Stupid People Budget - Car Insurance

nomeansno_2

raskazz wrote: »

Or to look at it another way, they are doing exactly what they said they would do (a) in the contract and (b) in the renewal notice. Did you read the renewal notice? If not, whose fault is that?

Deja vu. This Behaviour is not morally acceptable from a major consumer financial institution, just because it is written in a contract.

And actually no, I didn't even see the renewal notice, since I was resident abroad at the time.

stugib

nomeansno wrote: »

Deja vu. This Behaviour is not morally acceptable from a major consumer financial institution, just because it is written in a contract.

You agreed that you'd pay them once a year until you told them otherwise (automatic renewal).
When renewal came round you didn't tell them otherwise so a new policy started.
You didn't pay for the new policy so your policy was cancelled and you incur the cancellation fees.

Where's the problem?

raskazz

stugib wrote: »

You agreed that you'd pay them once a year until you told them otherwise (automatic renewal).
When renewal came round you didn't tell them otherwise so a new policy started.
You didn't pay for the new policy so your policy was cancelled and you incur the cancellation fees.

Where's the problem?

Exactly. The insurer seemingly cannot win in this case. Imagine for a moment that the insurer did immediately cancel a policy due to Direct Debit mandate cancellation, without any verbal or written instruction from the policyholder. The policyholder returns from abroad to find a burned out car on his driveway, rings the insurer and is told that they cancelled the policy contrary to what was actually agreed and specified in the contract. The customer and the FOS would have a field day.

nomeansno_2

raskazz wrote: »

Imagine for a moment that the insurer did immediately cancel a policy due to Direct Debit mandate cancellation.

??? They did

losgiganteskid

raskazz wrote: »

Exactly. The insurer seemingly cannot win in this case. Imagine for a moment that the insurer did immediately cancel a policy due to Direct Debit mandate cancellation, without any verbal or written instruction from the policyholder. The policyholder returns from abroad to find a burned out car on his driveway, rings the insurer and is told that they cancelled the policy contrary to what was actually agreed and specified in the contract. The customer and the FOS would have a field day.

A mid- term cancellation by the insurer due to the non-payment/collection of a premium instalment is not quite the same senario as the OP's original gripe appertaining to an auto renewal for which he either did not grasp the significance of when effecting the policy or failed to understand at renewal that his/her premium would continue by virtue of silence.

It's a weird concept - when I studied law (many moons ago) - it was always drummed into us that "silence is no acceptance". I'm sure most laymen/women would consider the motor insurance contract an annual one, whereby you agree the premium required for a set period ie 12 months - then decide whether or not you wish to renew when the renewal notice arrives.

I can see for and against on both sides of the fence.

nomeansno_2

losgiganteskid wrote: »

A mid- term cancellation by the insurer due to the non-payment/collection of a premium instalment is not quite the same senario as the OP's original gripe appertaining to an auto renewal for which he either did not grasp the significance of when effecting the policy or failed to understand at renewal that his/her premium would continue by virtue of silence.

It's a weird concept - when I studied law (many moons ago) - it was always drummed into us that "silence is no acceptance". I'm sure most laymen/women would consider the motor insurance contract an annual one, whereby you agree the premium required for a set period ie 12 months - then decide whether or not you wish to renew when the renewal notice arrives.

I can see for and against on both sides of the fence.

Finally, a comment that doesn't effectively say "it's your fault for not being as clever as me". Consumers should not have to be clever in order to avoid being fleeced by their insurance company.

I think the essence of my complaint is at least partly that one would normally expect a cancellation fee to be applicable during the first 12 months of cover; one would certainly not expect it to be applicable when NO cover has been provided by an automatic extension, that was simultaneously terminated, subsequent to either a contractually incorrect cancellation attempt or financial distress.

nomeansno_2

raskazz wrote: »

When a mandate is cancelled without explanation then the insurer cannot differentiate between those who have cancelled the direct debit to seek cover elsewhere or those other situations where the insured actually requires the cover to continue, but for whatever reason has had problems with their bank or with making the payment. It's pretty fundamental that the cancellation of a payment is not equivalent to cancellation of a contract.

As you say, the insurer has no way of determining the circumstances under which the DD was cancelled. It will therefore offer to reinstate cover (probably backdated) if the premium is received within a specified time. This will allow people who really wanted automatic renewal to receive continued cover. However, this offer will clearly be of no interest to a consumer who has cancelled the DD in an attempt to signal rejection of automatic renewal. Likewise, the consumer will be unable to accept the offer if he is in financial difficulty and simply can't afford the premium. These people are then given the choice of either paying a complete annual premium for cover that they do not want, or of paying an outrageous cancellation fee for a zero-length period of cover.

nomeansno_2

nomeansno wrote: »

As you say, the insurer has no way of determining the circumstances under which the DD was cancelled. It will therefore offer to reinstate cover (probably backdated) if the premium is received within a specified time. This will allow people who really wanted automatic renewal to receive continued cover. However, this offer will clearly be of no interest to a consumer who has cancelled the DD in an attempt to signal rejection of automatic renewal. Likewise, the consumer will be unable to accept the offer if he is in financial difficulty and simply can't afford the premium. These people are then given the choice of either paying a complete annual premium for cover that they do not want, or of paying an outrageous cancellation fee for a zero-length period of cover.

Budget could chooses not to charge a cancellation fee under these circumstances. I think it is clearly unreasonable that it makes the choice that it does. As I have previously said, the benefits of automatic rernewal are generally considered to be:

Lazy and/or forgetful policy holders are ensured continuity of cover, and the insurer benefits from and exploits customer inertia, gaining default business with uncompetitive renewal premiums.

It seems that Budget seeks to extend its benefit beyond this expected norm, and make additional money out of (possibly financially distressed) lost customers.

raskazz

nomeansno wrote: »

??? They did

Did they 'immediately' cancel the policy? Are you saying that no other correspondence was sent other than the renewal notice? No letters at all in respect of the DD cancellation? I find that hard to believe, personally.

raskazz

nomeansno wrote: »

These people are then given the choice of either paying a complete annual premium for cover that they do not want, or of paying an outrageous cancellation fee for a zero-length period of cover.

They do have the other course of action - that of taking responsibility to read their renewal notice and policy documentation and taking the appropriate action - i.e. calling or writing to the insurer to decline the renewal.