The Great 'Car Insurance Cancellation & Administration Fee' Hunt

iNath

I've added Yes to the first post and will look up the other companies within the next few days.

tobiascurious

Thanks iNath, I hope you find them easier to find than me

Quentin, I still think there's a good chance that each of those BISL brands have the same fees. Different amendment types might incur different fees though, which might explain the slight differences in the (minimal) data on BISL brands in the OP.

zulumalanga

THEY ALL ADD FEE'S IF YOU CANCEL YOUR CAR POLICY. DUH!!!!!!

The bottom line is why shouldn't they. They have to do the work for the adjustment. Duh!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

WAKE UP !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Had my rant for the day...

br1anstorm

Well done to the OP for assembling and updating this thread. I found it when looking for info after having been burned by (one of ) my insurance brokers.

General comment: I'm surprised that the regulatory authorities don't set maximum amounts (or percentages) for admin fees. The approach of some companies and brokers - as illustrated by this thread - gets close to sharp, or indeed shark, practice. It's a bit like having extortionate "arrangement fees" for mortgages.

I'm not vexed about cancellation charges, where it's reasonable to calculate a pro-rata amount for time on cover and also recoup appropriate admin costs. And if there is an amendment to the nature of cover (3rd party to comp, or change from small car to big) then an extra cost is to be expected.

My issue is with admin charges. Intermediaries get commission from insurers anyway, which should go towards covering costs and providing a profit margin. If they add a policy-admin element on to the quoted total premium, well OK up to a point - at least you can compare costs and know what you're paying.

But when brokers add a substantial admin element into the quoted premium, and also make hefty charges for any subsequent amendment, this gets into rip-off territory.

Look at the facts in this case - and it adds Sureterm Direct to the master list...

Actual premium inc IPT payable to underwriter £89.25
Sureterm charges for broking, processing, print & staff costs £75.66
- giving a total annual 'premium' of £164.91

So the admin overheads are equivalent to almost 85% of the actual insurance premium, and about 45% of the total amount I paid for annual cover. Already that's a pretty mighty mark-up for a routine and low-risk policy (I have 35 yrs clean driving record, NCD etc, and this is not my main car).

And then.... I changed the registration plate, and informed them. My other insurers have made similar amendments in the past without charge. Sureterm said there would be a charge of £30! On top of what they had already taken to cover the admin, this seemed more than a little steep.

Turns out that their small print is less than precise, but it does say that for changes, a charge "will be applied - but will never exceed £100". A hundred pounds!
So should I consider myself fortunate to be charged only £30?

I challenged this, and we settled after some haggling, on £15. I still feel ripped off, and won't be renewing with Sureterm anyway. So be warned...

This ain't so different really from the extortionate bank admin charges about which MSE Martin campaigned so successfully. Maybe it's time for another similar campaign on insurance admin charges?

poodlesmcnoodles

Hi all
I'm waiting for Budget to call me back to see if they will reduce their cancellation fee of £125.75! and an admin charge of £35!! Last week I changed my policy (which I thought meant cancelling the old one & getting a new one, with 14 days for cool-off, but no, it's just a change according to them)
Thay had insured my saab for about £270 & my new 03 Subaru bought a week ago went up to £555 which I foolishly accepted.
They are charging me a %age of my NEW premium (that I've had for a week) as the policy runs til October.
Can anyone advise me of any snappy answers/points I can make?
cheers
ps hope I've posted this in the right place

poodlesmcnoodles

I forgot to say, I found a quote for £235 for my Subaru. The Budget guy took all my details again & said the cheapest he could do was £555.
Then I noticed one of the quotes (on 'motley fool' )was from Budget, with a quote of £283! He said he'd get back to me.

dunstonh

'm waiting for Budget to call me back to see if they will reduce their cancellation fee of £125.75! and an admin charge of £35!!

The £125.75 is not a cancellation fee. That will be a charge for providing the insurance. The cancellation charge is £35 and well under the £50 that the FOS generally consider as acceptable.

poodlesmcnoodles

Thanks Dunstonh
I'm still waiting for my call back from Budget, but think a total charge of £155 is extreme - would you agree? I don't owe them anything in terms of intalments - all up to date - I was told I'd be charged this for cancelling my policy
cheers

dunstonh

but think a total charge of £155 is extreme

You have to break it down though. The charge is £35. Thats well within what the FOS consider acceptable. The provision of insurance is £120.

Your problem is that insurance isnt pay as you go. You pay for a year and if you cancel mid term you will get a refund. However, that refund is not exactly pro rata. i.e. if you cancel after 5 months you wont get a 7 month refund. It will be closer to 5 months or 6 months if you are lucky.

Those that pay monthly have the added issue that the insurer is paid up front and its a credit agreement that is used to pay the monthly premiums and the monthly cost may not tie in like for like with the period of cover. So just because your monthly premiums are up to date, doesnt mean you dont owe them anything.

This is why you are always told to not change insurance company mid term unless you really have to.

poodlesmcnoodles

Hi Dunstonh
cheers for that advice it will help me talk to them today