Charged for NOT renewing Insurance policy

Hoonercat · 18th January 2008, 20:05

Hello all, first post on this site

Just thought I'd warn others and maybe get some advice while I'm at it.

My home insurance policy with the Coventry BS expires on 28th Jan, received the renewal letter, shopped around and found cheaper elsewhere.

Phoned the Coventry today to say I wouldn't be renewing and was told that there would be a £25 'cancellation' charge

. I argued that I wasn't cancelling, merely not renewing at the end of the yearly period but they insisted that the charge still stands

.

I looked at the policy booklet and couldn't find anything about the charge so phoned back and spoke to another person who confirmed that I would be charged. I asked her to point out where in the booklet this charge was mentioned and she couldn't, but said the marketing dept would look into and get back to me next week.

She did say that it may have been a case of policy change in which case a letter would have been sent out to me, if so I didn't receive one, I'd have changed policies straight away on principle alone.

Whether it's in the T&C's or not, how can they charge you for not renewing their non-competitive product? This is completely underhand and a disgraceful way to do business, is it legal?

Thanks

Michael Browne · 18th January 2008, 20:16

Put it in writing to them.
That you are not cancelling the policy, merely letting it run to the end of the contract and are giving them notice that you will not be renewing it, and that if as they have informed you, they still insist on a cancellation charge for a contract that no longer exists, you will issue a claim in the Small Claims Court to recover it.

Chesterexpress · 18th January 2008, 20:22

Is the policy attached to a mortgage with CBS? If so it is standard procedure to charge an admin fee to ensure that your new policy complies with your mortgage agreement. If this is the case, many insurers will actually agree to pay this fee when you switch to them.

Hoonercat · 18th January 2008, 20:39

I do have a mortgage with the Coventry but at no point during two conversations was I told that this was why I was being charged the fee. The only reason given was that the insurance automatically renews itself unless cancelled, hence the fee, so I assume that this applies to everyone whether they have a mortgage with the Coventry or not (actually, she said this was standard policy, and that MOST co's do the same

)

First time I've ever come across it.

The new Insurance co won't pay the fee as they don't have this 'cancellation' policy.

LemonTwist · 18th January 2008, 20:47

This is rather disturbing. Ask them to put in writing the rationale behind the fee. I have never heard of a bank/building society charging someone for not renewing insurance, unless it was attached to a mortgage agreement.

Chesterexpress · 18th January 2008, 20:55

It sounds as thought the policy is attached to the mortgage, hence the fee. As I said earlier most insurance companies will offer to pay the fee charged by your building society if you explain to them about it.

Hoonercat · 18th January 2008, 20:56

Having spoken to the new Insurance co, it seems that it's nothing to do with the fact that they're a Bank/BS. They said a small number if insurance companies have these charges (I hadn't mentioned that I was formerly with the Coventry) and I should check through the policy.

Definately something to be aware of in future though.

LemonTwist · 18th January 2008, 21:03

Quote:

Originally Posted by Hoonercat

Having spoken to the new Insurance co, it seems that it's nothing to do with the fact that they're a Bank/BS. They said a small number if insurance companies have these charges (I hadn't mentioned that I was formerly with the Coventry) and I should check through the policy.

Definately something to be aware of in future though.

I think these fees are immoral, and I work in insurance myself! I wasn't aware that this could happen, unless the insurance contract was attached to a mortgage contract.

I really don't understand how this can be legal, seeing that once the 12 month insurance period is up, the contract is finished.

It's not doing the industry any good at all; all it does is alienate customers and annoy people. After all who would ever want to go back to a company who had charged them for no reason?

Hoonercat · 18th January 2008, 21:14

Bear in mind that the lady I spoke to didn't really seem to know much about it, but as I said, the only reason given was that the insurance automatically renews itself unless cancelled. I've had all sorts of insurance that automatically renews but there's never been a fee for not renewing.

IF this is the only justification then the Coventry are just playing on words to fleece people before they leave. I look forward to hearing from them next week and will keep this thread updated.

TractorGirl · 18th January 2008, 21:20

I am in the same position myself and sent a LBA letter yesterday stating that unless it lapses I will take them to court see thread

CANCELLATION/ADMIN FEE

TG x

Michael Browne · 18th January 2008, 21:21

You should still give them notice of non-renewal in writing, otherwise they may automatically renew and then justifiably be able to charge a cancellation fee

TractorGirl · 18th January 2008, 21:26

I personally wrote to them on 4th Jan (22 days prior to renewal) and again on 17th threatening action

Hoonercat · 18th January 2008, 21:31

TG, who were you insured with?

dave · 18th January 2008, 22:18

Personally, and this is just me, I just wouldn't pay it. I'd let them take me to court over it.

...but then I like an easy fight!

Hoonercat · 19th January 2008, 13:19

Right, finally managed to speak to someone who knows their job

The woman I spoke to yesterday said the charge was because the insurance automatically renews itself, therefore you need to cancel it, hence the charge :angry
Today I find out that it's because I have a mortgage with them also, they have an interest in the property and so charge the £25 as an admin fee to cover the cost of checking the new insurance (yeah, like it costs them £25).
So why call it a cancellation charge???

It's an admin fee.

watercooled · 27th January 2008, 22:21

If your policy renews, it is a new contract for a year. Under FSA regulations this new contract comes under the 14 day cooling off period. If I was you ask them to send you a final decision letter and FOS rights. Take them straight to FOS (Ombidsmand) they are in breach of FSA

Hoonercat · 29th January 2008, 15:51

Unfortunatelt I don't think they're doing anything illegal as it's a tie-in to the mortgage. Guess what, they still took the direct debit, despite me cancelling it, for the new higher asmount

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