Definition of "new customer"

Ialwaysgetdone

I posted a similar message in someone else's thread a few days ago but didn't get the answer I was looking for so apologies for asking again but I want to be sure before I buy which has to be in the next 5 days.

When I get my renewals I always phone up to say "please allow my policy to expire", then I buy again online for £50 or so cheaper.

This time when I phoned up to say that and was asked (as always) why, I said "I want to allow it to expire then buy again online from you cheaper, unless you want to match the price on your website?"

I was then told that they couldn't match the online price as I wasn't a new customer therefore didn't qualify for the 30% discount and that even if I buy it online with the 30% discount it would then be invalid since I wasn't a new customer.

I have been doing this for several years and now I am now unsure whether my insurances are all invalid.

It does say on their website that the discount is for new customers, so can anyone actually define what a new customer is?

I could be wrong but I think in the world of satellite TV Sky class you as a new customer only after a specific period of time has elapsed since you were last on their books, to prevent you taking up special 'new customer' offers by cancelling your subscription and taking out a new one.

Martin Lewis actually recommends on this site that you do what I have been doing but why have I been told otherwise by Direct Line?

Martin says - Apply for cover from your existing insurer as a new customer and it’s likely you’ll be given a cheaper price. This is because home insurers like any company will happily profit from apathy if they can. It’s for this reason renewal notifications are sent as near to renewal as possible; as then you’re pressured for time and less likely to try and find a cheaper price

*MF*

Martin Lewis actually recommends on this site that you do what I have been doing but why have I been told otherwise by Direct Line?

My 2p.

Main reason imo - Because you asked, rather than just lapse and restart. ask the question and you may get an answer - including one you don't want.

Other potential reasons - because the person you were speaking too had taken a long list of bad phone calls, because insurers are becoming more and more aware that this is happening.

The only definition of a "new customer" will be that decided by the Insurer - its their decision and it won't be universal between all insurers - ever.

But ... always remember that insurance is a contract - you make an offer to insure, the insurer then decides to accept your offer - and the deal is done when you pay the premium they ask for. UNLESS - there is an element in that contract formation where the Insurer restricts and/or makes their acceptance dependent on you being a new customer, then imo a valid contract is formed ... in this case because you asked, and if you like brought it into the formation of the contract as a material fact - and have been given the answer you got - to me it becomes cloudy, thus my initial response.

As I say - my 2p - be interested in comments from other members

Ialwaysgetdone

Thanks for your input.

Because you asked, rather than just lapse and restart

I have no option but to phone them to tell them to allow it to lapse because it's an automatic renewal, if I don't ask them to do that it comes off my card automatically and I don't really want to go to the extremes of cancelling my card.

My own thoughts are that if they wanted to prevent me or anyone else doing this then there would be a question on the application that would ask if you have had that particular type of insurance in the past 12 months from them.

I would like to be 100% sure before I buy though

raskazz

To my mind you're not doing anything wrong.

Firstly, from the insurer's point of view preventing customers from doing this would really be cutting off their nose to spite their face. The choice they are presented with is to either retain business (albeit at a lesser premium) or lose the business of that customer entirely.

As far as validity of cover is concerned, I'm positive that such action does not invalidate cover. Worst case scenario IMO is that the insurer could try to charge an extra premium to make up the difference between the discounted premium and the renewal premium.

However, you give all your information for the quote and this is sufficient for the onus of checking 'new customer' status to lie with the insurer - it would be obvious that you were not a 'new customer' from your name, date of birth, address and source of NCD. If they don't contact you to decline, I say this is the insurer waiving any subsequent rights to question the validity of the contract or vary the premium on the grounds of you not being a 'new customer'.

I'm certain that if the insurer tried to invalidate a contract on such grounds the FOS would overrule them.

As an aside, I'm not sure that Martin is correct when he says that you are 'pressured for time' at renewal. Under FSA rules insurers have to issue the renewal at least 21 days prior to renewal. This gives the customer around 3 weeks to arrange their cover.

zkw29

*MF* wrote: »

because the person you were speaking too had taken a long list of bad phone calls

I'd suggest you call back. Before you do that save your online quote and then the person you are speaking to should be able to view it. If you get it at the lower price over the phone you can be happy you're policy is valid.

Good luck

Oscar_The_Grouch

There is a loophole here; If their website will let you take the policy out and doesn't have the question "are you an existing customer of ours", there is nothing that the insurer or broker can do.

When you take out a policy, the insurer has to ask you questions that they feel are material to the risk you want to place with them; if they don't ask the question then it's not considered material.

Take the policy and if they have a go at you, tell them "it's not my fault your website is crap".

Iamthesmartestmanalive

With insurance you need to give them all the information

To me your not a new customer if you have been with them the previous year and by doing what you do you are breaking the insurance terms and therefore likely at any time to become liable for the new customer discount

Its all well people saying do it, but if you crash etc or they notice you add 30% to the cost at the very least not to mention the hassle if they decide not to pay out at all

*MF*

I am not going to change the response I gave earlier - for me this remains cloudy.

The car insurance is an annual contact - it ends. If you had a crash the day after that end date - there is nobody here believes for a second that the Insurer would pay a claim - so immediately the policy for one year ends - the OP is NOT a policyholder, he is not insured - he is NOT a customer.

The contract being formed relates to the period after that end date - so to that extent a new contract is being formed, and the OP again becomes a policyholder, an insured - he again becomes a customer.

That is why I laid emphasis on what the OP gave as an answer to why he was letting the policy expire. Had he chosen to say "I have found a cheaper quote" I don't think we would have been discussing this - at least in my opinion - if the OP had said that or something like it - then I could hear the person at DL say perhaps "we've just lost another customer".

(*) Where it becomes cloudy for me - is that the "new" contract as a "new" customer is being discussed whilst the OP is in an existing contract and is at that very moment an "existing" customer. Leave the car off the road - and uninsured, and I don't think that argument applies.

EG., (Using exagerration) - if the car was uninsured for 10 years - I don't think any of us (including DL) would see the OP as anything other than a "new" customer, change that to 2 years or 1 year, still ok, ... but uninsured for 1 day - and I am not so sure again.


But the nub of this for me at least - is not what we think, whatever that may be - it is how the Insurer calls it - which has to be related to why they, and others, use the technique to pull in "new" business - not give discounts to business they already "consider" they have on the books - but that for me, for the reasons I have given, is why I answered as I did - it's cloudy.

PS: My apologies to the OP - when I suggested earlier that you had asked - that was wrong - I meant (and therefore should have said) it was in the nature of the response you gave - which i have tried to correct in this post - sorry about that!

*EDIT* (*) This bit added later.

PPS: Sorry if I seem to have waffled on - but - with the use of cashback etc, discussed so much on this site - I think there may a serious issue in all of this - if someone had the validity of their car insurance called into question arising from just these circumstances.

Ialwaysgetdone

Interesting points MF, this is exactly why I wanted to try to find out for certain before I bought it.

The insurance I am talking about here is home insurance which is in my name and I can get round this 'new customer' thing by putting it in my wife's name and I may well have to do this. (She would be a new home insurance customer but not a new DL customer so not even sure about that either)

Here's something else to be considered:

On the online application it gives you the opportunity to have the home insurance in joint names but why? Is it so that when it comes to renewal neither of us would be 'new customers'?

Martin is advising this 'allow to expire and sign up as new customer' on this site but we don't know for sure if it's valid, the only way would be to hear from people who had done it and claimed.

My wife's car insurance renewal has also arrived now and will have to be dealt with within 3 weeks so I could do to find out for sure before that.

EDIT > I read an insurance leaflet in Tesco today which also said 30% discount to 'new customers only'

*MF*

Interesting points MF, this is exactly why I wanted to try to find out for certain before I bought it.

They say nothing in life is certain - it applies to insurance as well, maybe even more so. My concern is that the certainty in this may only be stated after a claim - and as I tried to point out it may be certainty at the behest of the particular insurer, ie., not a market certainty. I could argue a strong case (as others have alluded to on here) that the Insurers have been given information purely to advantage the Insured - and solely and knowingly to obtain an advantage on cost - is that "fraud"? tbh, I don't know, but I do know the last time to find out is after an accident.

The insurance I am talking about here is home insurance which is in my name and I can get round this 'new customer' thing by putting it in my wife's name and I may well have to do this. (She would be a new home insurance customer but not a new DL customer so not even sure about that either)

For insurance to be valid, the insured must have an "insurable interest" in the property at risk - assume from what you said you and your wife both have an interest in the house and/or contents, so unless divorce is on the horizon after a claim - should be ok - loads of married couples insure in only one name.

Here's something else to be considered:

On the online application it gives you the opportunity to have the home insurance in joint names but why? Is it so that when it comes to renewal neither of us would be 'new customers'?

Read mothing suspicious into that - it relates to what I have said above, more than one person having an insurable interest and wanting it included in the policy - not at all uncommon, and where relevant - to be advised tbh.

Martin is advising this 'allow to expire and sign up as new customer' on this site but we don't know for sure if it's valid, the only way would be to hear from people who had done it and claimed.

Disagree - there will be many claims that have been dealt with after precisely these circumstances - the claim(s) I am worried about is the first (perhaps only claim) where it is challenged by the Insurer on these grounds - it is because I cannot rule that out, that I am concerned. I will sleep tonight lol - but I think there is an issue in what you are asking.

My wife's car insurance renewal has also arrived now and will have to be dealt with within 3 weeks so I could do to find out for sure before that.

Repeating myself - I do not know how to be sure - it is cloudy.

EDIT > I read an insurance leaflet in Tesco today which also said 30% discount to 'new customers only'

Per my last post - THAT would apply to YOU at this moment, and maybe that is an answer

- find the best terms you can - and then haggle with your "existing" Insurer to beat or match it - but don't pretend you are new - because as I said (and I stress my reasoning again) while you are an "existing" customer I think it is a pretence that "could" be used against you - and not when you want it to be.

- if there is an offer which you are happy with and offers better terms because you are a "new" customer, and there is no doubt you are "new" then it is safe to take it.

Having thought about it - that is MY answer - but I would be happy to hear the views of others on this subject - those not bored to death by now, lol.

Oscar_The_Grouch

I have a possible solution; I'll phone the Financial Ombudsman Service next week and set up a new post with their response on this forum. I'll not have a chance to do so until Thursday and I propose to ask them 2 specific questions:

1. If someone allows their policy to expire and then takes up a new policy with the same insurer, would the FOS consider them to be a new customer?

2. If an insurer offers a discount to "new customers only" and their website allows existing policyholders to obtain new policies with this discount, would you consider this to be a breach of utmost good faith by the customer or poor programming by the insurer?

If anyone has any suggested changes to these questions, please post them on here and I will review them on Wednesday evening.

Please remember that advice given by the FOS when asked for technical assistance is just that; advice. Their advice is intended to give direction without a "decision", as they cannot give a full response without all the facts of a case.