Moped insurance after accident - owing money

Navygal

Hi, 
My 19 year old son purchased a new moped 6 weeks ago. He paid half in cash & took the other on finance. He took out fully comp insurance on a pay monthly scheme
2 weeks later he had an accident and 4 weeks after that the insurance company wrote the scooter off. 
After speaking to the claims company they have offered £120 less than the purchase price (not an issue he had 2 weeks use of it!). They will then take out the £700 excess (expected) and pay of the finance (£1200 - again expected). We then expected the rest of the money to be returned to him (approx £400) he would then use this as a deposit on a new bike. 
However, the insurance company are saying that he needs to pay the full year's premiums and they will then cancel his insurance. That means he will have no transport & end up owing the insurance approx £300. 
Previously, when I had a vehicle written off I have just had to pay a charge to change vehicle details. Is the cancellation and the payment in full a normal procedure? 
His policy does state 'like-for-like' but the finance company won't transfer the finance and even then he would have to pay the full insurance and they would still cancel. 
Any advice gratefully received. 

Wonka_2

Navygal said:

Previously, when I had a vehicle written off I have just had to pay a charge to change vehicle details. Is the cancellation and the payment in full a normal procedure? 

The issue is potentially that he's only 19 and has written off a new vehicle

You've mentioned the finance company not transferring but would the insurance company transfer to a replacement vehicle were he to source one ? Or are they refusing future cover based on the claim ?

Whatever the solution it's going to cost £££ 

TadleyBaggie

Being required to pay the full year’s premium after a write off is normal. 

Wonka_2

TadleyBaggie said:

Being required to pay the full year’s premium after a write off is normal. 

Indeed - but some insurers, in some circumstances, will continue cover on a replacement vehicle

DullGreyGuy

He bought an annual policy and took out a loan to pay the premiums. It's standard process for insurers to pay off that premium loan in the event of a total loss; customers become very poor payers when they feel they aren't getting anything for the money. Once a claim is made on a policy you cannot cancel it for a refund of the annual premium.

In most cases you can transfer the remainder of the policy term onto another vehicle if it's done within a fairly short period of time (normally somewhere between 14 and 28 days). There may be an additional premium to pay if it's a more power/expensive vehicle etc. 

Aretnap

Wonka_2 said:

TadleyBaggie said:

Being required to pay the full year’s premium after a write off is normal. 

Indeed - but some insurers, in some circumstances, will continue cover on a replacement vehicle

Ombudsman's position has been that all insurers should do this, but with caveats like the replacement vehicle being one that the insurer would normally be willing to cover, getting it within a reasonable timeframe, payment of extra premium if applicable etc 

Kim_13

Is this cancellation of a declarable kind? That seems extremely unfair on him if it is, as there’s no suggestion he’s done anything other than have an accident (which statistics must say is more likely with a vehicle you’ve only just got, as insurers load the premium for it.) If it is, challenge this all the way, as it will affect him for the rest of his life. Unlike bankruptcy and penalty points, a declarable cancellation never falls off the record.

With that said, it does seem that more insurers say cancellation in the event of total loss, so if it was important to have the means of using the remaining policy term, an insurer should have been selected that didn’t have this term.

DullGreyGuy

Kim_13 said:

Is this cancellation of a declarable kind? That seems extremely unfair on him if it is, as there’s no suggestion he’s done anything other than have an accident (which statistics must say is more likely with a vehicle you’ve only just got, as insurers load the premium for it.) If it is, challenge this all the way, as it will affect him for the rest of his life. Unlike bankruptcy and penalty points, a declarable cancellation never falls off the record.

With that said, it does seem that more insurers say cancellation in the event of total loss, so if it was important to have the means of using the remaining policy term, an insurer should have been selected that didn’t have this term.

No, it's just the natural conclusion of the contract when you are insuring X, X ceases to exist and so you are paid out the value of X. The contract has no purpose now what is covering has gone. 

Declarable cancellations are like when they cancel the contract because they find out you've been telling porkie pies about how long you've held a driving license or your claims history etc.

Navygal

Wonka_2 said:

Navygal said:

Previously, when I had a vehicle written off I have just had to pay a charge to change vehicle details. Is the cancellation and the payment in full a normal procedure? 

The issue is potentially that he's only 19 and has written off a new vehicle

You've mentioned the finance company not transferring but would the insurance company transfer to a replacement vehicle were he to source one ? Or are they refusing future cover based on the claim ?

Whatever the solution it's going to cost £££ 

They are refusing him any cover on this policy at all even if they were to honour the like for like, which at this point seems unlikely. I asked the question about transferring the policy to a new bike and they said no - its a fault claim so no insurance company does that. 

Navygal

Many thanks for all of your responses. We are currently deciding whether to just accept and start all over again with him having learnt an expensive lesson, buy a new bike and owe the insurance company or try and fight as I thought that fully comp meant that all costs were covered. 
It does seem very unfair or do you think I will be fighting a losing battle?
Who is the best person/company to contact if we want to raise awareness of the situation, especially considering they aren’t giving him the full value of the scooter because they can’t find anything comparable on the market?
Thanks in advance. 

DullGreyGuy

The process is to raise a complaint with them, if you aren't happy with their response you then escalate the matter to the Financial Ombudsman