Charge for my mistake?

MrGreen64

Recently got a good deal with those meerkats for my car insurance. Company asked for a copy of NCD and V5 which I gave but they also needed my old car insurance certificate.

They then noticed two things ncd was 6 years instead of 5 and that I had given the wrong purchase date of my car. Same year different month.

For my mistake they charged an extra £16.66 plus a £50 admin fee. Now I have saved very little on my car insurance for my mistake.

Can insurance companies do this [and they clearly have]? Is it worth switching again. Is £50 admin fee fair?

DullGreyGuy

There are a few companies "specialising" in quoting low and then checking everything is accurate. You ultimately signed a declaration (digitally) to say all the information is correct when basic checks have proved it wasn't so they are entitled to correct the premium for the wrong information and charge for the admin in doing so. 

Insurance is a contract of trust... they trust you've given the right details and you trust they'll payout if you run someone over. There are arguments that if you've proven to be lax in your answers from the few checks they've done that the trust has to be questionable and so premiums should reflect this. I mean if a shop keeper accidentally gave you too little change you'd be double checking it the next time the same guy serves you again. 


I cannot remember the exact year now but it was circa 2006 when the FSA, the pre runner to the FCA and PRA not the food standard authority, asked insurers to provide the costs they incur for cancellations, amendments etc. At that point the regulator deemed £50 was the upper level of reasonable as a general rule of thumb but you really would need to apply 17 years of inflation and innovation to assess what is reasonable today, most have stuck in the same ballpark. 

If you look to switch again now you will have cancellation fees to be paying as well as the amendment charges 

dunstonh

Can insurance companies do this [and they clearly have]?

Who is going to pay for the extra work if you are not?
Would it be fair to charge other consumers for your mistakes?

 Is £50 admin fee fair?

The FOS ruled £50 was reasonable and fair decades ago (it was in one of the FOS publications at the time).   With decades of inflation, its unlikely they would now think it was unfair at that same level.

Many years ago the costs of admin were included in the premium (and there are still some that use this model).  However, the cheaper ones tend to strip out admin costs to reduce the premium and then charge admin explicitly.    That way, only those creating the extra work pay for it.

It isn't really possible to charge on a case by case basis as that would actually increase costs.   So, they look at the average and charge on that basis.  

DullGreyGuy

dunstonh said:
It isn't really possible to charge on a case by case basis as that would actually increase costs.   So, they look at the average and charge on that basis.  

Not only that but it would be difficult to meet the FCA's requirement on communications and customer understanding if you said you can buy the policy online to start right now but you'll have to phone us for a quote to cancel it if you change your mind in a few weeks time and it'll cost you £10 for a cancellation quote to be generated. 

The FSA before and the FCA now prefer the simplicity that if you cancel after 3 or 4 months you pay £50 rather than you pay 9/12ths or 8/12ths of the acquisition costs which because you bought via Confused.com is £90 plus £1 software fee, £0.75 postage etc. etc.