The AA and cancellation policies

[MichelleMaurice]

Hello,

I have been with the AA (motor insurance) for the past year and a quarter and I pay roughly £31 a month direct debit for my insurance.Recently I found an insurance company who will do it for less. So I called the AA to cancel my policy. I expected that I would have to pay a cancellation fee;I did not expect what they told me.

The lady first told me that I would get £150 (roughly)credit for my insurance for time that hasn't lapsed.Then she said for outstanding insurance I owe(again rougly)£274 which means if I were to leave the AA next Monday,I would owe THEM £124.00 a month to cancel! I was shocked.She explained that when you sign up (or in my case renew your policy) they give you a grace period of 59 days in which they don't charge you (which I didn't know) and now I owe them to leave.

I don't have £124 to pay out to leave the AA! I'm a single mother on benefits with a run down car that doesn't have breakdown which I thought was included in my policy when I joined - but doesn't - and when I enquired about breakdown they want to charge me an additional £12 a month!!!

So if I left the AA on Monday, I would have to pay that £124 and then the new deposit on my new insurance and one months insurance up front! That's rediculous!

Moreover the woman (trying to be helpful) said that I could repay that money cancelling my insurance but continuing to pay my monthly repayments until the sum was paid off. However, the £124 would be more again because the AA see monthly direct debits as a 'loan' and therefore have the right to apply interest to my situation.

Therefore to repay the car insurance,it would take until Christmas, incur more charges and I would be paying for two sets of insurance.

I feel tricked and misled by the AA.I was never told there was this 59 day grace period.I never expected that I would have to pay out a cancellation fee of £124 to leave them. I feel trapped & obligated to them and their insurance doesn't cover the things I really need.

If I cancel the direct debit and refuse to pay - they want £12 per missed payment and £12 for failure to pay. That's extortionate. How do I get out of this agreement? Surely I am not stuck?

Please help.
Kind regards
Michelle Maurice

[old_andrew2007]

bump

[Trojan1401]

Michelle,

AAIS act as a broker for a number of insurance companies. They would levy a charge if the policy is cancelled however the amount seems extortionate.
You say that you've been with AAIS over a year but, was that with the same insurer ? If you actually changed insurer then I suspect that on top of AA's "admin" charges the insurer will also charge "short period" rates which is a percentage of the premium payable as opposed to pro-rata.
AA may also "clawback" their commission which was muted many years ago when I worked for them.
Suggest you call them back and request in writing, how they calculate the actual "time on risk" and separate out the "admin charges" they make. The actual insurance company will not make any charge as AA act as their agent. The insurer will only clawback AA's commission which may be as much as 22.5% of the cost of the policy.
When ( and if you get a reply ) please post their response here. At the moment though, do not cancel your policy as if you do, they will have every right to persue the difference.