A car insurance query.

Tango1947

My previous car was insured with the RAC but underwritten by LV. The last premium March 23 was £325. In December 23 I changed my car and called the RAC to advise them. They told that they couldn't insure my new car and we're terminating my policy. I would be refunded for the unused period i.e Dec to March. They offered me a new policy with another underwriter at a whopping £2300. Needless to say, I told them politely what to do with it! I ended up going on a comparison site and chose one of several quotes at £800.

The RAC offered me £55 refund but they deducted £35 because I had terminated the policy! So leaving me with just £22 refund. 

I'm not too concerned about the money, but what irritates me is they say "I terminated the policy" but I would argue that "they terminated the policy" and therefore should not be charging me a termination fee. 

I have had a browse through the policy booklet, and whilst it does say that if a policyholder terminated then there is a £35 admin fee. However I can see no reference to the RAC terminating the policy.

Are they justified in charging the termination fee?

user1977

Be careful what you wish for, as you don't want to be obliged to declare to other insurers for the rest of your life that you've had a policy cancelled by an insurer...

It is effectively you who has cancelled here, it's the same as you cancelling the policy because you got rid of the car and didn't need any further insurance. So they're entitled to charge the admin fee which I presume is stated in their terms.

maxmycardagain

You had a lucky escape, having an insurance terminated BY the insurers is a "dead albatross" round your neck

a broker contact advised me to cancel one, when i did my (then broker) asked why, i didnt reply, my choice, if i hadnt id still be getting screwed over now, 8 years later

PHK

Agree, if they'd recorded it as being cancelled by them then you'd struggle to get reasonably priced insurance. 

By changing the car, you've effectively cancelled because the insured car is no longer your property. Obviously the new car will carry a different risk so it would be highly unusual for the insurance to just continue. 

400ixl

There is no drama of lucky escapes here.

The OP has requested a mid term adjustment on their policy due to a change of vehicle. The broker they bought it through has checked the new vehicle with the underwriter and has been told that they will not be able to cover them. Therefore the options are to either leave the policy as is, or to cancel the remainder of the policy and take a new policy elsewhere (OP has chosen the same broker who has found a new underwriter in this case).

There is nothing unusual here, it happens (not as a high percentage of MTA's thankfully). It is the OP's request to change the policy terms which has forced the cancellation.

They may have waived that fee had you taken a new policy (as they would have got their fee for a new arrangement). You rightly didn't due to the price difference so unlikely they would have waived it.

DullGreyGuy

Tango1947 said:

I'm not too concerned about the money, but what irritates me is they say "I terminated the policy" but I would argue that "they terminated the policy" and therefore should not be charging me a termination fee. 

You had a choice, keep your old car and the policy or get rid of your old car, buy the new one and cancel the policy. You chose to do the later and therefore chose to cancel the policy. 

In practice if you put a complaint in they may waive the fee just get you to go away but they are correct to charge it.

As others have warned, if you get your wish and have them say they cancelled your policy then you'd have to declare that for the rest of your life not only on your Motor insurance but other classes like Home. You'd find 95% of insurers would no longer quote for you, certainly not online, and you'd end up with some poor quality products being offered by companies specialising in fraudsters etc at 3-4x the prices you are currently being quoted or more. 

Tango1947

Thanks for all your replies. I now fully understand the reasons why I shouldn't pursue this with the insurer.

However this now opens another can of worms. 

Perhaps I should explain why I think my transfer to another car was refused. 

I previously drove an Hyundai IONIQ electric car. Hyundai of course are well known in the UK and there are many of their cars on the road. My choice of new car was a BYD model. You may not have heard of BYD, but they are a massive Chinese car and electronics company who sell lots of cars both in China and typically Australia and New Zealand. Apparently they are now selling more EVs worldwide than Tesla. 

BYD have very recently moved into the European and UK markets, but as yet they are not a well known company in the UK, although I suspect this will change over the next year or so. 

I believe, from what I have read, that some insurers are being somewhat cautious about insuring BYD cars and either charging very high premiums or simply refusing to insure the cars. I believe that this is why my insurers refused to insure my new car.

When searching for a replacement policy, several insurers refused to provide a policy, with no reason given. However I suppose you could say I have been refused insurance and raises the question whether I should disclose this.

I wonder if insurers have a database of refused applications, and am I now listed in that database?

Is this now likely to cause me problems in the future? 

BoGoF

There is no database of refused applicatiions.

The problem with BYD is thay are 'to new' to the market with a small dealer network and poasible lack of spare parts etc. With a lack of spares then there is a higher risk of write off hence the reluctance to insure. 

bluelad1927

They didn't refuse, they declined to quote. Very diffent things

DullGreyGuy

Tango1947 said:

When searching for a replacement policy, several insurers refused to provide a policy, with no reason given. However I suppose you could say I have been refused insurance and raises the question whether I should disclose this.

I wonder if insurers have a database of refused applications, and am I now listed in that database?

The database in question is CUE, it doesn't hold details of responses to requests for quote. There is no insurance equivalent of Hunter (used in banking) for now. 

Everyone is insured for insurance each time they go to an aggregator for quotes... for example Saga will refuse everyone where the policyholder is under 50. Insurers do not care if others decline to quote, they know some specialise in old people, some specialise in high value cars, some in those with 4+ years NCD (which is over 95% of people) etc

Hoenir

Tango1947 said:

I believe, from what I have read, that some insurers are being somewhat cautious about insuring BYD cars and either charging very high premiums or simply refusing to insure the cars. I believe that this is why my insurers refused to insure my new car.

Insurers use data to arrive at premiums. Until there's sufficient data there's going to be a limited pool of underwriters for the risk. The obvious unknown being damage repair costs. Hence the high quote from your existing insurer. Not particularly interested in the business at the current time. 

Some years ago I owned a TVR. Only 39 were ever built of the model. In the end I went through a specialist motor broker directly to a Lloyds underwriting syndicate. As no mainstream insurers would even offer a quote.