Car insurance refund after cancelling policy

housebuyer7

My car broke down and wasn’t fixable so have sold it to a motor trader. I took out car insurance and paid £330 for the year on 24th September. I cancelled the policy 44 days later. Insurance said I had used £157 of the £330. I also had a £45 cancellation fee so would get back £128. My question is how can I have used £157? Does this not amount to more like 6 months? I’ve used less than 2 months.

Devongardener

You’d be better asking the insurance company for an explanation of the calculation.  There are probably details in the small print of the Ts&Cs too.

400ixl

What does the contract you agreed to say about mid term cancellations?

If it was bought through a broker then you often have broker cancellation / admin fees, then the insurer cancellation / admin fees and then the reduction for use.

For example 2 months use £66 + £45 cancellation fee = £101 then you may have an admin fee of say £30 from the broker and £25 from the insurer which would give you £156

All guess work, but your policy documents will tell you.

As the fees are a fixed rate it can easily get to the number you are talking. 

housebuyer7

I didn’t buy from a broker, the insurer specified it was from usage. I will have a look at the contract.

chrisw

If you're replacing the car, it might be worth seeing if they'll transfer the policy to the new vehicle.

housebuyer7

OK got a response - they say it is because I added extras to the policy and these are non-refundable. The extras are:

- No claims discount protection
- guaranteed replacement car
- Motor Legal Protection
- breakdown cover

lisyloo

It does seem steep but as others have said you need to check the contract that you agreed do when you bought your insurance DIY. It's your responsibility to check your happy with the contract when you buy if you choose to do it yourself.

They have said it was from usage, does that mean mileage? The fee is fair in legal terms.

A transfer is an idea to avoid the fee but only if they are competitively priced on your new model.

You must cancel the insurance. You've done the right thing, but for others reading you can be pursued for claims if you don't cancel and the insurer is liable because you didn't cancel.

saajan_12

400ixl said:

What does the contract you agreed to say about mid term cancellations?

If it was bought through a broker then you often have broker cancellation / admin fees, then the insurer cancellation / admin fees and then the reduction for use.

For example 2 months use £66 + £45 cancellation fee = £101 then you may have an admin fee of say £30 from the broker and £25 from the insurer which would give you £156

All guess work, but your policy documents will tell you.

As the fees are a fixed rate it can easily get to the number you are talking. 

OP said the £45 cancellation fee was being added to the £156 usage, so including it in the calc for the £156 would be double counting. 

DullGreyGuy

housebuyer7 said:

I didn’t buy from a broker, the insurer specified it was from usage. I will have a look at the contract.

Are you sure? A significant proportion of people on here say the same thing but then say they bought from the RAC which is a little amusing given RAC car insurance is just a white label of Budget Insurance Brokers. So definitely a broker and not even the named company. 


Whilst its been identified as the optional extras on this occasion the other thing that often stings people is for anything less than X months some companies will charge the time on cover as if you'd bought temporary insurance rather than an annual policy which inevitably has a much higher day rate. 

housebuyer7

I am sure as I bought with the insurer directly on their own website. It was an annual policy.

lisyloo

saajan_12 said:

400ixl said:

What does the contract you agreed to say about mid term cancellations?

If it was bought through a broker then you often have broker cancellation / admin fees, then the insurer cancellation / admin fees and then the reduction for use.

For example 2 months use £66 + £45 cancellation fee = £101 then you may have an admin fee of say £30 from the broker and £25 from the insurer which would give you £156

All guess work, but your policy documents will tell you.

As the fees are a fixed rate it can easily get to the number you are talking. 

OP said the £45 cancellation fee was being added to the £156 usage, so including it in the calc for the £156 would be double counting. 

I too read this as the cost of the insurance and not the fees.
I think the OP is entitled to an explanation for how it was calculated.
I've always had policies pro-rated due to length of time, but this says usage, so the next step is to get an explanation for the calculation.