Punitive Charges on Vehicle Insurance

Scott_Booker

Having just sold my motorcycle I informed the insurance firm (Bennetts), doing the correct thing legally and rather hoping that I might get a small refund. Unfortunately I was told that with over 8months of the term expired no refund was due, and I owed them £30 cancellation fee! Sure enough, it's (deep) within the policy document, but how can £30 be anything other than punitive if all they're doing is deleting the policy. They've had all the premium, paid in full at the start of the term, and I'm not asking for any administrative changes, just to stop the policy as required by law. Has anyone investigated taking this down the same route as the bank charges?

Overthetop

Thanks for your post im off to check my small print

raskazz

This gets asked a few times a week.

It does not fall under the same scope as the issue of bank charges as the insurer's cancellation or amendment fees are not penalty charges for a breach of contract.

Your best course of action is to simply escalate a complaint through the insurer's complaints process.

123oleary

if you just leave the policy in place as if you still owned the bike what would happen. surely no harm could be done as the new owner would arrange their own insurance

raskazz

123oleary wrote: »

if you just leave the policy in place as if you still owned the bike what would happen. surely no harm could be done as the new owner would arrange their own insurance

That the new owner would definitely arrange their own insurance is quite an assumption!

123oleary

well ok , what i meant is the new owner is responsible for their own insurance, the op's insurance company are no worse off if the op just lets the policy run down- they are never gonna be be exposed to a claim from the new owner.

raskazz

123oleary wrote: »

well ok , what i meant is the new owner is responsible for their own insurance, the op's insurance company are no worse off if the op just lets the policy run down- they are never gonna be be exposed to a claim from the new owner.

Actually they may still be exposed to Road Traffic Act liabilities if the new owner does not insure it. Besides, the vehicle would be showing as insured according to the Motor Insurance Database, when in fact it may not be insured by the new owner themselves.

Scott_Booker

Thanks, raskazz, I shall probably follow the complaints dept route. Incidentally the database will show that the vehicle is still insured, which means there's a possibility the new owner may have difficulty insuring the vehicle himself if I don't cancel the policy.

medman

As an update for the OP, exactly the same thing happened to me with Bennetts.

Sold my bike; cancelled my insurance and was told I would have to pay £30 on top of forfeiting the remaining premium. I told them I wouldn't pay and they would have to chase me through the courts. Having calmed down I received the demand for the insurance cert and £30 by recorded delivery. I paid it by cheque and then sent a letter to their complaints department.

Dear Sir,

I telephoned on 31 May to cancel the motorcycle insurance policy detailed at Reference A, which expires 25 Aug 08. I was informed that there was insufficient time remaining on the policy to justify any refund. A pro-rata balance of premium was at £27.66. I accepted this, despite feeling that it was a lot of money to lose when your company would not be providing any insurance cover for the remaining period.

I was then informed there would be an additional charge of £30 for cancelling. By now I protested: disappointed not to receive a partial refund I was dismayed to be charged a further £30 for not being insured. Together with the remaining premium this totalled £57.66 penalty for cancelling, which is approximately half the original premium of £117.38, which was paid in full in Aug 07.

Upon examination of the terms and conditions I found the details relating to these charges. I have now received, by recorded delivery, your letter at Reference B, requesting return of the insurance certificate and demanding the additional £30. I have reluctantly done this. However, I feel these charges are unreasonable. Under Reference C it “Causes significant imbalance”. The result of this is the detriment of the consumer and benefit the seller or supplier to an excessive degree.

It is for these reasons I respectfully request that you return the £30 fee levied, as together with the £27.66 premium with held, it amounts to an unreasonable contract that I was not able to negotiate.

While in itself the sum is only small, as a percentage of the premium I consider it extortionate and if you decline to refund the fee I will refer the matter to the Financial Ombudesman Service and thereafter persue a small claim at County Court.

Thanking you in anticipation.

Yours faithfully


The Unfair Terms in Consumer Contracts Regulations 1999

The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) provide that a term which has not been individually negotiated in a consumer contract is unfair (and hence non-binding on the consumer) if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer.
Under the Regulations, the Office of Fair Trading (OFT) has an obligation to consider any complaint made to it about the fairness of any contract term drawn up for general use. OFT may seek assurances and, if necessary, injunctions against those using terms which it considers to be unfair.


Just got my reply saying as a gesture of good will the thirty quid is on it's way!!

Consumers strike back!