Car Insurance Debt?????????

jackdaniels101 · 8th July 2008, 18:13

Hi , wonder if anyone can help

last year my car completely broke down and i had to get rid of it - i cancelled my car insurance (as you would) and a few weeks later got a bill for £85 from them which is the remaining money to be paid including a cancellation charge!!!!!!!!!!!!!!!!!

is it just me , but i find this completely outrageous.. imagine going into burger king , ordering a meal, then changing your mind quickly only to be told that you still have to pay the £6 , without getting anything

I didnt have a car so why should i have kept paying my insurance till it expired... this is ludicrous... now im getting sherriff officers letters demanding i pay £116 now , which includes other charges

anyone got any advice?

foolishgirl · 8th July 2008, 20:16

Depends on the T&Cs of your insurance I would think. Have you read them carefully?

I take your point but to be fair if you ordered a meal from burger king & it arrived at your table you would be expected to pay for it unless it was uneatable.

jackdaniels101 · 8th July 2008, 22:27

LOL .. ah but thats different

I should be expected to pay because burger king would have provided me with a service .. heres a better analogy.. or maybe not even an analogy , heheh if you had cable tv and paid monthly then cancelled , there would be no cancellation fee OR if you had cable for 8 months then decided to cancel they wouldnt charge you for the next 4 months... because logically and rightly so you wouldn't be receiving any channels hence there would be no service

if i cancel insurance why do i need to pay for months afterwards when i didn't have a car... this makes no logical sense. These companies like to add their "admin" charges , but what charges? all they need to do is press a few buttons and it would be sorted.

surely those charges are disproportionate to the service provided?

Michael Browne · 8th July 2008, 22:33

Quote:

imagine going into burger king , ordering a meal, then changing your mind quickly only to be told that you still have to pay the £6 , without getting anything

Except you didn't cancel immediately, you had a couple of bites first and then said you didn't want the rest.

Afraid your cable analogy is worse than the burger king one, since as far as I know you have to sign a years contract, so irrespective of when you cancelled, you would still be liable for 12 months

Michael Browne · 8th July 2008, 22:44

From This is Money website. Although not exactly your situation, may help to explain.

Quote:

Why must I pay if I cancel car cover?

27 April 2007
Are car insurance companies within the guidelines if they charge a cancellation fee and also a percentage of your premiums when you decide to cancel a policy?

My insurer is asking for 50% of the total premium because I have sold my car and want to cancel the insurance. In fact, it is more expensive to cancel than keep the policy running. L.A. Brown, Hullbridge, Essex.

Ed Monk, insurance reporter for This is Money, replied: This is a commonly misunderstood aspect of motor insurance.
When you take out a car insurance policy you are actually entering into a contract with the insurer. You agree to pay them and they will insure you.
The Association of British Insurers confirmed that leaving the contract early is technically a breach of that contract and the insurer is entitled to demand the full payment.
Most will stop short of insisting on payment in full but it is common for insurers to apply 'administration' fees that make it disadvantageous to cancel a policy. They are usually set at a level that means it is seldom worthwhile for you to cancel a policy and pay the fee.
In your case, the insistence on you paying half of the total premium is unusually harsh but is within the rights of the insurer. Margins for car insurance are tight and this is an example of an area where they are becoming increasingly punitive.

LemonTwist · 8th July 2008, 22:57

When your old car broke down, did you buy a new one? If you did, maybe you could just add it to the existing policy, and in that way you won't have to cancel it.

I doubt that all of the £85 is a cancellation charge; some of it could be for cover you received but haven't paid for, particularly if you cancelled part way through a month (assuming you paid by monthly instalments).

jackdaniels101 · 8th July 2008, 23:36

ok

I totally understand the angle and point of view you are expressing and also understand that when i took out the policy the official view is that , the contract lasts for a year regardless of what happens (car stolen, sell it, etc etc) you are still liable for the year (hence your burger king reply, lol)

but , from a consumer point of view do you think this is fair? surely its unfair trading ? surely i should only need to pay for the service i receive? i think this is tyrannical trading, heheh

lets say that i insure my car and i pay the insurance on a monthly basis, then fair would be that the moment i phone them up and cancel should be the moment i stop paying .... , they could then calculate exactly the amount you owe... so if i started the insurance on 1st November and decided to cancel on the 25th for some reason they would only calculate how much it would be from then until i phoned.

heres an idea , top up insurance cards, i might be onto something , lol - you could top up your insurance as you need it

LemonTwist · 9th July 2008, 20:40

I see what you are saying, and in some cases cancellation fees are written off, for example if the policyholder has died or they have cancelled the policy due to a complaint.

I think that in your case, the reason why they charged you the fee is because they were hoping you would replace your old car with a new one and keep the policy going. Personally I think that people shouldn't be charged the fee if the car broke down (irreparable) or was written off, but in practice how would an insurance company be able to prove that the policyholder didn't buy another car and insure it elsewhere?

never shay die · 9th July 2008, 20:45

Like the money supermarket website states, car insurance doesn't work like that.

You enter into a 12 month contract but choose to pay that contract in instalments. You do not actually pay for cover month by month. A lot of people don't realise this!

It's no different to a phone company. You enter into 12 month phone contract, cancel after 6 and they want you to pay the remaining 6 months.

foolishgirl · 9th July 2008, 21:32

I agree NSD.

Hey, it might not be fair but it's legal & you knew that when you signed up for the deal.

Life is not fair - who promised you it was going to be fair & who are you going to complain to?!

jackdaniels101 · 10th July 2008, 12:56

booooooo

yep you're right, i should have read T and C properly.. ah well own fault there but its really annoying.. talk about getting you in a trap. so basically say you had car insurance for two months, your car was unrepairable and you didnt have any money to buy a new one , you could be liable to pay the FULL year of car insurance??? or is it just usually one months premium?

i could see the purpose of charging you one month premium for cancelling, but they seem to add on more and more stupid admin costs.

thanks everyone for your help , you all really opened my eyes on the subject... cheers

foolishgirl · 10th July 2008, 13:07

Dry your eyes, we all live & learn.

For your info -It seems to be generally the 'cheap' premium deals that have these tight 'get out' clauses so I guess if you think the car is a bit past it's sell by date, you have to weigh up if the cheap '12mth, almost no refund' deal is better than the more expensive 'pro rata refund' deal for you & sign up for what you really want.

Hope you've now got new wheels...

LemonTwist · 10th July 2008, 20:32

Quote:

yep you're right, i should have read T and C properly.. ah well own fault there but its really annoying.. talk about getting you in a trap. so basically say you had car insurance for two months, your car was unrepairable and you didnt have any money to buy a new one , you could be liable to pay the FULL year of car insurance??? or is it just usually one months premium?

It is very unlikely that an insurer would ever expect you to pay the full year's premium if you cancelled early - I've never heard of any cases of that happening recently. In most cases you would be charged either one month's premium of a flat fee like £50 or similar.

Michael Browne · 10th July 2008, 20:41

Here's an example (Swiftcover) of early cancellation percentage refunds:
Car Insurance, Cancellation, Policy Information - Swiftcover

JackieJ · 11th July 2008, 12:07

I've just read this thread with interest as I'm in the same position and being threatened with a 'cancellation fee'. I can see they have you over a barrel but I would argue that this is not explained to you when you give your details over the phone although I accept it may be in my T & C's.

My other dispute is that I have been with ins co for over 5 years and never claimed so I cannot have 'cost' them very much at all and to charge me a 'cancellation fee' because they want to 'encourage' me to stay with them seems very wrong.

I have other policies with my insurance company and I want to cancel them as well. Is there any point in complaining to my ins co about this - I have been a very good customer to them and now they are threatening me with court action over £49.60 despite the fact I have paid them in excess of £4000 over the last 5 years and never claimed a penny?
Is it worth a try?

Jackie

Chesterexpress · 11th July 2008, 15:16

If you don't want to be tied into a 12 month contract, there is nothing stopping you getting a monthly/short term insurance contract. However pro-rata you will probably pay more. You pays your money you makes your choice. At the end of the day, insurance companies are a business not a charity.

LemonTwist · 11th July 2008, 20:09

Quote:

Originally Posted by JackieJ

I've just read this thread with interest as I'm in the same position and being threatened with a 'cancellation fee'. I can see they have you over a barrel but I would argue that this is not explained to you when you give your details over the phone although I accept it may be in my T & C's.

My other dispute is that I have been with ins co for over 5 years and never claimed so I cannot have 'cost' them very much at all and to charge me a 'cancellation fee' because they want to 'encourage' me to stay with them seems very wrong.

I have other policies with my insurance company and I want to cancel them as well. Is there any point in complaining to my ins co about this - I have been a very good customer to them and now they are threatening me with court action over £49.60 despite the fact I have paid them in excess of £4000 over the last 5 years and never claimed a penny?
Is it worth a try?

Jackie

I've replied to your other post about this in the NU forum. Beccus is currently on holiday but I've tried my best to answer your questions.

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