Car Insurance Cancellation

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82114517#Comment_82114517

1st central are a broker, so what price you see on a comparison site today with a correct declaration is broadly irrelevant as you cannot say which of their panel are being presented for the price. Once you have bought from a broker you are locked in to both the broker and the underwriter so any subsequent changes are based on that underwriter alone not the whole panel. So underwriter A may be cheap for someone with a clean slate and underwriter B cheap for someone with an adverse claims history. You quote without the claims then you will be sold a policy from A not B but when you finally come clean you get A's pricing for a policy with a claim whereas if you go back to the website you now see a quote from B because they are cheaper than A for people with claims. From the website however they are all just quotes from the broker.

There are a cohort of brokers who seem to have developed the model of quoting low, then going through the quote with a fine tooth comb and charging an AP if any errors are present. Certainly some of the APs seem disproportionate after taking off the £50 admin fee charged. In my opinion the Ombudsman didnt use to take these complaints too seriously seeing pricing a commercial activity and obviously seeing the consumer has made the problem by being careless. These days they are challenging more and there are several cases where the consumer won by default on the grounds that the broker simply didnt bother answer the FOS' request to justify the premium increase but its not a slam dunk, there are still cases where the AP is challenged and the FOS dont uphold the case.

You should have had the option to cancel the policy of your own accord and just pay the AP in relation to the time on cover and any cancellation fee but without hearing the call or reading its transcript its not possible to say how this has come about. As explained multiple times I can see circumstances where an agent could interpret the situation as a refusal to pay and so insurer lead cancellation. Having done a decade in contact centre (in insurance and other industries) I'm aware of the vast range of callers out there and how conversations can be misunderstood by the participants.

TheGreySection

https://forums.moneysavingexpert.com/discussion/comment/82114989#Comment_82114989

I mean you are all free to look at CIDRA, FOS guidance and previous decisions yourselves so you are well informed (to the extent you are not already) before commenting.

Your interpretation of the law is entirely incorrect. You're quoting the wrong paragraph of CIDRA.

​Paragraph 7 of Schedule 1 is what applies during a claim (proportionate reduction). However, for mid-term non-disclosures where no active claim exists, Paragraph 9 of Schedule 1 explicitly governs the treatment of the contract for the future:

1. ​Paragraph 9(4)(a): When a careless misrepresentation is discovered mid-term, the insurer can give notice that they will apply changed terms or a higher premium to future claims.
2. ​Paragraph 9(6): Crucially, the statute states: 'If the insurer gives notice to the consumer under sub-paragraph (4)(a), the consumer may terminate the contract by giving reasonable notice to the insurer.'
3. ​Paragraph 9(7): It goes on to specify that if the consumer terminates under this paragraph, the insurer must refund any unused premium.

​The law explicitly grants the consumer the right to reject an insurer's notice of higher terms and terminate the policy themselves. 1st Central offered modified terms (£290 extra), and I exercised my statutory right under Para 9(6) to terminate.

​If you want to read a direct FOS precedent where an ombudsman applies this exact statutory mechanism, look here: https://www.financial-ombudsman.org.uk/decision/DRN1974131.pdf.

• ​The FOS Ruling: The Ombudsman explicitly references CIDRA Schedule 1, Paragraph 9(4), 9(6), and 9(7).
• ​The Ombudsman's Verdict: The Ombudsman confirms that under CIDRA, when an insurer demands an additional premium for a careless misrepresentation mid-term, the customer has the statutory right to cancel the policy, and the insurer cannot treat it as an insurer-initiated cancellation or penalize the customer.

​The motor liability aspect under the RTA doesn't override CIDRA Schedule 1 Para 9. When an insurer gives notice of a recalculated premium and the customer says 'no thanks, cancel it,' the statute defines that as a customer-initiated termination.

TheGreySection

https://forums.moneysavingexpert.com/discussion/comment/82115028#Comment_82115028

See above. I don't see how a refusal to pay an additional premium and request by me to cancel the policy can be deemed to give 1st Central the ability to cancel the policy in accordance with the regulations.

MyRealNameToo

Your contractual terms allows them to apply the premium for the time on cover, at least on the policybook I saw. So you dont have a choice about paying the extra for the time before the cancellation took effect. This part of CIDRA is much more about protecting their interests not yours, it replaced the prior ABI agreement which was more lenient and in the claims circumstances would only bite if the non-disclosure was relevant to the loss.

As i say however, we are going deeper down the same rabbit hole which cannot be definitively answered without the call recording/transcript. I can see how it could be interpreted as a refusal to pay and you disagree. Not sure the point of continuing to repeat the same circle.

flaneurs_lobster

The OP has now demonstrated a comprehensive knowledge of the Regulations and previous decisions by the Ombudsman (or, at least, competent cut'n'paste skills).

Given that they have now taken a position where any contrary opinion to their own is described as "unhelpful" or "scaremongering" I'd suggest that any further contribution to this thread which does not agree with the OP's position will simply give rise to further comment by them as to why they are right and everyone else is "mistaken".

TheGreySection

https://forums.moneysavingexpert.com/discussion/comment/82115116#Comment_82115116

I am open to be shown to be mistaken by reference to the actual regulations, FOS guidance or previous ombudsman decisions but I can't see anyone has offered anything in that regard. Feel free to point me in the direction of someone that has.

I don't think it's unreasonable to challenge people's uniformed conjecture by reference to the regulations etc is it?

TheGreySection

https://forums.moneysavingexpert.com/discussion/comment/82115108#Comment_82115108

I understand they can apply the premium for time on cover. My concern is their assertion they cancelled the insurance not the backdated premium payable.

I have evidence they offered increased premium and that they gave no notice of cancellation (which they would have had to do to validly terminate where not a reckless misrep) which may be evidence enough. I was also on the call so know what was said. But yes, as mentioned I've made the DSAR re the call and complaint so will see what they say.

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/82115132#Comment_82115132

I rest my case.

TheGreySection

https://forums.moneysavingexpert.com/discussion/comment/82115165#Comment_82115165

Another helpful comment!

Glad you will all be far better informed on this subject next time someone on the forum needs help on this.

You're welcome.

MyRealNameToo

Regs are only one part of the picture, policy terms are another and we are considering the FOS then industry practice also come into play plus as they used to point out a lot, they arent bound to come to the same conclusion as a court of law would but instead are legally bound to find fair outcomes (to both the consumer and the company).

That isnt to say policy terms can override what the law states but they can supplement it… for example the law says you must have a cooling off period but is silent on any cancellations after that and doesnt talk of the cost however most policies extend your right of cancellation beyond 14 days plus add on top the fees you have to pay.


CIDRA gives them the right to reduce claims payments, it doesnt prohibit them from having terms that the AP is due. The carve out for premium changes doesnt stop a contractual term adding it back in.

There is no statutory requirement for notice for cancellation of a policy. The 7 days is a bit of relic from the repealed S147(4) from the RTA which required the return of the certificate of insurance within 7 days but thats no longer required.

ICOBs and Customer Duty arent prescriptive on the matter either, they talking in generality of being fair which is generally interpretted as giving the customer time to receive the notice and arrange alternative cover. Obviously if this is post you have 2-3 days just for the notice to arrive but clearly if its on the phone the notification is instant.

There are potentially various problems with their terms but as drafted one of the potential remedies they are claiming is the ability to cancel without notice for an unintentional non-disclosure. If the FOS consider this reasonable or enforceable is another matter.


I personally wouldnt buy a policy from them, I dont want to appear as defending them, all I am saying is the chances of winning a FOS complaint isnt 100%