/or relevant driver's details in the event of an accident and in the case of fire or theft it would be the policyholder or person in charge which would never be her.

DullGreyGuy

chrisw said:

DullGreyGuy said:

Grey_Critic said:

I would hazard that you do not need to remove her from the policy if she does not drive it. Learner drivers do not drive regularly only when practicing.

I cannot see an option where the OP keeps their daughter listed as a learner driver even if they arent going to drive and undoubtably would at least result in the policy being cancelled if not voided.

Genuine question - how would the insurance company ever find out if the daughter never drove?

She would never have an accident, they only ever ask for the policyholder's and/or relevant driver's details in the event of an accident and in the case of fire or theft it would be the policyholder or person in charge which would never be her.

In this case the OP has already told them so its easy

In a more theoretical case the insurer may already hold the driving license details of all the insureds and so could query with the DVLA or it may be that they ask for all details to be provided for all drivers at any point.

The reality is that insurance is ultimately a contract of trust. You could be a high risk driver adding randomly made up named drivers who are all the perfect driving record types that improve premiums. You could say your car has added security which it doesnt, forget to mention you've had the suspension lowered and a supercharger added.  In most cases most of these will escape notice unless there is a relevant claim. 

Some insurers, particularly some bottom of the barrel intermediaries, do spot checks, ask for docs or rerun the DVLA checks. In some cases its the claims handler just thinking things are a bit odd and insurers have fairly good AI or questioning techniques that trip up/detect fraudsters

You'd argue its in part why the consequences under CIDRA are so strict to try and act as a deterrent, other than most people probably havent heard of CIDRA or dont realise that "forgetting" to mention that tinting on the windows they added could mean their insurance is void and they have to personally pay the third party's claim.