Car Insurance after vehicle stolen

Filanblue

Hi,  Can somebody help me with this please? My son's car was stolen, he cancelled his insurance policy and he's now been told that he has to pay the remainder of the policy because his payments were monthly, not lump sum up front, and it was in effect a loan.  Is that correct?  Surely he shouldn't be paying insurance for a car he no longer owns?  I don't understand.  Any ideas please?

Helen

marcia_

 Its right im afraid. They effectively loan you the money when you pay monthly meaning you have to pay the outstanding 

SteveJW

I'm afraid that is correct

For example annual insurance £1200 per year, equals to £120 per month, car stolen after six months he owes the remainder

Veteransaver

Why did he cancel his insurance? Could he not transfer it to the replacement car?

cymruchris

Yes - you pay for the year whether you choose to use it or not. By paying monthly, it's spreading the cost, but still liable for the full amount. As above - might have been useful to transfer whatever was left of the policy to any replacement vehicle.

Mildly_Miffed

Does nobody EVER read what they're buying?

He bought an annual insurance policy.
He took out a loan to pay for it monthly through the year, probably at a ridiculous APR.

peter12345678910

Just costs about £25 to transfer it to another car, just takes a minute to do with the insurance app?  Though no point cancelling the insurance - the cops heaven forbid . . . may find the car.

jimjames

Filanblue said:

Hi,  Can somebody help me with this please? My son's car was stolen, he cancelled his insurance policy and he's now been told that he has to pay the remainder of the policy because his payments were monthly, not lump sum up front, and it was in effect a loan.  Is that correct?  Surely he shouldn't be paying insurance for a car he no longer owns?  I don't understand.  Any ideas please?

By this reasoning if you paid for the insurance up front you'd be due a refund in the event of a claim?

Depending on the policy some get cancelled in the event of a total loss claim so you can't transfer to another vehicle anyway. Not sure if that's the case for theft but was for written off cars.

DullGreyGuy

jimjames said:
Depending on the policy some get cancelled in the event of a total loss claim so you can't transfer to another vehicle anyway. Not sure if that's the case for theft but was for written off cars.

The FOS tends to look negatively on this and typically requires the remainder to be able to transferred as long as the insured obtains the replacement vehicle in a reasonable period 

Filanblue said:

Hi,  Can somebody help me with this please? My son's car was stolen, he cancelled his insurance policy and he's now been told that he has to pay the remainder of the policy because his payments were monthly, not lump sum up front, and it was in effect a loan.  Is that correct?  Surely he shouldn't be paying insurance for a car he no longer owns?  I don't understand.  Any ideas please?

He bought an annual policy, he couldn't afford the premiums so they gave him a loan to enable him to spread the cost (in some cases this will be a genuine loan that appears on the credit history like any other loan).

A policy becomes non-refundable after a fault claim and 99% of theft claims remain fault because the insurer cannot recover their money from the person responsible for the loss. 

Is he getting another car? Most insurers allow you to transfer the remainder of the policy subject to any admin fee and change in premium for new car etc. 

Iceweasel

Why did he cancel the policy?

eschaton

It has always been the case that if a policy pays out then there is no pro-rata refund. 

Paying monthly isn’t a get out clause.