Excessive insurance cancellation fee

bit_fuzzy

Hello,
  Sorry if this has been covered but I could not find any previous posts regarding this, or if I’m even in right section. 

  I took out car insurance for £230.00 in April, starting cover 4th march 25. I could not afford to pay in full so I chose to pay monthly. My car broke on 31st May and I sold it 13th June. 

I tried to cancel car insurance and they wanted £141.26. This is an online policy and there was no way to contact them. Tried sending messages to automated service to no avail. I cancelled my direct debit in hope they would contact me. 

  When I did manage to talk to someone they could not give a reason why the amount was so much given the short period of cover. I was given several different reasons on different occasions as to why it was this figure. 

  I was told to get a v777 form and given 28 days to obtain. This is to show when I was no longer the keeper of the car. In this 28 days, it was handed over to a debt collection agency. I have given them the proof of sale of the car. They have reduced the amount to £121.24. I have told them that I have made 3 payments totalling £77.98, for the car insurance before I cancelled the direct debit which they have asked for my sort code and account number to show the payments. I have provided this to them as requested. They have now asked for bank statements showing payments. I have sent them a screen shot of payments made which they say their client will not accept. As I am unhappy to provide bank statements to a company and people I do not know, they are saying that I am liable for the full amount. 

  My question is where do I stand on this as I’ve always stated that I’m happy to pay the cancellation fee plus a month or so of the policy but paying nearly £200.00 for 3 months use seems a bit excessive on a £230.00 policy. 

Wonka_2

Presumably the T&C’s you agree to when you took out the policy showed a) that it was an online only policy and b) what the cancellation terms were. 

Cancelling your DD wasn’t the wisest move and, again depending on the T&C’s may have incurred extra fees 

If you share the policy details people will be able to tell you whether the fees were correct based on the dates given 

eskbanker

What do the policy terms say about how mid-term cancellation is handled and in particular the charges and fees that apply?

MyRealNameToo

bit_fuzzy said:

Hello,
  Sorry if this has been covered but I could not find any previous posts regarding this, or if I’m even in right section. 

  I took out car insurance for £230.00 in April, starting cover 4th march 25. I could not afford to pay in full so I chose to pay monthly. My car broke on 31st May and I sold it 13th June. 

I tried to cancel car insurance and they wanted £141.26. This is an online policy and there was no way to contact them. Tried sending messages to automated service to no avail. I cancelled my direct debit in hope they would contact me. 

  When I did manage to talk to someone they could not give a reason why the amount was so much given the short period of cover. I was given several different reasons on different occasions as to why it was this figure. 

  I was told to get a v777 form and given 28 days to obtain. This is to show when I was no longer the keeper of the car. In this 28 days, it was handed over to a debt collection agency. I have given them the proof of sale of the car. They have reduced the amount to £121.24. I have told them that I have made 3 payments totalling £77.98, for the car insurance before I cancelled the direct debit which they have asked for my sort code and account number to show the payments. I have provided this to them as requested. They have now asked for bank statements showing payments. I have sent them a screen shot of payments made which they say their client will not accept. As I am unhappy to provide bank statements to a company and people I do not know, they are saying that I am liable for the full amount. 

  My question is where do I stand on this as I’ve always stated that I’m happy to pay the cancellation fee plus a month or so of the policy but paying nearly £200.00 for 3 months use seems a bit excessive on a £230.00 policy. 

You commit to an annual policy irrespective of if you pay up front or get a loan from the seller and repay it monthly. 

Once the 14 days cooling off period has ended you have no statutory right to cancel the policy at all, in practice all motor insurers will allow you to cancel the main policy as long as you haven't made a claim but most of the optional extras (breakdown, legal expenses, key cover etc) often cannot be cancelled mid terms so you have to pay the full price for them. 

Many will recalculate your premiums on a short term basis rate rather than annual, as if you had bought a temp cover policy rather than annual which is notably higher pre day rate else no one would buy temp cover, wed all buy annual policies and cancel a week or two later. 

There can be multiple fees, the seller may charge a fee for cancelling, the insurer, and the finance house if the loan on the premiums was a true loan from a third party rather than from the seller themselves. 

The cost of cancellation should be outlined in your policy book and they should be able to provide how they have calculated the cost so put a complaint in with the firm you bought the policy from. 

With a premium as low as £230 you will often find cancellation at any time is going to be almost all of the premiums (and potentially more) 

dumpster_fire2025

The admin costs of setting up the insurance policy (and the same for cancelling it) aren't related to the premium, they're essentially a flat rate cost if the insurance is £100 or £1000. That's why cancellation charges can seem "disproportionate" if your premiums are particularly low, as they are in this case.

bit_fuzzy

Thank you all for your replies. I cannot get the terms and conditions up as I do not have a policy with them anymore. 

 I fully understand that there would have been a cancellation fee which is £45.00 which I have no objection in paying. If I pay for 1/4 of the policy it is still a lot less than what they are asking from me from what I’ve already paid.  I don’t understand how if I do not provide them with bank statements how they can demand the full £121.24

Aylesbury_Duck

bit_fuzzy said:

Thank you all for your replies. I cannot get the terms and conditions up as I do not have a policy with them anymore. 

 I fully understand that there would have been a cancellation fee which is £45.00 which I have no objection in paying. If I pay for 1/4 of the policy it is still a lot less than what they are asking from me from what I’ve already paid.  I don’t understand how if I do not provide them with bank statements how they can demand the full £121.24

Ask them to explain how the £121.24 is comprised.  I suspect that it's made up of the cancellation fee plus the original premium minus a skewed refund of unused months.  That skewing isn't unusual.

bit_fuzzy

Aylesbury_Duck said:

bit_fuzzy said:

Thank you all for your replies. I cannot get the terms and conditions up as I do not have a policy with them anymore. 

 I fully understand that there would have been a cancellation fee which is £45.00 which I have no objection in paying. If I pay for 1/4 of the policy it is still a lot less than what they are asking from me from what I’ve already paid.  I don’t understand how if I do not provide them with bank statements how they can demand the full £121.24

Ask them to explain how the £121.24 is comprised.  I suspect that it's made up of the cancellation fee plus the original premium minus a skewed refund of unused months.  That skewing isn't unusual.

 They have said that it’s from insurance from 4th April till 13th of June plus cancellation fee but I’ve already made 3 payments to them. First one was admin so two payments in effect. They will not look into the payments I’ve made until I send them bank statements though which I’m uncomfortable doing. I’ve sent screen shots of the information they need but they will not accept these. 

Aylesbury_Duck

I too wouldn't want to send bank statements to a debt collection company.  The insurance company already know what you paid them and when, in any case.

You're going to have to get a copy of the terms and conditions.  If you don't have the emails or access to them any more, you should ask the insurer for a copy.  

eddddy

bit_fuzzy said:

They have reduced the amount to £121.24. I have told them that I have made 3 payments totalling £77.98, for the car insurance before I cancelled the direct debit which they have asked for my sort code and account number to show the payments. I have provided this to them as requested.

They have now asked for bank statements showing payments. I have sent them a screen shot of payments made which they say their client will not accept. As I am unhappy to provide bank statements to a company and people I do not know, they are saying that I am liable for the full amount. 

Can you clarify - is the insurance company claiming that you haven't paid anything by direct debit, so they are saying you owe a total of £121.24?

Or are they agreeing that you've paid £77.98, but they still want £121.24 in addition to that?



Also, was £230 the price for a single up-front payment? 

According tp Which, if you choose to pay monthly, you could be paying interest with an APR of up to 40%, which would add an extra chunk of costs:
See: https://www.motorfinanceonline.com/news/which-exposes-aprs-up-to-40-for-monthly-car-insurance-payments/

MyRealNameToo

bit_fuzzy said:

Thank you all for your replies. I cannot get the terms and conditions up as I do not have a policy with them anymore. 

 I fully understand that there would have been a cancellation fee which is £45.00 which I have no objection in paying. If I pay for 1/4 of the policy it is still a lot less than what they are asking from me from what I’ve already paid.  I don’t understand how if I do not provide them with bank statements how they can demand the full £121.24

Unless it's a traditional broker most firms will have their standard terms on their website, you just need to know what date you bought the policy as they change periodically. 

Did you have any optional extras like breakdown or Legal cover? As already said, those will typically be charged in full on cancellation outside of the 14 days, especially if the seller isnt the underwriter for those sections