The Great 'Car Insurance Cancellation & Administration Fee' Hunt

dunstonh

It's still £5 more than has been allowed by the FOS.

Its £5 more than we know the FOS have allowed but we dont know if they allow more because they have not published any examples above that figure.

oh silly me should have the read the contract,

Correct. You are responsible for what you buy and you make the choices. Who else do you want to blame?

mikey72

dunstonh wrote: »

Its £5 more than we know the FOS have allowed but we dont know if they allow more because they have not published any examples above that figure.

£55 now, then £60....
They're pushing it, so the customer should push back.
If the FOS increase the limit and publish a new figure, fair enough.
Let's ask them though.

dunstonh

mikey72 wrote: »

£55 now, then £60....
They're pushing it, so the customer should push back.
If the FOS increase the limit and publish a new figure, fair enough.
Let's ask them though.

The FOS is intending to publish more complaint decisions in future. The main aim is to show firms what is good and what is bad. At the moment the system is reliant on the FOS publications showing a limited selection and their own experience. I think that is a good idea as it will effectively set benchmarks for quality.

mikey72

I think it is an excellent idea.
If there are effective guidelines published it will stop a lot of complaints, both by reducing the needless ones, and reducing the cause for the complaints.

phh1_2

Elephant.co.uk just charged me 47.50 to cancel my car insurance, what a rip off?
Anyway around this?

waltonator

My N reg mondeo has been on SORN since early june. I had hoped to revive the old thing. No chance.

Tonight I have called Lloyds TSB (SABRE INS) to cancel the insurance as I have got rid of the car.

This must be a record reading all your cancellation quotes........ £205.20.

I have had the car insured with them for 3 years, the call center operator said that as this years insurance has only operated since 14th June they are changing the policy to emergency cover hence the high charge. I have asked to be passed onto customer complaints. This didnot occur and after going back to her team leader 3 times,the response was that the T.L. will call me some time tomorrow.
I have also told them that I am refusing them authority to take this £ from my bank account.

Does any one have any advice?:mad:

useless_git_requires_wife

waltonator wrote: »

Does any one have any advice?:mad:

cancel your direct debit and make a complaint.....ask them what their official complaint procedure is and take the full name of whoever you speak to.

waltonator

Thanks, I attempted that yesterday, funny they made it difficult to make a complaint. I have already cancelled the DD. So now returning insurance cert and writing letter to chairman.

dadsma

I hope this is helpful. I cancelled a Swiftcover car policy after 4 months. They wanted to charge me for 6 months as it was in their T&C's but after I sent them the following info they changed it to the 4 months actually used plus a £25 admin fee. If Lloyds don't respond fairly to your complaint then please do complain to the Ombudsman.

dadsma wrote: »

"ombudsman news
issue 54

July 2006

annual insurance policies – cancellation rates

Most insurance policies contain a clause giving either party the right to cancel – provided they give sufficient notice. The consumer will generally receive a pro rata refund of premiums paid, less a cancellation charge. This charge will often be greater if the policy is cancelled during its first year than if it is cancelled later, because insurers want to cover the cost of setting up the policy.

In the complaints referred to us involving cancellation of annual policies, consumers generally accept that the firm may wish to make some charge to cover the costs incurred in cancelling a policy. But they often query the firm’s approach if it fails to offer them any refund at all – or if it offers substantially less than a pro rata calculation of their premiums.

In assessing such disputes we are guided by the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR) and by the statements on unfair contract terms made by the Financial Services Authority (FSA) in its publication ‘Challenging unfair terms in consumer contracts’ (available on the FSA website

The UTCCR state that ‘ a contract term that has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the consumer’.

Schedule 2 of the UTCCR sets out an indicative and non-exhaustive list of terms which may be regarded as unfair, including Term (d): ‘Permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract.’

In some policies the cancellation clause states that if the firm decides to cancel a policy at any point during the period of insurance, it will refund some of the premiums already paid – on a pro rata basis. However, if the policyholder cancels, then the firm retains all the premiums already paid, or refunds a smaller proportion than if it had itself cancelled the policy. "

The FSA statement specifically refers to terms that charge policyholders a disproportionately large sum if they do not fulfil their obligations under a contract, or if they cancel it.

We share the view that giving consumers the right to cancel – and then penalising them financially for exercising that right – is likely to be unenforceable in law, as well as unfair and unreasonable.

In cases referred to us, if a customer has cancelled a policy and received a significantly smaller refund of premiums than could be expected as a pro rata settlement, we will ask the firm to explain how its approach complies with the requirements under the regulations.

It is not usually unreasonable for the firm to recover any additional administrative costs it incurs. Nor is it usually unreasonable for its charge to reflect the costs it necessarily incurred in setting up the policy – and that will not now be spread over the assumed lifetime of the insurance.

Similarly, the provision that premiums for an annual contract are not refundable if a claim has been paid does not appear to be unfair.

We recognise that there may also be seasonal or other features of the policy which could justify different approaches to refunds. And we recognise the more fundamental point that under some policies, both the risk and the insurer’s potential liability may be higher at the outset of the policy than at the end – so the premium calculation will reflect this.

But in any event, it is important for the firm to have fair reasons for its approach to premium refunds – and for it to explain its approach clearly to the customer.

In some circumstances, regulatory rules require ‘cooling-off’ periods for contracts. We would expect firms to make particular provision for these periods, as it is important that cancellation rights are not restricted by unfair charging practices. For example, the Insurance Conduct of Business rules require insurers to allow a cooling-off period of 30 days for pure protection contracts. If a customer decides to cancel the contract during this period, insurers are not entitled to charge anything.

Complaints about refunds under payment protection policies – and under other policies that are not renewable – require us to consider some additional factors. We hope to comment further on this in a future edition of ombudsman news.

case studies

insurance policies – cancellation rates

54/4
Cancellation of motor insurance by policyholder – whether firm correct in refusing any refund of premiums:

Mr A took out the firm’s standard motor policy in February 2005 and paid the annual premium in full. Five months later, he decided to sell his car as he no longer needed it. However, when he returned his policy to the firm, it refused his request for a refund of some of the premium.

The firm said that if it cancelled a policy, then it would normally make a pro rata refund of the amount the customer had paid. However, when a customer cancelled the policy it did not refund any premiums if the cancellation was made four or more months after the start of the policy. When the firm rejected Mr A’s complaint about this, he came to us – saying he thought the firm was ‘grossly unfair’.
complaint upheld
We asked the firm for a copy of the policy conditions. These included the following:
‘cancellation by us ... If you return your certificate… to us we will refund the part of your premium which applies to the period of insurance you have left. If we cancel this insurance because you have not paid the full premium, we will work out the refund using the rates shown below. We will not give you a refund if anyone has claimed in the current insurance period.
cancellation by you If you have not made any claims in the current period of insurance, and you are not going to make a claim, we will work out a charge for the time you have been covered using our short-period rates shown below. We will refund any amount we owe you.
Period of time you have had the cover

• one month - refund up to 70%
• two months - refund up to 60%
• three months - refund up to 50%
• four months - refund up to 40%
• more than four months - refund 0%

Any refund made to you for any reason above will only be provided if your annual premium per vehicle exceeds £150.’

We asked the firm to explain why it had made these particular conditions. It said its main concerns had been to discourage customers from cancelling their policies and to recover the costs it incurred if they did so.

We then asked the firm how its costs could be so large as to justify its making no refund at all to customers cancelling more than four months after taking out a policy. The firm was unable to do this.
We concluded that the policy condition was unfair and contrary to the UTCCR. So we told the firm it should make a pro rata refund, after deducting a reasonable administration fee."

gatita

I informed Hastings (DON'T use them!!) that I had sold my car. The policy had two months left. The total cost of the yearly policy was £134 paid in one payment.

I received a letter informing me that I owed them £32!!!

Total cost of premium £134.41

Cancellation cost £ 55.00
Insurer return premium £ 22.09

Debt owed to THEM! £ 32.91 Thieving barstewards.

HOW are they allowed to get away with this extortion. & what price honesty? if I hadn't have told them they would be non the wiser.