Car insurance company, are they entitled to claim this..?

Vimes

Hello

My son was involved in a RTA, nobody was hurt, which involved his vehicle being assessed as a right off. No third party was involved in the accident.

He received a settlement from the company.

His policy was about six months old and he was paying it by monthly instalments. After he got his settlement he decided to use another car temporarily, which they swapped over his insurance without a problem.

Then he decided to get a van rather than a car. The company that he was insured with did not cover vans and so he cancelled his policy and took insurance out elsewhere.

Now he has received a letter from his first insurance company demanding the balance of the money that he owes, even though he had cancelled the policy.

I realised that he agreed with them to pay for 12mths as they agreed to provide cover as well but is he then obliged to pay for the balance of that policy when he cancelled it due to them not being able to insure his van...?

If he had kept the temporary car he would have been ok as the policy would have been in use for the vehicle that he was driving.

raskazz

Yes, they are quite entitled to do chase the full annual premium.

It is a standard policy term that if a total loss claim is submitted then the full annual premium is due, regardless of whether the policy subsequently runs its course or is cancelled.

They are under no obligation to let cover continue after the total loss in any case, they were only doing it on the temporary car as a courtesy.

Vimes

Thanks for letting me know, I appreciate your prompt response, even if it wasn't what I wanted to read, but rather suspected

Paul_Herring

As a side note, even if there hadn't been a claim, any refund is rarely based pro-rata on the number of months left to run. (e.g. cancelling 6 months in will result in a refund of no-where near 50%)

mattymoo

A lot of insurers will deduct outstanding premium from the total loss settlement as well.

Essentially, son pays £240 a year to insure a car. Say they pay £6k for that car in month 1, they have fullfilled their part of the bargain (the contract) and now want the other £220 from your son.

Figures are made up and probably wildy inaccurate btw.

lisyloo

cancelling 6 months in will result in a refund of no-where near 50%

Normally yes, but I think where it is a "forced" cancellation i.e. they will not provide cover then you can get fair terms e.g. 50% fee for 50% use.
This is because it's their "fault" you have to leave and not yours.

DaisyFlower

If it was a "forced" cancellation, then you would have got a pro-rata refund - but only if there have been no claims where payments were made.

Vimes

What my son was sad about is that whilst he had the temporary car they recognised that the car that he was using did not mean that the cost of insuring it would have increased his monthly payments. So if he had kept that car he would have met those monthly payments and had a vehicle insured.

By buying a van he was forced to then cancel his policy, a pity as he now seems to be compelled to pay them the rest of the premium without the continued use of the balance of the original insurance.

qazitory

I think the lesson is to check with your insurance company before buying any vehicle - I had to do the same when I upgraded from a 1.1 to a 1.8 engine car. My first insurance company would not insurance, so I had to change. Although I was warned, if I had made a claim I would have had to pay the entire year in full.

Vimes

You are right, of course
Sometimes it is knowing the right questions to ask in the first place and, with my son, there was that much going on, which included a total mess up of his hire car by the insurance company, that it has only been after a couple of months that he has just had a bill for the demand of the claimed outstanding balance.
On reflection if he had known the consequences he might well have kept a car for the balance of that policies duration, as he could not afford the cost of paying for two policies, oh hum...!!!

dunstonh

lisyloo wrote: »

Normally yes, but I think where it is a "forced" cancellation i.e. they will not provide cover then you can get fair terms e.g. 50% fee for 50% use.
This is because it's their "fault" you have to leave and not yours.

This happened to me recently when I replaced my car with a new one that had just been launched. I was with Screentrade and they didnt have the car on their list and as there was no model to compare it to in the Audi range the underwriters refused to offer cover with the reason that it is a high risk model and they havent assessed it yet and werent prepared to make an manual underwriting decision. Because they were unable to offer cover I got an exact pro rata refund (well, exact to the month rather than day) and no admin charge.

I was quite pleased with that result.