Car insurance - cancellation of policy

jeremymbwilson

My wife has just "disposed" of her car as she has been informed that after 5 years of driving it (and taking it and MOT'ing it) that HPI apparently say that it is reported (to the DVLA) as "destroyed".  Apparently in 2016.  Anyway, that is another story.......

She has been insured with First Central Services, so rang them up to cancel her (monthly paid) insurance.  They are saying that she has to pay a £64 cancellation fee.  Is that right ?

Has anyone else had any experience of this ?

DE_612183

Well insurance if for a full year - you can opt to pay monthly.

If you then cancel within the 12 months, they can ask you to pay a cancellation fee, and then future payments are stopped.

Sadly it's not wrong what they are doing - but £64 is quite high.

MeteredOut

What do the T&Cs agreed to at the point of purchase say?

Most car insurances have a cancellation fee nowadays. A monthly paid policy is still an annual policy, its just that you pay a premium (literally, in both senses of the word) every month. If you had paid the annual premium up front, you'd most likely have gotten a pro-rate refund, minus cancellation fees (assuming no claims have arisen in the policy year).

DullGreyGuy

jeremymbwilson said:

My wife has just "disposed" of her car as she has been informed that after 5 years of driving it (and taking it and MOT'ing it) that HPI apparently say that it is reported (to the DVLA) as "destroyed".  Apparently in 2016.  Anyway, that is another story.......

She has been insured with First Central Services, so rang them up to cancel her (monthly paid) insurance.  They are saying that she has to pay a £64 cancellation fee.  Is that right ?

Has anyone else had any experience of this ?

You bought an annual policy and took a loan to repay it monthly. To terminate it before the natural expiry at the end of the policy year its common practice for their to be a fee to exit the agreement early. 

If you had paid up front then it would just be discounted from the rebate but as you took a loan any part month rebate will be taken and you pay the difference . 

dunstonh

She has been insured with First Central Services, so rang them up to cancel her (monthly paid) insurance.  They are saying that she has to pay a £64 cancellation fee.  Is that right ?

its an unusual figure.  Normally cancellation fees are round figures but if that is what the T&C say then it is right.

Do you have any reason to think it isn't right?

Also, you say it was paid monthly, so it is more likely that the £64 you mention isn't a cancellation fee but the outstanding premium, possible credit charge and a cancellation fee?

(noting that their website says the cancellation charge is £50)

bluelad1927

Also if the cancellation fee is more than the remaining payments don't think about letting the policy naturally expire. An insured car that no longer belongs to you could cause a real headache

jeremymbwilson

Thank you very much, all for your comments - much appreciated.  It does seem excessive, but seems this is the norm.  We'll just bite the bullet and pay it.

Thanks, again - these MSE forums are brilliant.

DullGreyGuy

jeremymbwilson said:
It does seem excessive, but seems this is the norm.  We'll just bite the bullet and pay it.

Circa 2007 the financial regulator deemed that up to £50 was reasonable and over it may need justifying after asking a lot of firms to explain their cancellation fee and what the losses are when someone cancels mid term. 

Given we have over a decade of inflation since then the fact most are still around £50 isn't so bad.