Charged for cancelling new insurance?

Triggles

We changed our car insurance policy as we moved. This resulted in an increase in premium, which is fine. But I didn't realise that this also resulted in a £25 charge just to change our details and change the policy. This wasn't explained clearly when I spoke to the person on the phone yesterday. Today I received the policy documents, and it clearly shows the £25 charge. So we decided to go with a different company, which we had been thinking about anyway. We called our car insurance company back this morning and said we wanted to cancel the changes we had made yesterday afternoon and cancel the policy altogether. They are now saying that we will still need to pay £81 commission on the policy. Aren't we allowed a certain amount of time grace period to cancel a policy - like 7 days or something? I can't believe we're getting hit with £81 commission on something less than 24 hours old!!!! :mad:

dunstonh

Seems quite fair and logical.

Car insurance is an annual premium and you should really only change it at renewal. Not ad-hoc in between (unless you can save money greater than the cancellation costs and you dont need the year for your NCB).

Aren't we allowed a certain amount of time grace period to cancel a policy - like 7 days or something?

You have a cancellation period on commencement but not on amendments. The change of address is a factual event so you cannot undo that.

You are also not being hit with £81 commission but £81 premium for early cancellation. The refund of the annual premium doesnt have to be exactly pro-rata although it has to be fair. If you pay monthly then you have a credit agreement so the cost of cancellation mid term may be higher than had you paid up front.

Your error has been changing mid term. You should have waited until renewal. You now need to decide if its cheaper to cancel the new policy and keep the old one running until renewal.

Triggles

Yikes. Obviously I was spoiled by the car insurance I had in the US, as I was never charged for amendments to the policy. I can't say as I am quite in agreement with it only being able to be changed when it's up for renewal, but I guess, again, that's coming from a US mindset where it's not such an issue and car insurance is routinely set up as a monthly payment, so the "renewal" thing is not a big deal.

While I obviously don't agree with how this is done, apparently I'm stuck with it. How annoying. :mad:

dunstonh

I can't say as I am quite in agreement with it only being able to be changed when it's up for renewal, but I guess, again, that's coming from a US mindset where it's not such an issue and car insurance is routinely set up as a monthly payment, so the "renewal" thing is not a big deal.

UK car insurance is an annual contract that is paid annually. Those that choose to pay it monthly do so by using a credit contract.

There has been pressure on companies to be more explicit in their charges. In the past, the premiums were higher but the amendment fees either didnt exist or were tiny. Nowadays, the premiums are lower (so more people gain) and you only pay amendment fees when you make an amendment. A much fairer way of doing things.

Ialwaysgetdone

dunstonh wrote: »

Seems quite fair and logical.

I would agree it's normal practice for insurance companies to do this but I certainly couldn't agree that it's fair.
Insurance companies normally charge one twelfth of your annual premium to change your details. My son was charged a £54 fee for them changing the details when he changed his car whereas I was charged £15 by the same company for the same thing.

It obviously would take no more work to change his details than it would mine so how on earth can it be considered fair for him to pay £54 while I pay only £15?

I would go as far as to say that this could possibly be challenged legally in the same way that unfair bank charges have been.

I would consider it fair to be charged a flat fee across the board for administration, a fair price that reflects the work carried out which amounts to less than a minute of typing and the cost of paper, printing, envelope and postage. £10 would more than cover that easily.

You can't always wait until renewal time to change your car, move house or get married and they know it and cash in.

An insurance company that offers a "no-fee on details change" policy may just get a few more customers

dunstonh

I would agree it's normal practice for insurance companies to do this but I certainly couldn't agree that it's fair.

What do you want to do then? Put it back into the premium so everyone's premiums go up or just pay when you use that particular service

My son was charged a £54 fee for them changing the details when he changed his car whereas I was charged £15 by the same company for the same thing.

The FOS have generally accepted that admin charges of upto £50 are acceptable. A £54 admin charge sounds like a strange amount. Its quite possible that the £54 was admin charge and a change in the risk premium rather than being just an admin charge.

I would go as far as to say that this could possibly be challenged legally in the same way that unfair bank charges have been.

Admin charges are not penalty charges so they are not alike and the principles behind it are not the same.

I would consider it fair to be charged a flat fee across the board for administration, a fair price that reflects the work carried out which amounts to less than a minute of typing and the cost of paper, printing, envelope and postage. £10 would more than cover that easily.

Whilst the actual transaction itself no longer carries much cost, what about the infrastructure that is in place to allow that transaction to take place? The salaries, the offices, the running costs, the acturies, underwriters, re-insurers, computers etc. These are all costs that have to be covered by a call centre dealing with administration queries only.

An insurance company that offers a "no-fee on details change" policy may just get a few more customers

Some do offer no fee. However, surely the gross premium is more important as its not often that you have to change your details.

lisyloo

An insurance company that offers a "no-fee on details change" policy may just get a few more customers

I doubt it very much.

Firstly most people go on premium price and do not delve deeply into the details.
Secondly some of us don't change partner, car or house frequently so don't have a great need for this.
Thirdly the premiums will be more expensive.

Think of the airline like RyanAir and Easyjet.
Would you like to have the cost of baggage handling included in your fare or jsut when you take bagagge.
I think the latter is fairer.
No offence but if I don't change my car, address or partner then why should I subsidise you.
Like the baggage handling it WILL have to be paid for somewhere.
The only question is whether you pay for it upfront or later.
I vote for the current system by mine and your desires are irrelevant unless you are in a posistion to influence company policy because these are private companies.

Personally I think it's a lot less fair to penalise "stable" people who don't need to change their policies so I regard this as an improvement.
Sorry if you don't agree but it's legal and the way business is run at the moment.
I think more businesses are going that way and charging for extras.
It's fair to my mind to make the people that use the facilities pay.

Ialwaysgetdone

What do you want to do then? Put it back into the premium so everyone's premiums go up or just pay when you use that particular service

As I said, a flat fee across the board

The FOS have generally accepted that admin charges of upto £50 are acceptable. A £54 admin charge sounds like a strange amount. Its quite possible that the £54 was admin charge and a change in the risk premium rather than being just an admin charge

No, it was the admin fee, it was stated on the amendment and he was told the same on the phone. 'Generally accepted' obviously means very little and obviously not legally binding

Some do offer no fee. However, surely the gross premium is more important as its not often that you have to change your details

CIS used to have no admin fee then they started charging, they also got rid of their agents - what a cost saver eh? Do you think the premiums didn't go up at the same rate as previous years :rolleyes:

lisyloo

As I said, a flat fee across the board

I vote against that as I think people that use the service should pay.
People who use admin serviecs because they change car, house and driver should pay and not those who don't.

However as already stateed, you don't get to chose the business model of the companies that provide insurance (unless you own one or are in an influential posistion).
You can only chose which companies to use.
Although of course you have to weigh up this factor against others when making your decision.
Personally I would have price, cover and service as high on the list of factors and admin fees would be quite low down. Most people just have 1 and that's premium price alone.

Ialwaysgetdone

lisyloo wrote: »

I doubt it very much.

Firstly most people go on premium price and do not delve deeply into the details.
Secondly some of us don't change partner, car or house frequently so don't have a great need for this.
Thirdly the premiums will be more expensive.

Most people do go only on price, I do too but what I meant was if you had a couple of quotes the same but one of those companies offered a 'no admin fee' then of the two I would probably go for that one if I knew I would be changing my car.

CIS started charging admin fees when they hadn't previously and it made no difference to their premiums

Ialwaysgetdone

lisyloo wrote: »

I vote against that as I think people that use the service should pay.
People who use admin serviecs because they change car, house and driver should pay and not those who don't.

That's what I'm saying, a flat fee across the board for those who do use it, not those who don't. Instead of someone paying a £54 admin fee and someone else paying £15, it would be fairer to charge the same fee to everyone that has to pay the charge