cancellation charges by insurers

cliochick

Does anyone know how you avoid cancellation charges from insurers? I've recently changed over insurers to much better deals - and lower, using MSE, but have been charged for cancellation of the old policys?

Quentin

You will avoid paying the charges if you complete the period of cover you have been provided, and contracted for.

You will have agreed to pay cancellation charges if you cancel your policies when you first took them out.

Insurance_Advice

Quentin is correct. Insurance policies are generally for a 12 month period and unless you can make substantial savings (taking the cancellation fee into account), it is not worth cancelling and renewing with someone else.

Insurance does not work the same as e.g. your electricity supplier, whereby you can change after 28 days with no admin charge, you will more often than not be charged for amendments or cancellations in respect of your motor insurance and this charge can vary from £25 to £50. Some of the better insurance companies will allow a fourteen day cool-off period from inception, whereby you only incur a minimal charge, such as the Direct Line group of companies and Esure,

dunstonh

The charge is one of the reasons brokers wait until renewal to shop round.

This charge has been tested in complaints to the FOS and they have ruled in the favour of the companies on figures upto £50 (as an admin fee) and a fair pro rata deduction on the annual premium.

The charge is not deemded to be unfair or unlawful.

Sturdy

You are entilted to cancel within the first 14 days which is the cooling off period which is applicable to most insurance contracts.

Insurers premiums are based on there being a minimum contract period; with shorter contract period deemed to present a higher moral hazard.

If you are lucky you may be quoted a short rate scale refund which takes into account the insurers additional exposure and administration costs. Normally this is only offered in exceptional circumstances - and generally not just because you found better terms elsewhere.