Charged Cancellation Fee for Insurance Policy after death

qwerty129

My father passed away last month and I contacted Fish insurance company to cancel his motor Insurance policy. They asked me to submit copy of death certificate, which I did. Had to contact them a couple of times but eventually they confirmed it was cancelled and confirmed amount refunded less the standard 50GBP cancellation fee.

Is it legal to charge a cancellation fee on death of policy holder? Also, why did they ask for proof of death certificate if they were going to charge me the standard cancellation fee anyway (since you can cancel and pay that fee for any reason).

Only 50quid but just seems crass. 

sammyjammy

Sorry for your loss, it is a little crass but very unlikely to be illegal after all whatever it costs them in admin applies on matter what the cancellation reason, thats business I'm afraid.

user1977

The cancellation fee ought to be the same as whatever he would have paid if he had cancelled while alive, there's no legal requirement for some sort of compassionate waiver of such things.

And I expect they want the death certificate so they have a record of why they didn't take instructions from him to cancel - otherwise what's to stop anybody phoning up, claiming you're dead and cancelling your insurance?

sammyjammy

user1977 said:

The cancellation fee ought to be the same as whatever he would have paid if he had cancelled while alive, there's no legal requirement for some sort of compassionate waiver of such things.

And I expect they want the death certificate so they have a record of why they didn't take instructions from him to cancel - otherwise what's to stop anybody phoning up, claiming you're dead and cancelling your insurance?

Good point!

DullGreyGuy

Cancellation fees, in the round, are designed to be cost neutral and therefore charging it isn't them benefit from your fathers passing but also not them losing out given they didnt cause his demise. 

As above death cert will be a data protection type requirement for taking instruction from someone that isn't named on the policy. Secondly insurers often do consider some gestures of goodwill in these cases like if its the widow(er) reporting the death and saying that it means they have no NCD as it was always their spouse that was the policyholder... in most cases the insurer will allow the NCD to be switched to the widow(er)

dunstonh

Is it legal to charge a cancellation fee on death of policy holder

Its not illegal and it would depend on the terms regarding cancellation. However, nothing seems untoward or unusual here.

Remember that those with cancellation fees tend to have lower premiums as they have stripped out the admin/cancellation costs to charge them explicitly.     So, whilst the policyholder was alive, they got lower premiums knowing that there were explicit charges for administrative events.    The policyholder could have chosen to pay more each year and go with a provider with no explicit charges but they didn't.

 Also, why did they ask for proof of death certificate if they were going to charge me the standard cancellation fee anyway (since you can cancel and pay that fee for any reason).

The death certificate tells them that the policyholder is deceased.   This gives them some audit trail to allow them to take instructions from third parties.