Hi,

 

Would appreciate some relatively urgent advice on an insurance issue if there is anyone kind enough to assist.

 

When we bought our Vrs we changed from two cars to one and as a result had a decision to make regarding car insurance. Insurance in my name comes with full NCD whereas insurance in my wife's name comes with only 2 years NCD. As car and documents associated are all in my name we decided to change the vehicle on my policy and cancel the policy held in my wife's name as it would be surplus to requirements. We were going to have to choose one to use so decided to use mine as all ownership papers etc are in my name.

 

When my wife called to cancel the policy the Company reacted very poorly and hinted at the time that there would be a hefty bill to pay for cancelling. We didn't understand exactly how hefty they meant.

 

The Annual premium for the car on the policy that we cancelled was £350. We had been paying this since December via monthly DD. The price quoted and signed up to included legal cover and breakdown.

 

We have now received a letter from the Company demanding £358. The cost is broken down as Cost of Annual premium (350) plus car hire cover (25, that we didn't actually have on the policy), plus legal cover (30), an admin charge of 26 and a cancellation fee of 88, totalling 519. They have taken off the money we have paid so far and have come up with the figure of £358 outstanding.

 

To me the sum being sought seems excessive and punitive, surely it can't be right that we have to pay such a high amount for a policy that ran for six months, thus any risk has disappeared with the cancellation of the policy? I had heard that in some instances people actually got a refund when they cancelled, I'm not expecting or looking for that but am genuinely shocked that they would want us to pay in excess of £519 altogether for what was effectively a six month policy.

 

If anyone can say whether or not I am trapped leg before so to speak I would be grateful.

 

Richard

Did you check the Terms & Conditions when you took out the policy?

I doubt you would have much wriggle room with this,as Llanigraham said it's probably all in the T&C's.I would just finish the policy it sounds like it will work out cheaper and you get the extra year of ncb.

When you take out a policy and pay monthly, you are paying for the policy plus interest. They are effectively loaning you the money for the full 12 month term, you are not paying for a monthly policy. Your premium was and is for the full 12 months.

 

You've made 7 payments, but how much was the £405 premium with interest added, so you may have paid less than you thought depending on the APR of the loan. The cancellation fee does seem a little high, but they can charge what they like and you agreed to that charge when you took out the policy as it will be in the small print you agreed to when you accepted it. The £405 premium is actually £526 in total if I assume the typical 30% APR, it could be more or less of course.

 

I never pay monthly, always pay the full policy up front, that way the policy premium is whats paid and no interest. The interest can make what seems a cheap policy very expensive.

It may be mentioned in the T&Cs, but that doesn't necessarily make it legal.

http://www.adviceguide.org.uk/scotland/consumer_s/consumer_protection_for_the_consumer_e/consumer_contracts_s/unfair_terms_in_consumer_contracts.htm

 

I'd have thought there is a huge likelihood that a court would agree with you that charging quite a bit *more* than the 12 month cost and only providing six months cover would be unfair.

I got caught the same way by Prestige.

Which had a £200 cancellation fee one or two months into a policy costing about £350.

Effecively all of thier comission and then some extra beer money on top.

 

I notice no indication in post one of which company this is?

So you'd be better off just keeping the payments going until renewal on a vehicle you no longer own?

 

There will be an interest charge as has been mentioned as it is a loan of sorts but the cancellation fees/methods/calculations should have been made available to you up front. That might be the loophole you need to challenge the charge.

I got caught the same way by Prestige.

Which had a £200 cancellation fee one or two months into a policy costing about £350.

Effecively all of thier comission and then some extra beer money on top.

 

I notice no indication in post one of which company this is?

 

Sorry, didn't want to mention them initially. Sheila's Wheels Brokers based in Glasgow. They were particularly hostile to Anne during the conversation where she advised them she was cancelling the policy so we should perhaps have taken from that they were likely to look for a hefty sum.

 

 

So you'd be better off just keeping the payments going until renewal on a vehicle you no longer own?

 

There will be an interest charge as has been mentioned as it is a loan of sorts but the cancellation fees/methods/calculations should have been made available to you up front. That might be the loophole you need to challenge the charge.

 

I have the renewal documents to hand from last December, and there is plenty of paperwork. I suspect that like many others I'm not alone in going through every last paragraph on the policy, to be honest I just checked the certificate of insurance was correct and the payments and payments schedule was correct. Looks like a tough lesson to learn.

 

Funny thing was that we didn't actually shop around or negotiate on the price, we simply let the policy renew to avoid any hassle at the time. Won't do that again either.

Edited 21 July, 201411 yr by Sittingbull

So, on original documentation (the quotation for automatic renewal that we allowed to do just that) shows an actual premium cost of £260.76 plus additional costs (legal and car hire apparently) of £51.98, meaning a total price of £312.74 for the year. Of course, as we were paying by DD the amount rises to take account of interest, with the schedule showing 11 payments of £31.87 required, total £350.57. We have paid £159.36.

 

In their letter demanding payment, and after I asked them to, they broke down the payment due as follows;

 

Motor premium 356.08

legal                   26.99

car hire              24.99

admin fees        26.00

cancellation       55.00

 

Total premium £489.06 less payments of £161.08 leaving a balance of £327.98.

 

Their notes on cancellation on mid term cancellations states

 

Provided no claims have been made in the period of insurance you will be charged for the time you have had insurance cover based on the short period rates as shown below. Additional charges may include a proportion of any commission paid to your insurance adviser and a proportion of any fees charged by your insurance adviser, sufficient to cover your insurance advisers costs.

 

Lord knows where this leaves us. To me it seems they are looking for an excessive amount, with the person on the phone suggesting they would seek 80% of the total premium.

 

Thanks for advice given so far, much appreciated.

Without seeing the documents it's hard to comment too specifically but the problem you've got in that cancellation paragraph you've quoted is that they're working on short period rates rather than 'time on risk'. 'Time on risk' charges pro rata only for the period you've been on cover. Short period rates are fixed percentages or amounts that may not be proportionate to the timescale.

Sheila's Wheels  = Bank of Scotland

So they are asking you to pay twice for things that were already in your premium such as the legal protection and breakdown cover.

and the breakdown letter says your premium is more than the renewal price,

They have their figures wrong somewhere.

 

If I was you I would pay the outstanding amount of the premium and ask that they suspend the policy.

It may be worth checking with Citezens Advice or the Insurance ombudsman.

I think they're saying that what he's paid only chips away at the premium and that the add-ons such as breakdown and legal are still payable in full - there is no cancellation available on those covers.

 

How can there be a cancellation fee on top of the admin fee on top of more than 12 months' premium though? Surely it should be one or the other. Maybe call them up again and question it.

I think they're saying that what he's paid only chips away at the premium and that the add-ons such as breakdown and legal are still payable in full - there is no cancellation available on those covers.

 

How can there be a cancellation fee on top of the admin fee on top of more than 12 months' premium though? Surely it should be one or the other. Maybe call them up again and question it.

The OP said that his renewal was £260 odd and a total of £350 odd including breakdown, and legal and instalment fees.

Then added this so to me this means they are adding the breakdown and legal again and car hire which he never had.

 

In their letter demanding payment, and after I asked them to, they broke down the payment due as follows;

 

Motor premium 356.08

legal                   26.99

car hire              24.99

admin fees        26.00

cancellation       55.00

 

Total premium £489.06 less payments of £161.08 leaving a balance of £327.98.

What is the cancellation amounts (usually as a percentage)?

Does seem odd that they can demand more than the policy.

What would happen if you'd payed the whole premium? Likelihood is you'd simply walk away with nothing to pay

Short period rates should be reasonable and not punitive when used in the case of cancellation. What are the rates shown in T & C table?

Just had a bit of a ding dong with admiral over cancellation fees funnily enough.

 

My mistake it seems, was to simply cancel my payment due on the 6/7 without informing them.

 

Snotty letters have since arrived, so I rang them.

 

That'll be £47 please.

No way I said.

 

Got it down to £25, but still not a happy bunny and told them so.

 

Only good side was that by using SAYNO to 0870, I denied them 8p a minute for the 25 minutes I was on to them  :moon:

I normally say i have sold the car and thats that, maybe a small admin fee, i tried to cancel one once for whatever reason and they were going to charge ne an the rest of the policy, i phoned up again a week alter and daid i sold the car and they jusr canceld it lol

I'm going to send them a c/q for £20 just to be awkward, and see if they can be bothered hounding me for the fiver.

So I called them and advised that I felt the level of their demand for payment was both punitive and unreasonable, and not in line with the letter or spirit of contract legislation enabled in 1999 to protect consumers. I got the runaround quite frankly. They are sticking to the "you knew all the terms and conditions when you signed up" line. When I said that I was probably one of the majority who didn't read absolutely everything when buying online I was told that wasn't there problem, which I understand.

 

When I said I would refer to the Financial Services Authority I was wished good luck with that. When I pointed out the figures quoted were in error I was told the accounts department would have checked and double checked them before issue.

 

So it looks like being taken further, both by them and by me. They are unhappy I don't want to pay full outstanding balance, and I am unhappy for different reasons.

 

Turns out the whole terms and conditions paperwork is entirely relevant to people who have paid annually, there is nothing in my documents in either hard copy or online relating to mid term cancellations when paying by monthly DD. Also, it looks like they have already been paid in full by Close Premium Finance, and Close haven't been in touch. Perhaps Sheilaswheels brokers are acting for Close but that isn't clear either.

 

What a monumental f up.

What are the short term rates referred to in post #9?

I know it's in T & C, but perhaps writing to the broker as a formal complaint, before referring the matter to the relevant ombudsman might hel .with subject of complaint as the cancellation charges. Then ,there's the matter of the other policy - do they want repear business from you after renewal .

BUT the main warning here is that  when looking on line for a comparison quote, if paying monthly, look at NOT the premium, but the total  after interest. I always find that those quoting least, charge more for credit. Sometimes taking a higher premium  means less overall cost .

Looking at the breakdown,most decent firms give you a courtesy car free, or if it's not your fault, an accident management company will sort that out.  . Don't really like this, but if cost cutting leads to extra customer charges, then perhaps a few high up might get the message, that they should lok after customers.

As above, what are the cancellation rates on your policy schedule?

I've been insuring my Fiesta on a classic car policy today.

What an absolute fiasco.

 

After listening and near falling asleep whilst the operative wittered on , and on, and on, and on, and on zzzzzzzzzzzzzz, for 30 minutes with all the usual drivel we've ALL heard a thousand times, I was eventually after verbally agreeing to the quote, put through to the payment dept., and had to endure yet another load of boring info....until the words 'CANCELLATION FEE' suddenly stood out amongst the very fast rabbiting of drivel that was going on.

 

I stopped her in her tracks and asked her to rewind the tape (I did actually say that), and she explained again, slowly.

 

£75 to cancel after 14 days, plus a further admin charge to them the broker, minus pro rata for any unused insurance cover time.

This ALSO applies if you cancel at renewal time, or ANY other time in the future if you decide to take your business elsewhere due to a better quote from another provider.

 

I exclaimed my shock at this, and was told this is now commonplace in the industry.

 

I explained that the insurance premium was only £94, and could they therefore explain how cancelling at some time in the future could be virtually the same cost as the premium?

 

"That's just the way it is, but it's only because it's a classic car policy that's making it seem so unfair" was the answer.

No way 'round it apparently.

 

Looks like the insurance companies have got us all by the short and curlies, and simply move the goalposts to suit their own rules when they feel threatened by loss of sales.

 

Basically, WE'RE STUFFED!

RIP OFF BRITAIN....yet another fine example.

I'll also add that I consider this 'wittering on and on' to be a very cunning sales tactic.

 

They know damned well that we hear all this crap every time we ring any of them, and they obviously think that WE think it is SO tedious and mind numbingly boring and repetitive, that out of sheer frustration, we'll buy virtually ANYTHING at virtually ANY price to end the call (quite often at 0840 rates)simply due to the fact that we can't face this annual trauma anymore from any other provider.

 

2 hours all this took me this morning.

I was exhausted at the end of it.

 

You really need a week off work to trawl through the utter plethora of minefields and t & C's of car insurance providers to REALLY obtain the best VFM.

Strange how they all claim to be 'The Best though.

 

Good ruddy luck, and may your hot ear cool down soon..

Edited 26 July, 201411 yr by Mr Ree