How are car insurance companies allowed to charge a fee for cancellation during 14-day cooling-off?

Fingerbobs

I was just wondering - doesn't this completely negate the whole point of the cooling-off period? 

I've just re-insured a secondary car with Aviva Zero (I know they get bad reviews and they're rubbish at claims, but it's a little-used car and they're cheap, so I figured I'd cross that bridge when I came to it!) and they charge a £28 fee for cancellation within the 14-day cooling-off period. 

When I've cancelled policies with Direct Line in the past, I've only been charged pro-rata for the days of cover I'd had, which was usually a couple of quid. I assumed that was the law, and they would have charged a lot more if they'd been allowed to, but apparently not. 

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

DullGreyGuy

Fingerbobs said:

I was just wondering - doesn't this completely negate the whole point of the cooling-off period? 

I've just re-insured a secondary car with Aviva Zero (I know they get bad reviews and they're rubbish at claims, but it's a little-used car and they're cheap, so I figured I'd cross that bridge when I came to it!) and they charge a £28 fee for cancellation within the 14-day cooling-off period. 

When I've cancelled policies with Direct Line in the past, I've only been charged pro-rata for the days of cover I'd had, which was usually a couple of quid. I assumed that was the law, and they would have charged a lot more if they'd been allowed to, but apparently not. 

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

Because outside of the cooling off period you have no statutory right to cancel at all... it won't happen in Motor because people buy/sell cars etc but if you look at private medical insurance you often have no right to cancel after the cooling off period so have to pay for the other 11.5 months of cover before declining the renewal. 

The law simply says they have to give you the right to cancel, it doesn't say it has to be fee free. Direct Line certainly used to charge for cancellations because more historically they didn't and so found they were subject to negative selection from people who'd had cars impounded for no insurance, they'd buy a DL policy, use the certificate the same day to get the car released and then cancel the policy in the evening and pay for 1 days cover which doesn't come close to covering the cost of sale etc. 

SaverRate

You signed up to the terms and conditions when you brought the policy.

I must admit I took out an Aviva Zero policy back last year and cancelled within the 14 days due to a change in vehicle and wasn't charged so must be a new charge. 

Fingerbobs

SaverRate said:

You signed up to the terms and conditions when you brought the policy.

Why does everyone make assumptions on here? At what point did I say I had changed my mind and wanted to cancel, or did I complain about the cancellation fee? 

To clarify: I was 100% fully aware of the cancellation fees before buying (or should that be "bringing?") the policy, but was just surprised they were allowed to charge such fees. I have absolutely no intention of cancelling the policy, and never had any such intention (unless I dispose of the car at some point I suppose). 

Fingerbobs

DullGreyGuy said:

Fingerbobs said:

I was just wondering - doesn't this completely negate the whole point of the cooling-off period? 

I've just re-insured a secondary car with Aviva Zero (I know they get bad reviews and they're rubbish at claims, but it's a little-used car and they're cheap, so I figured I'd cross that bridge when I came to it!) and they charge a £28 fee for cancellation within the 14-day cooling-off period. 

When I've cancelled policies with Direct Line in the past, I've only been charged pro-rata for the days of cover I'd had, which was usually a couple of quid. I assumed that was the law, and they would have charged a lot more if they'd been allowed to, but apparently not. 

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

Because outside of the cooling off period you have no statutory right to cancel at all... it won't happen in Motor because people buy/sell cars etc but if you look at private medical insurance you often have no right to cancel after the cooling off period so have to pay for the other 11.5 months of cover before declining the renewal. 

The law simply says they have to give you the right to cancel, it doesn't say it has to be fee free. Direct Line certainly used to charge for cancellations because more historically they didn't and so found they were subject to negative selection from people who'd had cars impounded for no insurance, they'd buy a DL policy, use the certificate the same day to get the car released and then cancel the policy in the evening and pay for 1 days cover which doesn't come close to covering the cost of sale etc. 

I see, so they could charge 100% of the premium as a cancellation fee if they wanted then. All seems a bit pointless. 

DullGreyGuy

Fingerbobs said:

DullGreyGuy said:

Fingerbobs said:

I was just wondering - doesn't this completely negate the whole point of the cooling-off period? 

I've just re-insured a secondary car with Aviva Zero (I know they get bad reviews and they're rubbish at claims, but it's a little-used car and they're cheap, so I figured I'd cross that bridge when I came to it!) and they charge a £28 fee for cancellation within the 14-day cooling-off period. 

When I've cancelled policies with Direct Line in the past, I've only been charged pro-rata for the days of cover I'd had, which was usually a couple of quid. I assumed that was the law, and they would have charged a lot more if they'd been allowed to, but apparently not. 

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

Because outside of the cooling off period you have no statutory right to cancel at all... it won't happen in Motor because people buy/sell cars etc but if you look at private medical insurance you often have no right to cancel after the cooling off period so have to pay for the other 11.5 months of cover before declining the renewal. 

The law simply says they have to give you the right to cancel, it doesn't say it has to be fee free. Direct Line certainly used to charge for cancellations because more historically they didn't and so found they were subject to negative selection from people who'd had cars impounded for no insurance, they'd buy a DL policy, use the certificate the same day to get the car released and then cancel the policy in the evening and pay for 1 days cover which doesn't come close to covering the cost of sale etc. 

I see, so they could charge 100% of the premium as a cancellation fee if they wanted then. All seems a bit pointless. 

The FSA, as it was at the time, looked into cancellation fees several years ago. They agreed that flat fees for everyone gave much more clarity/certainty -v- highly complex fees depending on how you bought the policy, how far in you were etc etc. 

Over a decade ago the FSA agreed that fees up to £50 plus time on cover was reasonable and proportionate to the costs for an insurance company. Obviously with inflation you'd imagine that number would be higher now if the exercise was rerun but most companies still stick within it. 

Someone here the other day was saying their Contents insurance is £65 and so yes a cancellation on that would most likely represent the overwhelming majority of the premium

Hoenir

Fingerbobs said:

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

Reasonable that a company recovers costs incurred in setting up and cancelling the policy. Employees still need to be paid. 

oldagetraveller1

https://quote.onecallinsurance.co.uk/existing_customers/website-documents/getDocument.php?doc_name=1650628068charges_31.12.21.pdf&_ga=2.116451910.1185775217.1701853210-435203755.1701853210

Scroll down to "set up fee, during cooling off period".

born_again

Fingerbobs said:

I was just wondering - doesn't this completely negate the whole point of the cooling-off period? 

I've just re-insured a secondary car with Aviva Zero (I know they get bad reviews and they're rubbish at claims, but it's a little-used car and they're cheap, so I figured I'd cross that bridge when I came to it!) and they charge a £28 fee for cancellation within the 14-day cooling-off period. 

When I've cancelled policies with Direct Line in the past, I've only been charged pro-rata for the days of cover I'd had, which was usually a couple of quid. I assumed that was the law, and they would have charged a lot more if they'd been allowed to, but apparently not. 

What's the point of the cooling-off period if they can just charge a fee for cancellation anyway? 

In order not to be accused of make a assumption.🤣

Did you cancel the policy before or after the cover had started?
But as this was a renewal, there is no 14 day period as you are simply continuing the policy.

They are allowed to reclaim reasonable fee's for setting up the policy.
If the cover had started, they are also able to charge for the period of cover.