BUDGET car insurance - is this legal?

[give_me_it_back]

Hi.

I insured my car with Budget on 13th February. Today (only 14 weeks later), I called to cancel the policy as I have sold the car. They tell me that I need to pay £55 'cancellation fee', as well as a percentage of the total cost of cover.

I paid £159.67 in February for a years policy. Today, after cancelling, I will receive back the princely sum of £24!
It has therefore cost me £135 for 14 WEEKS cover!

I asked what this 'cancellation fee' covers, and was told: "Nothing. That's just the cost to cancel".

Sounds suspciciously like a penalty charge to me...

Is this legal?

Thanks

[Beanie1]

Think youve been had on this one matey

Lets work it out. £159.67 equates to £3.07 per week. Times that by the 14 weeks youve had cover that = £42.98. Now add their "cancellation" charge on that = £97.98 and take that from the premium you paid leaves you £61.59 due as refund or more if you dispute the charge.

Check your docs as you'll usually find the charge in the small print. You should also have been advised this over the phone when you took the policy out, if not then you have a case as FSA dictates that any charges should be notified at point of sale.

Hope this helps you along the way ..

[give_me_it_back]

I think you're probably right... It does say in their terms and conditions (which, of course, I don't read until this far down the line!)

Bloody disgrace!

Ho hum!

[Trojan1401]

I fully agree that a £55 fee for cancelling your policy is quite extortionate however all the insurers are imposing fees for adjustments. Mind you, not as high as £55.

As for calculating premium due, certainly within the first year of a policy, insurers charge "short period" rates not pro-rata. ( have done so in th 20+ years I've worked in the business ) SP rates normally a percentage for each month or part thereof. In this case, you have entered the 4th month of the policy therefore a 50% charge would be made which after the deduction of the canx "fee" appears correct.

Completely agree though that there should never be a charge for adjustments to policies as commissions etc are always built into the policy cost.

I would complain to them about unfair charging.

[give_me_it_back]

You are absolutely correct with your assumptions, and I agree that is is very ufair and totally extortionate. I will write a letter - not that it will make the slightest jot of difference to them, but I want to let them know!

Thanks.

[Beanie1]

I dont know, you may get some joy from the complaint. Complaints folk usually have the power to overide business decisions as its more beneficial than the negative publicity.

Was it explained to you why the refund was only £24? As above thread states, there are some quite high short term cancellation rates out there but again you would need to check docs to find this out. Would be under the section of Cancellation. If it aint there then point this out in your letter as well.

Best of luck

[HSBCrusher]

Ah, my old friend budget.
"BUDGET" People insurance cock up
I had a lot of trouble with this lot... what a bunch they are.
Yes... complain, complain a lot. In writing, don't bother with a phonecall. Then the FSA.

[give_me_it_back]

Thanks HSBCrusher! Off yo compose a letter now!

[CRED]

I too am having trouble with this company, my accident was in november 2006 and they are still dragging their feet, let me know how you get on

[HSBCrusher]

Originally Posted by CRED

I too am having trouble with this company, my accident was in november 2006 and they are still dragging their feet, let me know how you get on

indeed.
they are hopeless!

keep us posted.

[Surfer01]

I had an issue with them for the same reason and it was only when I sent an LBA that I got an apology and refund. The amount at the time was approximately £45 but it was the principle of the thing plus it was my money!