The Great 'Car Insurance Cancellation & Administration Fee' Hunt

dunstonh

If your son cancelled within the first 14 days - it is within the cooling off period. it used to be 7 working days ( distance selling regulations)

Distance selling regs dont apply to insurance. Financial services has its own rules.

our son can complain and will get his £100 back (they could only deduct pro-rata for those 12 days that he had cover for).

They can charge for each day of cover within the cancellation rights and an admin fee.

in this case do not bother with ombudsman (unless you want to wait 2 years), but go straight to "letter before action" and tell them that if they do not refund within 14 days, you (your son) will issue a claim via moneyclaimonline without further reference to them, and that court fee will be added to the claim.

On what basis would the claim be?

rs65

malchish wrote: »

it used to be 7 working days ( distance selling regulations), but recently these regulations have been replaced by Consumer Contracts regulations, that give 14 days, starting from the day AFTER the service/goods have been received.

I have a feeling that insurance is exempt from Consumer Contracts Regs, and I don't think DSR applied either.

malchish

I see dunstonh is always at work - even on Sunday. I knew that my post will be immediately followed by him (or rather it may be a team of hard-working people on shifts). In any case, if all 76000 postas are made for free, I would question the quality of an adfvice by anyone who writes 76000 posts on internet instead of being busy doing everyday professional work.

malchish

"Financial services are generally exempt although warranties, credit agreements and insurance which are offered in conjunction with the sale of a non-financial goods or services, will still need to meet the requirements for cancellation of ancillary contracts and additional payments not being a default option,

malchish

Consumer Contracts Regulations 2013 and the application to Insurance suppliers


by Brooke Titley
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 came into force on 13th June 2014 and have limited application to the insurance industry. However, the Regulations will apply to the provision of insurance if the following occur: The service provided is received by an individual, being the consumer and the “financial service” is provided by way of an ancillary contract.
What is a “financial service”?

Generally, a financial service in the context of the insurance industry will be an insurance contract which is available with the purchase of a product, e.g. insurance that is purchased when entering into a contract with a mobile phone provider, or extended warranty insurance.
How will the Regulations apply to the financial services?

If the consumer terminates the main contract, any ancillary add-on insurance contract will terminate too.
Contracts which are terminated are generally at no cost to the consumer, unless the consumer expressly consented to such costs.
What should insurers do next?

Firstly, the insurer needs to identify how this applies to their supply chain. They may not supply these contracts directly, but do their coverholders or appointed representatives do so? Those insurers who also provide appointed representative status to affinity scheme providers should also check provisions of their relevant agreements. The insurer should also make sure that no additional payment is charged for automatically cancelling add-on insurance, unless the consumer expressly agreed the additional payment before the contract became binding. It thus needs to be agreed with those affinity providers what they intend to do if a cancellation occurs.
Secondly, if they do supply directly or indirectly, what needs to be said at the point of sale regarding the insurance, its potential for cancellation and the collection of premiums (and potential for repayment if cancellation occurs).
Thirdly, the Regulations are likely to place a new layer of reporting under coverholder or appointed representative arrangements, and all in the supply chain should be clear what needs to be reported and when. For example, if the consumer bought a car from Chrysler, and an insurance product was sold alongside, then the relevant agreement should make sure that Chrysler has to inform the insurer if the car is returned.
As a result of the Regulations, the insurer should make sure that it can be easily informed of when the main contract is cancelled, and if an additional payment is to be charged for cancellation, expressed consent is received before the signing of the contract.
Conclusion

Insurers should read Regulations 38 and 40 to ensure that their responsibilities under the Regulations are understood fully. Terms of business should make sure that the onus is on the “trader” (as defined in the Regulations) to inform the insurer of when any main contract is terminated.
This clarifies the situation. With separate car insurance the regulations may b not applying, if the insurance was purchased with the car (like, an insurance was part of the offer - ) then they do apply.

rudekid48

malchish wrote: »

I see dunstonh is always at work - even on Sunday. I knew that my post will be immediately followed by him (or rather it may be a team of hard-working people on shifts). In any case, if all 76000 postas are made for free, I would question the quality of an adfvice by anyone who writes 76000 posts on internet instead of being busy doing everyday professional work.

Whereas an anonymous "expert" like your good self should be listened to?

At least Dunstonh has declared his occupation so that people can judge for themselves if his advice is worth listening to. Maybe you could do the same so that we can judge your "expertise" in this area?

Incidentally, you are wrong and he is right.

Beancounter

My Dad's policy is with Churchill. Unfortunatly he has had to quit driving and sell his car due to Dementia.

Has anyone had any success in having a cancellation fee waived due to health reasons? I guess he will have to grin and bear it as far as this is concerned but worth asking anyway.

Current fee is £53.

dadsma

I have two questions;
Is £53 a standalone cancellation fee or is it made up from a cancellation fee plus an administration charge?

Will the balance of the insurance premium be repaid pro rata to the time remaining on the policy?

Beancounter

dadsma wrote: »

I have two questions;
Is £53 a standalone cancellation fee or is it made up from a cancellation fee plus an administration charge?

Will the balance of the insurance premium be repaid pro rata to the time remaining on the policy?

The terms and conditions on the website state it is an administration fee and the balance would be paid out minus the fee and the time since the policy was started

http://faqs.churchill.com/help/car/refunds

dadsma

The Churchill t&c's say they will 'return any premium paid less a charge for the number of days for which cover has been given and an administration fee of £53'

'a charge' may mean the pro rata premium paid for the time on cover but you need to confirm. I cancelled a policy with another insurer after 6 months. They wanted to return only 10% of the premium and wanted £40 admin fee.

I called the Financial Ombudsman who sent me some decisions on cancellation and what they say are acceptable charges. As a result of this the insurance company refunded 50% of the premium and halved the admin fee to £20.

An admin fee of £53 seems very high as they are fully computerised and only need a short time for a few clicks of a mouse to cancel and email confirmation. It may cost a pound or two to print and post a letter and cheque but not a lot.

Look at my post#243 which reports the Financial Ombudsman's view and rulings on cancellation and admin fees. May I suggest that if you cannot get a full pro rata refund for a reasonable admin fee you complain to Churchill and then to the Ombudsman.