Looking for advice on car insurance cancellation

basically_bankrupt

I realise not the most descriptive of titles.

I'm trying to resolve an issue with a young driver policy. I'm not the policy holder.

The policy was paid in full when it was taken out. It's about 7-8 months old.

It's a telematics policy. My understanding is that when the policy was taken out it was based on an estimated mileage of 10k miles.

Recently the insurer (well actually the broker) sent a letter out stating Action required - Declared annual mileage

It stated the the telematics device indicated that the number of miles driven exceeds 10k and they required the policy holder to get in touch by a certain date, if not the policy may be cancelled.

The brokers (not sure if I can mention the name here) are very difficult to get hold of. They were contacted at the start of this week but said due to high call volumes they were doing callbacks and would call back within 48 hours. They did not do that.

They were contacted again today (7/9) still well before the cut off date in the letter.

After roughly an hour on hold the policy holder was put through to the adjustments department. They stated that they had calculated the annual mileage would be 17k by the end of the policy and on that basis a new insurer would need to be found.

Essentially they are saying "either you cancel the policy or we will" - their cancellation policy states that if they cancel the policy a refund would be provided for the remaining duration. However, my understanding is that having a policy cancelled by an insurer can make it very difficult to get another policy/increase premiums.

On the other hand, if the policy holder cancels then no refund is due.

Is there any recourse here? This company reviews very badly on trust pilot and based on previous encounters with them earlier in the course of the policy, it seems like their default stance is we're cancelling, see you later. It feels like a scam.

I can't find anything in the policy documentation that suggests that exceeding the mileage would result in immediate termination of the policy, nor does the letter they sent out suggest that either.

[Deleted User]

You are right that if they cancel it's a big and expensive problem.

What does the policy document say about refunds?

Nobbie1967

Sounds like they must’ve done 10k after 7/8 months if they’re expecting 17k in the full year. In which case the driver has got the insurance for the 10k miles they paid for.

DullGreyGuy

What was the cancellation actually for? 

Given the "irresponsible youth" comment it probably wont apply in this case but some people do confuse who has really cancelled the policy and incorrectly declare a cancellation that didn't need to be declared (eg policyholder calls to say they've changed their car and the insurer says they wont insure the new car so the policy has to be cancelled)

basically_bankrupt

[Deleted User] said:

You are right that if they cancel it's a big and expensive problem.

What does the policy document say about refunds?

It says:

You are entitled to cancel your Policy with a full premium refund
within 14 days of it starting, provided that there have been no
claims. You may cancel your policy at any time after the first 14
days, but no refund will be made. Please contact Us if you wish to
cancel.

It also states:

Cancellation of your policy by us
We, or the administrator, may cancel this insurance by sending seven days’ notice, in writing, to your last
known address.
We will refund the part of your premium which applies to the remaining period of the insurance via the
administrator.
Reasons we may cancel this insurance include, but are not limited to:
• unpaid premium
• you or anyone else covered by this insurance has not met the terms and conditions of this
insurance
• you fail to provide documentation requested by us or the administrator
• any change in your circumstances that means we can no longer provide cover
• you misrepresent or fail to disclose information that is relevant to your insurance
• we identify fraud on another associated policy with ERS or
• you harass any member of our staff or show abusive or threatening behaviour towards them
This is not an exhaustive list.

It seems that they have created a scenario where the policy holder has no choice but to cancel, even though they would prefer to continue the insurance and pay whatever the increased premium would be.

No sensible individual is going to choose for the insurance company to cancel the policy, thereby they never have to provide a refund

basically_bankrupt

DullGreyGuy said:

What was the cancellation actually for? 

Given the "irresponsible youth" comment it probably wont apply in this case but some people do confuse who has really cancelled the policy and incorrectly declare a cancellation that didn't need to be declared (eg policyholder calls to say they've changed their car and the insurer says they wont insure the new car so the policy has to be cancelled)

The policy hasn't been cancelled (yet) but they are refusing to continue to provide insurance on the basis of the increased mileage. So they are giving the policy holder the option of cancelling the policy - no refund, or having the policy cancelled, along with all of the implications that brings

laidbackgjr

Is the mileage estimate accurate, are they really on track to do 17k miles a year? If so then I think you will be best off cancelling and finding another insurer, young drivers doing 17k a year are rare so not surprised some insurers don't want to take the risk, also they will take the view if you didn't accurately input mileage at the time of taking out the policy, what else might not be accurate?

basically_bankrupt

laidbackgjr said:

Is the mileage estimate accurate, are they really on track to do 17k miles a year? If so then I think you will be best off cancelling and finding another insurer, young drivers doing 17k a year are rare so not surprised some insurers don't want to take the risk, also they will take the view if you didn't accurately input mileage at the time of taking out the policy, what else might not be accurate?

Yes, reasonably accurate. Based on the fact that they've done just over 10k at this point, a rough calculation assuming the same rate of mileage between now and the policy expiration comes to 17k

I was always under the impression that the mileage you give an insurer when you take out a policy is an estimate.

More experienced drivers are likely to have a better idea of how many miles they drive in a year, assuming no change in circumstances.

DullGreyGuy

basically_bankrupt said:

DullGreyGuy said:

What was the cancellation actually for? 

Given the "irresponsible youth" comment it probably wont apply in this case but some people do confuse who has really cancelled the policy and incorrectly declare a cancellation that didn't need to be declared (eg policyholder calls to say they've changed their car and the insurer says they wont insure the new car so the policy has to be cancelled)

The policy hasn't been cancelled (yet) but they are refusing to continue to provide insurance on the basis of the increased mileage. So they are giving the policy holder the option of cancelling the policy - no refund, or having the policy cancelled, along with all of the implications that brings

Apoligies, some how have managed to cross post (or totally misread the original post when multi-tasking)

Ultimately you need to cancel the policy to ensure its on your terms and then log a complaint that no refund has been given and that the terms are unfair, particularly as if you let them cancel it then you do get a pro-rata refund. If you look on the Ombudsman there are various complaints about "no refund" policies and the ombudsman typically rules against the insurer/broker despite the terms.

Herzlos

It doesn't sound unreasonable on their part here - you signed a contract for 10k miles and have gone over it.

So your options are to let them cancel it (and make insurance a nightmare) or to cancel it yourself.

You may lose the deposit, but you'd be paying in a lot more money to adjust the policy anyway, so you're out of money whatever happens but you don't want to have to report a cancelled insurance policy.

DullGreyGuy

Herzlos said:

You may lose the deposit, but you'd be paying in a lot more money to adjust the policy

They are 8 months in on the policy for which they've been told they get no refund so its losing 4 months premiums not just a deposit and then having to pay the higher rate on the new policy (the later bit being reasonable)