RAC extortionate charge...

[indebtstudent]

I have been informed by my insurance company that if I cancel my policy they will charge me £75. This figure seems ridiculous as the toal premium was jut over £300. There were other policies available at the time which were only a little more expensive some of which will not have had such ridiculous charges. When I was on the phone I said I was not aware of this charge and was told in was in the terms and conditions. I asked where and the representative could not tell me. I understand the law in relation to penalties with regard to bank charges and I know this is a different area but surely there should be some kind of fairness? Essentially they are saying I HAVE TO pay £75 for them to press a button. At present I was thinking of sending a letter saying cancel immediately and that I was unhappy and was only accepting the charge under protest; also that I would pursue this all the way to the ombudsmen if neccesary. Any input would be appreciated

I am also considering writing to the local paper as this company has advertising on the television on the moment trumpeting thier potential to save customers money - this does not tally with reality.

I realize it may be in the T & C's but the stuff I have definately does not have it in. Also as I purchased the policy online this sort of thing should be in big bold letters otherwise I cannot make an informed decision about the policy versus others.

[Chesterexpress]

When you took out the insurance, you entered into a legally binding 12 month contract. Therefore if you choose to end it early they are entitled to charge you a fee to end it. Had you taken out a short term policy it would have been more expensive pro-rata. They have done nothing wrong whatsoever.

[Bookworm]

RAC insurance T&C summary state:

"Alternatively, if you wish to do so [cancel the insurance] and the insurance cover has already commenced, you will be entitled to a refund of the premium paid subject to a deduction for the time for
which you have been covered. This will be calculated on a

pro-rata basis for the period in which you received cover."

And in General Terms:

"11 Cancellation
Following the expiry of your statutory cooling off period, you continue to have the right to cancel this policy at any time by calling us on 0800 404 7516 and returning your RAC Direct Insurance certificate of motor insurance to us. If you have not made a claim during the current period of insurance, we will refund the premium you have paid for the cancelled period of insurance, subject to a deduction
for the time for which you have been covered. This will be calculated on a pro-rata basis for the period in which you have received cover and will include an additional charge of up to £30.45 (inclusive of Insurance Premium Tax where applicable)"

http://www.rac.co.uk/web/insurance/c...nal_secure.pdf

At the very least, you should obtain a breakdown of where the £75 comes from.

I must say, I am getting increasingly concerned about those insurance companies that tie you into 12 months contracts. Whilst I can understand it for mobile phones, and cable TV, where they supply the equipment and therefore have an outlay to offset, I fail to see how that argument can apply to insurance cover. (I don't think the free tax disc cover counts! )

[beccus]

indebtstudent - I sent you a PM, i'm looking into this
Becca

[indebtstudent]

"When you took out the insurance, you entered into a legally binding 12 month contract. Therefore if you choose to end it early they are entitled to charge you a fee to end it. Had you taken out a short term policy it would have been more expensive pro-rata. They have done nothing wrong whatsoever."

The total premium was £320 ish. How can there possible be a similar amount of work involved in cancelling a policy as arranging one?

I have checked and I do not have that information but even if I did what is this obsession with having complicated products? Why not be fair so that the customer can make an informed decision?

The parties involved are BDML, RAC (premium search) and Noriwch Union are the under writers.

There are other issues too, they will not put in writing.

I'll go to the Ombudsmen followed by the courts then we'll see who is right.

[LemonTwist]

I must say, I am getting increasingly concerned about those insurance companies that tie you into 12 months contracts.

Most insurance policies are designed to run for 12 months. If you only need short-term cover, then it is often possible to arrange cover for just a few days.

I guess it's similar to the pricing for travel insurance - if you take out cover for a single trip of say, 14 days, then it won't cost that much more to take out an annual policy. Short term policies always work out to be more expensive than 12 month ones.

In this case, what is the reason for needing to cancel the cover?

[indebtstudent]

I have sold the car and do not need another.

My main gripe is with the figure it seems arbitrary and takes no account of the work involved. Also the very serious matter that I genuinly did not recieve notification of this.

In general I see car insurance as somewhat of a con, I recall someone from Endsleigh trying very hard to get my agreement to pay £4,000 a year in installments (when I first passed my test). That person told me I would not find a cheaper quote elsewhere. Whoops I've gone off on a tangent again.

BTW if the reason for this charge is, as you say, they incorporate this into the premium then why do other insurers make a MUCH smaller charge? One months premium plus another small ish charge ring a bell from a Tesco policy I had in my first year.

Does anybody know if I can use the unfair terms type or law? They could argue that it is part of the contract (but so are bank charges) so couldn't I argue that this term is unfair and so on and so forth...

I'm left feeling that, if I had had to make a claim or similar I really couldn't trust this companies expertise.

[Bookworm]

Originally Posted by LemonTwist

Most insurance policies are designed to run for 12 months. If you only need short-term cover, then it is often possible to arrange cover for just a few days.

I guess it's similar to the pricing for travel insurance - if you take out cover for a single trip of say, 14 days, then it won't cost that much more to take out an annual policy. Short term policies always work out to be more expensive than 12 month ones.

In this case, what is the reason for needing to cancel the cover?

You're missing my point.

Yes, most insurance policies are designed to run for 12 months. However, why is the consumer being tied up to those? A year is a long time, and circumstances change.
As I said in my previous post, a mobile company, for example, is subsidising the cost of the phone and is relying on having a fixed-length contract to recoup that. Fair enough. What is the outlay of the insurance company? Issuing the policy?
They provide a cover, in other words nothing of substance. You want to cancel for whatever reasons, I do not understand why they can't just cancel, you go your way, they go theirs.
As for short-term cover, not being funny, but the only reason behind it is to maximise profits and nothing else. It doesn't cost the insco any more to issue a 7 days policy than a yearly one, let's face it.

[cazzaswfc]

Indebtstudent, can i just add, you say that it will cost 75 to cancel? It's my understanding that RAC charge 52.50 to cancel ( Bookworn - not sure where you got that info from? it MAY be out of date or information from a household policy? - it did used to be 30.45 - i'm sure rac now charges the same as NUD)

Therefore part of the 75.00 will also be for time on risk that you have had your car on cover for.




*edited - apologies bookworm I've just gone through the link, I'm going to investigate a little into this as this is different to what I thought - I don't however work for RAC so apologies, I do know NUD's product inside out!

[cazzaswfc]

Have checked an upto date policy booklet for Rac today, my mistake, Rac do have a cancellation charge of 30.45.

indebt - I understand your point that you don't think it's fair to pay a cancellation fee however this looks like part of the 75, is actually for time on cover ( maybe you pay you dd's slightly in arrears?) why not offer to pay what's actually for the cover and complain about the canx fee?

[Rtech]

I am going through this,with my Insurance company,and they have stated that they will NOT give me a itemised bill showing how the amount charged was reached.I therefore will not pay,and the TS say my request is not unreasonable.
They have gone to a DCA and I am going to report them and the DCA as the bill is in dispute.
The CAB say,they can make a small Admin charge,BUT this must not include any profit.
The 1999 CCA act says that as per banks if the charge is illegal you can fight it,and that is what I am doing,suggest you tell them you are disputing the bill,ask for a detailed brakdown, do this in writing,via recorded delivery,and see what the reaction is.They cannot proceed with any action if the bill is disputed.I have put the following in my letter to them:-
No advice has been given showing how the above sum has been achieved,therefore in line with the Consumer regulations of 1999,this charge must reflect your ‘actual or real loss’,and to this end please advise a breakdown of all costs in regards to your actual loss,and that this charge accurately reflects your true costs in relation to the said charge.

[indebtstudent]

Obviously there is some misunderstanding here I paid the amount up front IN FULL. This is why I am so annoyed. The total premium was £323, and I was told I would lose any time I had been covered for (whcih I knew) and then the £75 comes off also.

Looks like I'm going to have to take what I can get now then pursue the complains procedure, then bother the ombudmsne, then potentially go to court. All in all even if I lose this will use more than £75 worth of resources

The fact they will not put it in writing seems suspect to me, I won't let this job, I could use something to get my teeth into since the banks managed to delay things...

[cazzaswfc]

No probs, from what you wrote before I wrongly presumed that you would have being paying by dd as the charge was 75 ( as above rac canx fee is 30.45) did you have any additional cover ( i.e legal cover or breakdown cover?) - It's my understanding that some co may charge the full amount for things like legal cover regardless of wether you then canx this half way through.

have they confirmed if the 75 payable is inclusive of time on risk? when did you take the cover out?

[indebtstudent]

I took it out in April. They also said the charge is less if I waited until 26th to cancel as that would be in the next quarter.

I did not have any additional cover, he clearly said £75 is a cancellation charge. I might ring them tomorrow and ask them if it is a penalty charge. Honestly I got the impression the guy I was speaking to is one of these customer 'service' people who doesn't care, doeasn't know much and whos rela job is selling.

[cazzaswfc]

TBH, this doesn't sound quite right, however I have to point out I don't work for RAC, have you emailed beccus? if not do, she'll be able to either get this sorted or give you a full explanation to why you owe 75 to cancel the policy.

hope you get it sorted out.

[indebtstudent]

Sent a pm, promised reply, she must be busy. No wait is that the same person who works for Norwich Union? I think I can sort this myself and want something for my time :P

[cazzaswfc]

She works for Norwich Union, however NUD and Rac all come under the Aviva group, hence she will have access to the right people, I'm sure she'll be in touch with you, she has sorted out some issues for people on this board.