Insurance Cancellation?

hellokitty08

Hello,

I have spent an hour this morning looking throught this site trying to see if i could find an answer to my question, and whilst i found some similar i could not see any cases the same. However please forgive me (or direct me to the relevant post) if there has already been an answer to the same question.

I have just phoned to cancel my bike insurance policy, for which i paid the full 12 months upfront. Now if dont mind at all that i paid this for 12 months and actually only used 9 months and therefor do not mind getting no money back on the policy, however i was a little confused when the insurance company then said i would have to pay them £30 to cancle the policy.

I enquired as to what this charge was for, assuming that they would say to cover administration, however the person i was speaking to on the phone simply stated it was a penalty for leaving the policy earlier. I do not understand how this is possible. Surley they can't justify charging me this fee as a penalty? Im a little bit miffed as this is 1/3 of the price of my total policy.

So i actually paid £100 for 9 months cover instead of 12, (effectively paying them for three months for nothing, which im not to bothered about) and then they want to charge me nearly a third of this as a penatly on top for cancelling early? im so confused as that seems to make no sence to me at all!

I would appreciate it if any could suggest what to do as i can not see a post where anyone else has been so blatently told its just a penalty fee and when the policy holder has already paid the 12 months unfront.

Thanks

lisyloo

Have you asked them whether any return premium is due? i.e. for the 3 months you haven't had.

If there is some return premium, it might wipe out the fee.

My understanding is that penalty fees are illegal but admin charges are not so I'm suprised they aren't calling it an admin fee.

I would clarify the situation with any return premium and then ask them to put what they said in writing to you.
If I am right and penalty fees are illegal then you will have a better leg to stand on if you have it in balck and white.

Have you also cheked your contract to see what it says about cancellation?

hellokitty08

Hi,

My documents state that they charge a £30 cancellation fee, but it does not state why or what it is for. It also says you do not get anything back if you have had cover for 8 months or more.

I am awaiting to see what they put in writting, but was just shocked when the person on the phone stated it was just a penalty.

dunstonh

My documents state that they charge a £30 cancellation fee, but it does not state why or what it is for.

It is a cancellation fee. That is all it is required to say. Anything upto £50 is considered acceptable by the FOS.

bob80141

Had insurance from Budget. My advice - OK while you want nothing but car insuance. Support is Garbage !
Got a new car could not tax it for 10 days becausae they could not get a covernote or insurance documents out for the post office. Nowich Union to the rescue - 7 days free drive away insurance.
Budget charges me for swapping the car, did not mention the 7 working days to get the documetnaion. So hacked off with them attempted to get a re-fund on the reaminder of the term. "Sorry sir, the short term fee (of ninty seven pounds) is so much that it is actually cheeper for you to stay with us"
Over an hour on the phone and all I was able to get was "sorry sir"
Customer service is woth a lot - if you value it do not touch Budget

hellokitty08

hurm, the pliot thickens! I got my paperwork yesterday and the £30 charge is an outstanding balance premium. I dont have an outstanding balance as i paid annually. I am even more confused now. Do i have a leg to stand on if i don't pay it?

lisyloo

You would have an outstanding balance if they added on a £30 cancellation fee.

Do i have a leg to stand on if i don't pay it?

It doesn't sound like you have a case to me.
The £30 fee is "reasonable" for cancellation (as far as the law is concerned).
This fee was stated in your documentation as well as the fact that there was no return premium after a certain point.

You might have been unlucky in the way things have turned out but you should have read these documents when you got them and rejected the policy if you didn't like the terms.

It does actually cost companies to do admin, send out letter etc, there are printers, paper, envelopes, postage, storage, staff, telephones, computers, rent, electricitry etc. that have to be paid for.

I think you have been a bit unlucky but I don't think you have a case and my advice in future would be to check the policy upfront. Preferably do this before you take the insurance ( as it saves hassle cancelling and getting refunds), but if for some reason this is impractical then you have a 14 day period in which to check the documents.
A lot of companies these days have their polciies in pdf format downloadable from the web, so if you can do it upfront you will avoid the hassle of trying to get a refund which can occassionally be problematic.

hellokitty08

Thank you very much for your reply. I will make sure that i check all my documents in more detail in the future. I am still a little bit shocked that they can do this, but then at least I will be more prepared in the fututre.

lisyloo

I am still a little bit shocked that they can do this

In order to be competitive they are stripping out all non-essential costs from the initial premium e.g. admin costs.

It's a bit like Easyjet charging people extra for luggage.
It means that the people that use the service pay rather than spliting it across everyone.
Looking at it objectively I think that's fairer.

It's not something that has been widely announced so lots of people have got caught out, especially people who don't spend much time reading their contracts.

There are two ways round it.
One is to do a lot of legwork yourself and check each policy on the web.
Alternatively there is a guide that has been created (I have no connection) called Matthews guide. Parts of it are free but some information if £1.99. There is also a legal cover offer.
It's at www.matthewsguide.co.uk.
I generally like to check things myself but I think a number of people have found it useful.

pompeyrich

Probably a stupid idea but couldn't you just keep the policy going for the remainder of the period and not renew it ? You wont get any thing back as per their t&cs but wouldn't be liable for the cancellation fee either.