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  • FIRST POST
    • PetesSake
    • By PetesSake 9th Nov 18, 6:15 PM
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    PetesSake
    Car insurance cancelled and have to pay outstanding balance
    • #1
    • 9th Nov 18, 6:15 PM
    Car insurance cancelled and have to pay outstanding balance 9th Nov 18 at 6:15 PM
    Hi Guys

    I think I have a fairly unique case here whereby I took out an insurance policy with RAC insurance (who is in fact the broker) and the underwriter is Aviva.

    About 3/4 months into the policy my vehicle was written off following a fault accident. For the claim I had to deal directly with Aviva who declared the vehicle a write off and paid me out for the vehicle based on their initial valuation, but the claim was not settled as I did not agree to the engineers valuation and this was to be reassessed based on my comments and evidence for what I felt the market value was (the advisor advised me that if Aviva do revise the evaluation they will pay me the diffenrece). This initial payment was sometime late in August.

    On the 4th September, worried that I will continue to make monthly premium payments if my policy had not been cancelled, I called Aviva to find out if my policy had been cancelled. Aviva said I would need to discuss with RAC. So I called RAC and explained to the agent that the vehicles been written off and Aviva have made a payment to me so my understating is under these circumstances the policy is usually cancelled. He agreed but to my shock he also said I need to pay the outstanding balance of approx £1400. I pushed back on this and asked the agent to send me the policy documents where I can see that it states that the outstanding balance needs to be paid following a fault claim. He agreed to send the policy documents by post but also said he has to cancel the policy today and I will be liable for the outstanding balance. He said the only reason for not cancelling the policy is if I was looking to buy a new vehicle. At this point I was still disputing whether I have to pay the outstanding balance let alone thinking about buying a new vehicle. So I told the agent I have no intention of buying a new vehicle and I don’t want him to cancel the policy until I can read the T&Cs and if in the T&Cs then I will consider my options (which would include transferring the policy). The agent went ahead and cancelled the policy anyway without my consent, based on me telling him that the vehicles been written off and money had been paid (he himself did not have access to that information due to RAC just being a broker).

    Anyways shortly after getting off the phone I found the original policy documents which stated in the T&Cs that the outstanding premium is due if the policy is cancelled and a fault claim is made on the policy. So I immediately called RAC back saying to them that I want to transfer the policy on to a new vehicle. The agent I spoke to this time was confused and couldn’t understand why the prior agent had cancelled the policy as the status of the claim was still showing as open. She advised me that the policy shouldn’t have been cancelled and that you usually get 7 days to transfer the policy on to a new vehicle. She said she will investigate and give me a call back.

    The next I spoke to this agent was the following day. She said to me that she will reinstate the policy but it will have to start fresh for 12 months. So I agreed, she took all my details, history of claims etc and at the end put me on hold and after speaking to her supervisor came back to me and said she can’t reinstate the policy because more than 24 hours had lapsed since the cancellation (25 hours to be exact). Obviously at this stage I was pretty annoyed and she left it on that they will have the original call listened to and then call me back.

    They called me back later in the week and said because I had advised the agent that the vehicle had been written off and that I had been paid out for the vehicle he did the right thing to cancel the policy.

    My argument against the above was that RAC should have carried out the necessary due diligence and cross checks with Aviva to make sure that indeed the claim had been settled (as this was not the case and Aviva in fact made a further payment post the cancellation after revising the value of my vehicle). Secondly I argued that I never received 7 days notification to transfer the policy onto a new vehicle before the policy was cancelled. And I was also put on the spot by the agent about transferring the policy in the original call and at that stage it was difficult for me to make such a financial decision about purchasing a new car without having all the information. Thirdly I argued that the second agent I spoke to should have been aware that there is a 24 hour period to reinstate a policy and should have acted sooner.

    I have followed the complaints procedure and was offered around £20 compensation for my inconvenience but still asked to pay the outstanding balance.

    If you managed to read all of the above I would appreciate your advice!
    Last edited by PetesSake; 09-11-2018 at 8:09 PM.
Page 1
    • dunstonh
    • By dunstonh 9th Nov 18, 6:37 PM
    • 95,773 Posts
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    dunstonh
    • #2
    • 9th Nov 18, 6:37 PM
    • #2
    • 9th Nov 18, 6:37 PM
    I did a speed read the post as it was very long and appears to have a lot of unnecessary padding. So, I will summarise what I see as the key thing and you can let me know if something is missed.

    Car insurance is an annual policy. When you pay monthly, you are doing so using a loan. If you suffer a claimable event, the policy has done its job and is required to be paid for in full. it doesn't matter if that claimable event was on day 1 or day 365.

    Most insurers will transfer the policy to the new vehicle and continue it. Some will not. If there is no vehicle to insure, then the policy should be cancelled. There is usually a small window given to allow for replacement.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • keith1950
    • By keith1950 9th Nov 18, 6:46 PM
    • 2,526 Posts
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    keith1950
    • #3
    • 9th Nov 18, 6:46 PM
    • #3
    • 9th Nov 18, 6:46 PM
    With a write-off it is usually normal for them to deduct any outstanding premium balance or excess from the settlement figure.
    So why have they paid you the full settlement without deducting it?
    As far as the policy continuing after a wtite-off , that should be in the terms and conditions although many won't let you transfer the policy.
    I think your insistance on getting a better payout has confused the situation but they don't seem to have done anything wrong or out of the usual.
    • zx81
    • By zx81 9th Nov 18, 6:46 PM
    • 19,351 Posts
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    zx81
    • #4
    • 9th Nov 18, 6:46 PM
    • #4
    • 9th Nov 18, 6:46 PM



    I would have much rather been able to transfer the policy but donít think I was given a sufficient chance. As a result Iím losing out on £1400 plus whatever a new policy will now cost me. I think a reasonable solution would have been for RAC to say we will issue you with a new policy for a new vehicle and the £1400 will go towards that and I would have to cover any increase in premium. This still leaves me worse off than if I was able to just transfer my policy over but I think is a good comprise given whatís happened.
    Originally posted by PetesSake
    That would leave you much BETTER off. You are paying the 1400 for the remainder of the existing policy you bought. Not to start a new 12 month policy.

    Equally, if you had transferred the policy, you would still need to pay any difference in premium.
    • PetesSake
    • By PetesSake 9th Nov 18, 7:20 PM
    • 4 Posts
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    PetesSake
    • #5
    • 9th Nov 18, 7:20 PM
    • #5
    • 9th Nov 18, 7:20 PM
    I guess my point was that they do allow to transfer the policy and normally would give you 7 days notice. However I never got this notice, because that would have probably required Aviva to notify RAC the claim has been settled but at that stage the claim was still open.

    Had I been aware that the outstanding balance was due if cancelled, I would have transferred the policy and saved myself £1400.

    You can argue the agent told me that on the phone however I wanted to see it in the T&Cs myself as I genuinely thought the agent was mistaken, based on my experience with Admital who in fact refunded me my premium pro rata (as I had paid up front) following a fault accident.
    • PetesSake
    • By PetesSake 9th Nov 18, 7:52 PM
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    PetesSake
    • #6
    • 9th Nov 18, 7:52 PM
    • #6
    • 9th Nov 18, 7:52 PM
    With a write-off it is usually normal for them to deduct any outstanding premium balance or excess from the settlement figure.
    So why have they paid you the full settlement without deducting it?
    As far as the policy continuing after a wtite-off , that should be in the terms and conditions although many won't let you transfer the policy.
    I think your insistance on getting a better payout has confused the situation but they don't seem to have done anything wrong or out of the usual.
    Originally posted by keith1950
    I raised that exact point. So the excess was deducted from the payout but not the remaining premium. I guess what complicates it is that RAC is the broker and Aviva is the underwriter. So Aviva made the payment minus the excess. However it’s RAC asking for the outstanding premium not Aviva.

    I still don’t understand the exact relationship the two have whether RAC takes a percentage of the premium and pays the rest to AVIVA. That would probably make sense.

    I tired clarifying this with Aviva but they said they have nothing to do with the premium that RAC is requesting from me.
    Last edited by PetesSake; 09-11-2018 at 8:01 PM.
    • angrycrow
    • By angrycrow 9th Nov 18, 8:46 PM
    • 588 Posts
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    angrycrow
    • #7
    • 9th Nov 18, 8:46 PM
    • #7
    • 9th Nov 18, 8:46 PM
    This sounds very much like customer error. These days it is very unusual for an insurer to deduct the outstanding premium from a total loss payment as people replace the car and transfer the new car to the policy. Insurers do set a maximum period to put a new car on cover which varies between insurers but 30 days is reasonable.

    You phoned rac and they offered to put your new car on cover. Your response was that you were not replacing the car giving them no option but to cancel the policy.

    The policy is a 12 month contract and when you pay monthly you are paying a loan back for the full premium. Most insurers will allow early cancellation and partial refund to cancel mid term if no claims have been made. In the event of cancellation after a claim the full premium is due.

    You claimed, you failed to put a new vehicle on cover then you asked them to cancel the policy. All they have done is what you asked.
    • PetesSake
    • By PetesSake 9th Nov 18, 11:01 PM
    • 4 Posts
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    PetesSake
    • #8
    • 9th Nov 18, 11:01 PM
    • #8
    • 9th Nov 18, 11:01 PM
    I found a old thread called ĎPaying outstanding premium when car is write offí canít include the link here as Iím a new user. Interestingly it is similar whereby the broker is chasing the customer for payment and makes me think this is only an issue when going through a broker due to issues with communication flow/barriers between underwriter and broker.

    But unlike the OP in that thread Iím not disputing the outstanding balance but more so that I wasnít given a sufficient chance to transfer my policy on to a new vehicle.

    From the thread attached it seems clear that the Financial Ombudsman agree that the custome should be given sufficient time to transfer the policy and I was not formally offered this.

    The nature of my phone call was that the agent was going to cancel my policy and only made me aware of the option to transfer when I argued against the cancellation. Even then he asked me if I was considering to purchase a new vehicle to transfer the policy. The word ĎNewí here is key for me as I understand you donít necessarily have to purchase a new vehicle, but can transfer the policy on to a existing vehicle you own. This was not made clear and is part of the reason why I made my intentions clear that I was not planning on purchasing a new vehicle.

    Furthermore I was trying to establish first, before making any commitment to purchase a new vehicle or transfer the policy, whether it was in my T&Cs if I have to pay the outstanding balance.

    My complaints are as follows:

    1. I wasnít given sufficient notice to transfer the policy and this is my main arguement. Along with that itís wasnít made clear that I can transfer the policy on to any vehicle that I own but instead was asked by the agent if I would be purchasing a new vehicle.

    2. It is evident that the policy should have not been cancelled at the time because the claim was not fully settled and this was confirmed by the second agent I spoke to. The policy was cancelled based on me telling the agent the cars been written off and claim settled. However I believe that RAC should have a process to verify any comments made by the customer and should have carried out the necessary due diligence and investigation to see if they should be cancelling the policy. I work as an accountant and I donít just take peopleís words for things but check that against relevant back up information. Indeed if I report financials based on what somebody has told me rather than cross referencing and checking I would be in serious trouble.

    3. The second agent I spoke to should have been aware that a policy can only be reinstated within 24 hours.

    I only wanted to see the T&Cs before I deciding on what my next steps were but was not allowed this opportunity.

    Let me know if you think I have a reasonable case based especially on point 1 above.
    • SabNys
    • By SabNys 10th Nov 18, 6:20 AM
    • 54 Posts
    • 5 Thanks
    SabNys
    • #9
    • 10th Nov 18, 6:20 AM
    • #9
    • 10th Nov 18, 6:20 AM
    I found a old thread called ‘Paying outstanding premium when car is write off’ can’t include the link here as I’m a new user.
    Originally posted by PetesSake
    Here's the link:

    https://forums.moneysavingexpert.com/showthread.php?t=4870888

    I'm not able to contribute any helpful comments because I've never made a car claim. (But I could have came a cropper on my house insurance - due to my own stupidity or laziness or both.)

    Thanks.
    Last edited by SabNys; 10-11-2018 at 6:30 AM.
    • takman
    • By takman 13th Nov 18, 1:09 PM
    • 3,771 Posts
    • 3,434 Thanks
    takman
    I work as an accountant and I donít just take peopleís words for things but check that against relevant back up information. Indeed if I report financials based on what somebody has told me rather than cross referencing and checking I would be in serious trouble.
    Originally posted by PetesSake
    So using that logic you should have read your insurance terms and conditions before you even rang them up so you knew what course of action you should take, then you wouldn't have had this issue at all.

    Unless you saying as an accountant you enter into official communications with people and only read the relevant documents if someone says your mistaken about something?
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